Qrb 501 Week 2
Running Head: INVENTORY SYSTEMS
Inventory Systems Summary
University of Phoenix
QRB/501
Quantitative Reasoning for Business
Instructor Joe Krupka
September 21, 2010
Inventory Systems Summary
In today’s economic recession, business owners are constantly looking for opportunities that would enable them to remain competitive through lowering their overhead cost. Kehrer (2010, ¶ 1) explained, “Bloated overhead is one of the major threats to small business competitiveness”. For this reason, it can be determined that business analysts are evaluating the different types of inventory management systems that could be applied to help reduce the cost of overhead and increase product turnaround. “Dell has achieved a system that at times leaves them with average inventories for long enough to last only three days. Instead of incurring holding costs, Dell doesn’t order until the demand is in place” (Atkinson, 2005, ¶6). Dell refers to this system as the Just-In-Time inventory system. The Vendor Managed Inventory system, a concept pioneered by Wal-Mart, is another inventory system that is paving the way for the future with its ability to communicate the demand of the customers directly to the supplier (Wal-Mart’s Focus on EDI, 2010). The summary will briefly describe the Just-In-Time and Vendor Managed Inventory Systems. Following the brief description, will be a comparison that indentifies both the advantages and disadvantages of each inventory system.
Inventory Systems Description
Just-In-Time Inventory Management System
Dell Computer is a large personal computer (PC) provider. The company adopted the just-in-time inventory system to manage their profitability status and to gain momentum in the computer industry. In the former years Dell struggled with their finances in the computer technology industry because of miss-managed capital. The company maintained a large amount of inventory regardless to customer demands and forecasts. The large amount of inventory
Inventory Systems Summary
University of Phoenix
QRB/501
Quantitative Reasoning for Business
Instructor Joe Krupka
September 21, 2010
Inventory Systems Summary
In today’s economic recession, business owners are constantly looking for opportunities that would enable them to remain competitive through lowering their overhead cost. Kehrer (2010, ¶ 1) explained, “Bloated overhead is one of the major threats to small business competitiveness”. For this reason, it can be determined that business analysts are evaluating the different types of inventory management systems that could be applied to help reduce the cost of overhead and increase product turnaround. “Dell has achieved a system that at times leaves them with average inventories for long enough to last only three days. Instead of incurring holding costs, Dell doesn’t order until the demand is in place” (Atkinson, 2005, ¶6). Dell refers to this system as the Just-In-Time inventory system. The Vendor Managed Inventory system, a concept pioneered by Wal-Mart, is another inventory system that is paving the way for the future with its ability to communicate the demand of the customers directly to the supplier (Wal-Mart’s Focus on EDI, 2010). The summary will briefly describe the Just-In-Time and Vendor Managed Inventory Systems. Following the brief description, will be a comparison that indentifies both the advantages and disadvantages of each inventory system.
Inventory Systems Description
Just-In-Time Inventory Management System
Dell Computer is a large personal computer (PC) provider. The company adopted the just-in-time inventory system to manage their profitability status and to gain momentum in the computer industry. In the former years Dell struggled with their finances in the computer technology industry because of miss-managed capital. The company maintained a large amount of inventory regardless to customer demands and forecasts. The large amount of inventory
References: Atkinson, C. (2005, May 9). Today’s Inventory Management. Retrieved September 19, 2010, from http://www.inventorymanagementreview.org/strategy/ Benefits of Vendor Managed Inventory. (2010). Retrieved September 19, 2010, from http://www.vendormanagedinventory.com/benefits.php Definition of Vendor Managed Inventory. (2010). Retrieved September 19, 2010, from http://www.vendormanagedinventory.com/definition.php Electronic Data Interchange. (2010). Wal-Mart’s Focus on EDI. Retrieved September 19, 2010, from http://www.wal-mart-edi.com/focus_on_edi.htm Greenberg, D. (2002, October 7). Just-In-Time Inventory System Proves Vulnerable to Labor Strife. Retrieved September 18, 2010, from http://www.allbusiness.com/management/304751-1.html. Hunter, A., King, R. & Lowson, B. (1999). Quick Response: Managing the Supply Chain to Meet Consumer Demand. New York, NY: John Wiley & Sons, Ltd. Johnson, C. (2001, February 26). Just In Time - Industry Trend or Event? Retrieved September 18, 2010, from http://www.findarticles.com/p/articles/mi_m0HWW/is_8_4/ai_71324386 Kehrer, D. (2010). Guide to Cutting Your Overhead Cost. Retrieved September 19, 2010 from http://www.business.com/guides/cutting-your-overhead-costs-33 Potential Pitfalls of Vendor Managed Inventory. (2010). Retrieved September 19, 2010 from http://www.vendormanagedinventory.com/pitfalls.php