“EFFECTIVE INVENTORY CONTROL AND MANAGEMENT: A CASE STUDY OF IKEA”
UNIVERSITY OF WALES
JANUARY 2012
Table of Contents
ABSTRACT 4
CHAPTER – 1 5
1.1 INTRODUCTION 5
1.2 BACKGROUND OF THE ORGANIZATION 7
1.3 OBJECTIVES 8
1.4 RESEARCH QUESTIONS 8
1.5 PURPOSE OF THE RESEARCH 9
1.6 DELIMITATIONS 9
1.7 TARGET GROUP 10
1.8 JUSTIFICATION FOR CHOOSING THIS RESEARCH TOPIC 10
1.9 PROBLEMS FORMULATION 11
1.10 OVERVIEW OF THE DISSERTATION 11
2.4 INVENTORY CONTROL 17
2.5 APPROACHES USED FOR INVENTORY CONTROL: 17
2.6 INVENTORY CONTROL SYSTEM 19
2.7 INVENTORY MANAGEMENT SOFTWARE: 20
2.7.1 Components of the software: 20
Asset tracking 20
Barcoding 20
Order
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After that collects additional information from the operators via fixed terminals or mobile computers.
This whole process is used for the automation of sales and satisfies the consumers to fulfill his needs. This all information is recorded in a system and then workers are required for packing and shipping of the order to the final consumer. In and outward hardware materials are also maintained by the inventory system. Various wireless and mobile terminals are used at the time of transactions moment and real-time inventory control system.
The name IKEA stands for “Ingvar Kamprad Elmtaryd Agunnaryd”. Ikea is one of the largest and well-known companies for home furnishing. The main objective of IKEA is to provide good quality home furnishing products at comparatively lower prices. The main core specialized areas of IKEA is designing, buying and selling home furnishing. At present there are more than 300 IKEA stores that are located in 37 different countries and are enhancing its number continuously. At present there are 127 000 employees are working in the company in the entire world such as in Europe, North America, Asia and Australia. This research study is mainly concerned with improvement of inventory control systems in order to lower inventory levels at IKEA.
Most of the companies at national as well as international level are facing huge challenges due to immense competition in the market. The challenges
The Process is that when received, all items are counted manually and taken to the warehouse - loaded on to special shelves. Information is recorded on the computer. Each department identifies goods needed. A list is made and items taken for display and sale in the shop. Department staff replenish the shelves when needed under close supervision and management in order to supply a high class service to customers.
Abstract —There are some complex and compelling challenges that global manufacturing industries should face, which includes price fluctuation, supply-chain inefficiencies and increasing customer expectations. In order to meet the demand of this economic environment, manufacturers need to find innovative, smarter ways to face those challenges. Thus, the efficient inventory management becomes urgent to manufacturers and it could help improve profitability and increase customer satisfaction. This paper aims to talk about what inventory management is and its importance, what problems inventory management might have and how to improve inventory management efficiency.
IKEA is a world famous furnishing company known for selling Scandinavian-style furniture and other home-based goods. The company has over 230 stores, with operations carried out in over 42 countries with well over 70 000 employees. The stores themselves can occupy 410 million shoppers per year. It is a Swedish based company built on the idea of offering a wide range of well-designed, functional home furnishing products such low prices, that a majority of people will be able to afford them. The IKEA group is currently solely owned by the INGKA Foundation through a holding company, unlisted on any stock exchange.
Businesses are not only faced with competition within the industry they operate in. They also face competition from businesses in other industries.
The POS is a great indicator of items in stock and knows when to order more stocks of the items. Every time any item is sold, POS updates the server and the inventory amount changes. Remember that POS system is the location where a transaction or checkout takes place. POS systems are able to track the internal stock and automatically schedule the replenishment stock from external sources. This inventory management is an important part of Information Systems. Inventory management is mainly about specifying the size and placement of stocked goods. Inventory management is also required at different locations of the supply chain; this encompasses everything from replenishment lead time, carrying the cost of inventory, inventory and demand forecasting, inventory valuation, inventory visibility, price forecasting, quality management, and returns of defective goods. The inventory management needs to be handled in the efficient manner as it is
• The company faces the challenge of competition and the use of enhanced technology by the other companies catering in this sector.
