If you're standing in the middle of a big retailer such as Walmart, and you look around, you're witnessing one of history's greatest logistical triumphs. Retailers such as Target, Lowe's, and Best Buy stock tens of thousands of items from all over the world. Walmart alone stocks items made in more than 70 countries, according to its corporate Web site. At any given time, the Arkansas-based retailer manages an average of $32 billion in inventory, reports Supply Chain Digest.
With those kinds of numbers, having an effective, efficient inventory control system, or inventory management system, is imperative. Walmart's system helps it maintain its signature "everyday low prices" by telling store managers which products are selling and which are taking up shelf and warehouse space.
Inventory management systems are the rule for such enterprises, but smaller businesses and vendors use them, too. The systems ensure customers always have enough of what they want and balance that goal against a retailer's financial need to maintain as little stock as possible. Mismanaged inventory means disappointed customers, too much cash tied up in warehouses and slower sales. Factors such as quicker production cycles, a proliferation of products, multi-national production contracts and the nature of the big-box store make them a necessity.
Modern inventory management systems must have the ability to track sales and available inventory, communicate with suppliers in near real-time and receive and incorporate other data, such as seasonal demand. They also must be flexible, allowing for a merchant's intuition. And, they must tell a storeowner when it's time to reorder and how much to purchase.
To achieve this, inventory management systems pull together several technologies into one cohesive approach. Read on to learn about the history of inventory management systems and how modern systems work.