Inventory Management In Retail

29-09-16 cheapnisha 0 comment

Inventory Management In Retail


In this era of globalization, where every retail business organization is opening multiple stores in countries across the globe, inventory management has gained vital significance. Retails businesses are required to have effective processes, tools, techniques and quality measures to ensure the efficiency of carrying inventory, thus optimizing costs. The two major objectives of retails organizations are to maintain an adequate inventory level to facilitate smooth production & selling activities, and to minimize inventory to optimize profitability. The importance of inventory management can be seen from the fact that it helps in maintaining a trade-off between carrying costs and ordering costs resulting into minimizing of inventory costs, maintaining adequate inventory for smooth production and sales, preventing stock-out problems and suggesting proper inventory control system for avoiding losses, damages & misuses (Ogbo).

Case Background and Innovation

This report is a case study of Levi Strauss and Co Ltd. which has a global retail chain in 110 countries employing more than 5000 people. The company is into the business of manufacturing jeans and casual wear under its leading global brands. Since, the company has more than 50 production centres worldwide, the supply chain is certainly complex. Hence, inventory management becomes an important issue to address, which is required to be done through the execution of adopted processes and technologies to manage in an efficient manner (Garcia).

It was in the year 2005, that Levi Strauss & Co decided that it needed a more efficient inventory management system for a more reliable and precise control of its inventory. It required an improvement that could increase the efficiency as well as profitability of the company. As a result, the company decided to incorporate GS1 Electronic Product Code (EPC) – enabled radio frequency identification (RFID) technology into its operations (Mathaba; Garcia).

This technology abbreviated as GS1 EPC-RFID is a state- of- the -art inventory management tool where the EPC syntax is represented in binary form for use on the RFID tags, and in textual form suitable for sharing data among enterprise information systems. Here, EPC refers to syntax for unique identifiers that are tagged with tangible objects for the role of identification of inventory, especially in retail business. The technology works such that when EPCs are encoded onto individual RFID tags of each article in the inventory, radio waves can be used for identifying the unique identifiers at a very high rate and distance over 10 meters, even when it does not fall in the line of sight. The major utility of the technology is to improve inventory visibility and accuracy. Levi Strauss & Co has been procuring the technology in its UAE production centres from a company called ‘Tagit’, through a long term business relationship (Poojary).