Wallmart
Wallmart is one of the world’s largest companies in the supply chain, and its stock control has been focal in its success. According to Macro trends, Wallmart’s inventory had risen to 44.269 billion dollars. (2019) With such a vast stock, the company has modernized its inventory systems for proper stock control. Wallmart’s advancement in stock management has given them the market advantage over other global companies. Their advancement and strategic planning have enabled them to minimize inventory costs.
Wallmart stock cost is incurred from the industries that supply them with goods to the cost of storing goods in the warehouses. (Wild, 2017)These costs include the price of goods, cost incurred when ordering goods, holding cost, and the shortage cost. When Wallmart purchases goods from various industries and retailers, they incur the cost of purchasing goods. The company has to bear this cost so that it can supplement the chain of supply. Buying these goods in bulk is advantageous to the company as they are provided with price discounts.
After purchasing goods, Wallmart incurs the ordering cost when these goods are being delivered to its stores. (Wild 2017) According to Statista Inc, Wallmart stores are 4,756 in which they have to provide their goods. (2020) The company has a continuous inventory system that enables them to order their goods when their inventory has attained the reorder level. Wallmart has established an effective delivery system which allows them to deliver goods to their stores in time and reduce the transportation cost
Wallmart has vast warehouses that are huge so that it can accommodate its immense inventory. These warehouses have been divided into various sections, from the food section to the pharmaceutical centers. In these centers, they incur holding costs. These costs include the rents paid for these warehouses, losses incurred when goods spoil or stolen, and the security cost for these goods. When warehouses run out of stock, the company incurs losses as the goods will not be delivered in time to the consumers. These losses are incurred when the reorder level had not been established
How Walmart can minimize its inventory costs
Using a continuous inventory system will enable Wallmart to establish the reorder level, which will help minimize incurring shortage costs. A constant system will allow goods to be delivered in time to the warehouse.
It is reducing its lead time, which is the time of delivering an order. Reducing this time will minimize the companies incur losses when storing goods, and it will save the company storage space. (Axsater, 2015) Establishing a precise forecast which will enable the company to provide the inventory goods in demand. The knowledge of these goods will allow the company to order more goods to prevent a shortage.
Establishing a modern stock system as it will improve the correlation with the suppliers. A modern system will reduce the holding costs as goods will not be stored for long in the warehouses. (Axsater, 2015) The relationship with the consumers will be improved as the goods are delivered to them on time. The company implementing effective management of inventory will reduce the stock costs incurred.