Business organizations face many different challenges. The following are some of the challenges faced by today 's company 's: competition, decreased profits, raising employee performance, enhancing leadership, increasing customer base, allocating resources, delivering better service, increasing efficiency, increasing shareholder value, reducing costs, and customer satisfaction
The inventory and production departments also have issues. Currently, inventory is done by the receiving area supervisor confirming the shipping documents against incoming orders by hand. This allows for human error and is not a quick or efficient way to do inventory. The same process is used when production takes items from inventory. The inventory system is only updated once daily when new raw materials arrive and then again once daily from production when the raw material is used. The lack of tracking and checking in a timely manner leaves the organization’s processes at a higher risk of failure. The inventory system does not currently communicate with the sales or with the Finance and Accounting applications. This may lead to a
Sales order processing 3. Picking and packing the goods 4. Shipping Process Definition and Functions To create information flows supporting: Repetitive work routines of the sales order department, the credit department, and the shipping department -Decision needs of those who manage various sales and marketing functions Horizontal Perspective Management Questions Using Data Mining to Support Marketing Data warehousing Data mining Global E-business E-business systems are divided into two categories: Buy Side -Systems use the Internet to automate and manage corporate vendors and purchases E.g. Electronic data interchange (EDI), Supply chain management (SCM) Sell Side -Systems are designed to allow a company to market, sell, deliver, and service goods and services to customers throughout the world via the Internet CRM Systems Cultivate customer relationships by prospecting, acquiring, servicing, and retaining customers Customer self-service systems Context Diagram Diagram 1: Validate Sales Order 1.1 - Verify inventory availability Diagram 1: Validate Sales Order 1.2 - Check credit Diagram 1: Validate Sales Order 1.3 - Complete sales order Diagram 1: Validate Sales Order External Data Flow of Process 1.3: A picking ticket authorizes the warehouse to “pick” the goods from the shelf and send them to shipping -A customer acknowledgment notifies the customer of the order’s acceptance and the expected shipment date -A sales order notification is sent to the billing
Based on Service Request SR-rm-001, the processes of inventory management and control at Riordan Manufacturing were evaluated. Four aspects of Riordan Manufacturing’s inventory management and control require improvements. These aspects of business are improvements to automation, inventory control and error reduction in the inventory management, as well as an overall inventory storage cost reductions. Furthermore, each part of the inventory management and control process requires a single unifying method to deliver a solution using computer systems.
As number of firms in the industry keeps increasing, greater competition force firms to earn more market share, innovate substitutes, produce differentiate products and be cost leadership to keep or improve their position in the industry. For example, some of the products of Billabong and Quiksilver are similar, consumer will choose to buy the one with lower price if they have similar function, or buy the one with higher price if the product is different from others. Thus, a firm could run well if it has different products and lower cost compared with rivals.
All retailers have a common goal in mind, and that is to make a profit. Companies earn a profit by first connecting customers with products, which can lead to an exchange of product for money. Without the ability to connect customers with products, no money exchange is possible and no profit is earned. It is, therefore, immensely important for retailers to have the right products, in the right quantities, at the right locations, and at the right time. Inventory Management Systems provide companies like L.L.Bean with the necessary information to achieve just that. L.L.Bean’s advanced inventory management system (IMS) connects customers with products, irrespective of the location of the product or the customer (Hoffsess, 2015).
Competition is increasing because of growth in automobiles, computers, and electronics. Firms are also defending their home markets from foreign competitors by entering into foreign markets.
Threat of New Entry – It is easy for a new company to enter in the market, however the competition in the market is increasing so rapidly. There are many factors which can restrict the new entrants to enter the market.
Clients everywhere throughout the world need great quality items at least expensive costs. To fulfill this interest of customers, the Yakult’s production manager must constantly enhance the nature of his items. Alongside this, he should likewise make vital moves to lessen the expense of his items. Production management also includes stock control. The Yakult’s production manager must check the balance of the inventories. In this system also includes stock control. Yakult’s staff must check the stock level whether is overloading or under stocking of inventories. (Image of Production Management Functions,