Alliance Supermarkets
Although Alliance Supermarkets utilizes a point-of-sale system to track its inventory levels and keep constant records for each location’s on-hand quantities, the firm still experiences several problems with regards to effective and efficient inventory management. As stated in the case study, “sudden changes in demand for a particular item can catch the company by surprise as it bases inventory replenishment on historical demand patterns. Further, demand patterns and preferences may vary from one store to another depending on the customers served by each, but the inventory system groups all demand information together and treats each store equally. Finally, the manufacturers that make the products stocked by Alliance Supermarkets are always pressuring Alliance to help them target appropriate customers for special promotions and sales.”
A positive element of the firm’s procedural design is that Alliance utilizes a periodic inventory system, as opposed to perpetual inventory systems, which allows for inventory levels to be updated following the completion of each transaction, resulting in a more accurate inventory measurement on a daily basis. For this kind of business, continuous monitoring can be quite advantageous when multiple area locations are in operation, as it allowed for “item locator” services and inter-store transfers to be possible. Additionally, Alliance Supermarkets’ Chief Information Officer, Merchandisers, and Purchasing Managers can analyze the inventory levels for specific products between locations, along with variances in purchasing trends between the locations. With such information, the firm can implement inter-store transfers to properly distribute merchandise to the locations high rapid sales performance for a given product. For example, suppose Store A is shown to have had rapid sales for a particular Snapple beverage, and is now completely sold out of the product. Miles away, Store B has sold very few units of the same product.
A positive element of the firm’s procedural design is that Alliance utilizes a periodic inventory system, as opposed to perpetual inventory systems, which allows for inventory levels to be updated following the completion of each transaction, resulting in a more accurate inventory measurement on a daily basis. For this kind of business, continuous monitoring can be quite advantageous when multiple area locations are in operation, as it allowed for “item locator” services and inter-store transfers to be possible. Additionally, Alliance Supermarkets’ Chief Information Officer, Merchandisers, and Purchasing Managers can analyze the inventory levels for specific products between locations, along with variances in purchasing trends between the locations. With such information, the firm can implement inter-store transfers to properly distribute merchandise to the locations high rapid sales performance for a given product. For example, suppose Store A is shown to have had rapid sales for a particular Snapple beverage, and is now completely sold out of the product. Miles away, Store B has sold very few units of the same product.
References: Finch, J. (2012). Managerial Marketing. San Diego, CA: Bridgepoint Education, Inc. Moseley, G (2009). Managing health care business strategy. Massachusetts: Jones and Bartlett Publishers. Vonderembse, M. A. & White, G.P. (2013) Operations Management. San Diego, CA: Bridgepoint Education, Inc.