INVENTORY MANAGEMENT

Homework Take-up

Inventory Management Getting the product or service to the consumer is a concern for the marketers Once the product gets to the place of business – there has to be a system in place to manage the inventory

What would happen? The Mustang Market orders a shipment of hoodies, sweatpants, T-shirts, Lanyards, Shorts & of course, Rubber Duckies Students come and buy products every day at lunch No effort is made to determine what is being sold at any given time What is the problem with this?

Inventory Management Inventory management controls the goods that are within the business Integral part of the supply chain

Inventory Management Inventory Management determines: – How much we need – When you need it – What items are in demand – What products to push/promote – What prices need to be changed – Many, Many more reasons

Inventory Management Overstock – A business never wants to have more inventory than it can sell in a reasonable reason of time Ties up money that could be used elsewhere – Advertising, Investing, Production, etc Takes up Space Just-in-Time (JIT) Inventory – Inventory is kept minimal and arrives just as a company needs to sell it – Walmart got to where it is today because of JIT

Inventory Out-of-Stocks “Sorry, we are out of ”

Inventory Management Out-of-Stocks – In some companies (manufacturing) – the production of a good can come to a complete stop if you run out of inventory If Toyota runs out of break-pedals.... – You will lose business to the competition Companies try to avoid this by sending you to the “nearest location” – It is the goal of every inventory system to know what is running out and ordering more before the product is out of stock

Inventory Management Shrinkage – No......not that – Loss of inventory due to Theft Damage Breakage Effective Inventory Management will ensure – It is pre-emptive – ensuring shrinkage does not happen

Inventory Management Turnover – No......not that – The number of times a business sells its inventory in one year – It is important to turn over inventory as many times as you can in a given year More turnover = More $$$$$ – Industry standards are well known and excellent benchmarks

Inventory Management

To calculate inventory Turnover = cost of inventory sold in 12 months average inventory Example – a business spends $30,000 on hoodies in a given year. At any given time the average inventory they have on hand is 80 hoodies at $35 each ($2,800)

Inventory Management In Groups of 4-5 – You will be given a scenario involving an inventory situation at the Mustang Market – Your job, as a group, is to brainstorm as many different ways that you can solve this problem using what you know about Inventory Management Rank your ideas

Inventory Management Over-Stocked – Sell inventory at a lower price to the consumer Mark-Down Clearance Sales – Increase Promotion for that product – Sell the product to a different retailer at a lower price (Winners) – Recycle the goods in some way – Give to Charity

Inventory Management Out-of-Stocks – Keep track of each item that is on hand and each item that leaves – Re-order items when there is a weekly supply left based on previous demand – Raise the Price on popular items and see if the demand stays consistent – Push other similar products that may not be selling as well

Inventory Management Shrinkage – Install Security Systems – Theft Tags – Hire Security Guards – Monitoring Entrance and Exit – Have only one person in charge of all incoming merchandise Receiver – Hold Managers responsible for missing goods – Count Inventory early and often

Inventory Management Turnover – Very similar to over-stock – Sell inventory at a lower price to the consumer Mark-Down Clearance Sales – Increase Promotion for that product – Find cheaper merchandise – Offer package deals

QUIZ TOMORROW!!!! On everything that has been covered thus far in “PLACE” – Channels of Distribution – Type of Distribution Channels – Inventory Management Then you are done with place!!!! –.....until the exam