The explanation below of a well developed supply chain management system highlights the importance of equally sophisticated measures for ensuring an accurate inventory.
Much of the popularity of supply chain management in business community is attributed to the success of Walmart's supply chain system - an example of collaboration between a large supplier/manufacturer (Procter & Gamble) and distributor/retailer (Walmart). Before these two companies started In 1980s, the two giants built a software system that linked P&G up to Wal-Mart's distribution centers. At Walmart's distribution center, when the inventory level of P&G's products reaches re-order point, the system automatically alert P&G to ship more products. In some cases, the collaboration between P&G and Calmat goes all the way to the individual Wal-Mart store. P&G was able to pass the saving from inventory management and order processing to Walmart and eventually to Walmart's consumers at "low, everyday prices".
Accurate Point of Sale (POS) data and correct inventory information at both individual stores and distribution centers is essential for complex supply chain management systems like this to be successful. If every product delivered to each store was subsequently scanned as POS at the checkout, this process could be seamless. Unfortunately, factors such as damaged product unfit for sale and theft are realities within retail markets. I will discuss technology for manual manipulation of inventory data in a subsequent blog.
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