7. Inventory Management

Question 1

Inventory management

Answer 1

Inventory management is used to acquire and maintain a variety of stock while ordering more stock, shipping, storing and displaying other stock.

Orders for stock are placed according to the need for the product.

A supplier will then fill the order and send the merchandise to a warehouse or, in some instances, directly to the store.

After receiving the product, the retailer will place the product on the floor for display and sale.

Question 2

Aspects of inventory management:

Answer 2

• Retailer tasks.
• Inventory levels.
• Merchandise security.
• Reverse logistics.
• Inventory analysis.

Question 3

• Retailer tasks.

Answer 3

Some retailers require their suppliers to accept more responsibility before delivering the merchandise.

This means that the goods should be “sale-ready” or closer to being ready when they arrive.

Antitheft tags can be applied at the supplier instead of at the retailer. This is both cost- and time-effective.

Question 4

• Inventory levels.

Answer 4

Having an inventory of available goods is both di cult and necessary.

It is difficult because consumers are never 100% predictable, and shelf space may be a problem.

Question 5

• Merchandise security.

Answer 5

Owing to the losses organisations incur because of theft, proper security measures should be taken.

Product tags, surveillance and background searches are some of the solutions an organisation can look into to prevent theft by customers and employees.

Question 6

• Reverse logistics.

Answer 6

Reverse logistics is the path of a product that could be damaged.

The rules pertaining to reverse logistics should be properly specifed well in advance.

Return policies, refund policies and repairs should be considered here. Vodacom has a “seven-day out of box” policy.

This means that if the product malfunctions seven days after it has been opened, it may be returned and replaced with a brand new phone. If the product malfunctions after seven days, however, there is a repair policy in place. The malfunctioning phone then has to be sent in for repairs.

Question 7

• Inventory analysis.

Answer 7

An analysis of process flows is valuable information in any company.

This can indicate where so-called “bottlenecks” occur and where improvements can be made to ensure better pro ts.

Inventory analysis can tell a company the extent of its income, pro t and even the supply that is available. This also improves logistics.