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SUPPLY CHAIN MANAGEMENT

AND
LOGISTICS

CASE STUDIES

ON THE

INVENTORY PROCESSES SYSTEMS

DEEKSHA PANT
Roll No: 511
M.COM 2nd Year
2021-2023
Hansraj College
University of Delhi
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ACKNOWLEDGEMENT

Firstly, I would like to thank the teacher in-charge Dr. Preetinder Kaur
for providing me the opportunity to develop a case study on the topic-
INVENTORY PROCESSES SYSTEMS. The topic helped me
enhance my knowledge and provided me a better outlook.
Secondly, I would like to thank my family for helping me search
information required and providing me moral support when needed.
Thank you for understanding my work with so much patience.
And lastly, I would like to thank GOD for giving me enough strength
and capability to complete my work on time, along with helping me
with the information required.
THANK YOU……

CONTENTS
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Acknowledgement……………………………………………………
……………………………………………………………………….2
1) INTRODUCTION……………………………………………
……………………………………………………………….4-8
1.1What is an inventory management
process…………………………….………………………..4
1.2 The 5-step inventory management process
………………………………………………………...….5-6
1.3Tips to optimise inventory
management…………………………………………..…..6-8

2) CASE STUDY : INVENTORY MANAGEMENT

PRACTICES AT WALMART………………….
…………………………………………………………………
……………………………..8-11
2.1 About
WALMART………………………………………………...8-9
2.2 WALMART Inventory management……………….
……………………………....9-11
3) CASE STUDY : INVENTORY MANAGEMENT
PRACTICES AT AMAZON
…………………………………………………………………12-16
3.1 About
AMAZON………………………………………………..………...12
3.2 AMAZON’S Inventory management……………………..
…………………………..….13-16
Conclusion……………………………………………………………
………………………………………………………………….….17
Bibliography…………………………………………………………
……………………………………………………………………..18
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1. INTRODUCTION

A great inventory management process saves money and time. When done right,
it also improves cash flow and the customer experience. As more sales channels
and fulfilment options become available, its importance is growing too. 
Whether you want to take advantage of social commerce, make your products
available on more marketplaces or implement quick commerce fulfilment, a
first-rate inventory management process is essential. Post-pandemic, it will also
be key to reviving retail and managing the supply chain crisis.

1.1 What is an inventory management process? 

An inventory management process is about tracking and controlling your
brand’s stock from the moment it’s manufactured until it reaches customers.
This includes procuring, storing, moving, processing and selling inventory. 
Inventory management aims to ensure that the right level of stock is always
available in the right place at the right time. To avoid shortages or oversupply,
brands need to carefully enact stock monitoring and make forecasts based on the
likes of seasonal demands, past trends and marketing promotions.
Inventory management can have a huge impact on a brand’s financial wellbeing.
According to Retail Dive, stockouts cost retailers $1 trillion every year. Back in
2014, Walmart alone lost out on $3 billion in sales because of stockouts.
However recent research suggests that surplus stock costs businesses even more
than stockouts, so it’s crucial to get the balance right.
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1.2 The 5-step inventory management process

Before being able to optimise your inventory management process, it’s
important to ensure you have the basic steps covered. Below are the five
essential steps required for any inventory management process:
1) Receive and inspect products
The first step in the inventory management process includes receiving your
order from the supplier. Getting this part right is crucial for the following steps
to function as efficiently as possible. The first thing that should be done after the
order arrives it to inspect the products. It’s important to check that the quantity,
product code and serial code are all correct. You should also ensure handling
conditions, such as temperature, are accurate for perishables, and that all
products are in good condition.
2) Sort and stock products
After inspecting the products, they must be properly stored in the warehouse
and inputted into your leave management system. At this stage, it is a good idea
to be strategic about how products are stored. Warehouse slotting techniques,
such as organising products based on SKU and product type can be beneficial. It
is also important to minimise the distance to bestselling products by storing
them where they are most accessible.
3) Accept customer order
The next step in the inventory management process involves accepting customer
orders. The orders will typically go through a point-of-sale system (POS), which
processes the orders and accepts payments. The POS system will either have a
built-in inventory management feature, or be integrated with an inventory
management software that will enable the order details to be viewed by the
warehouse staff.
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4) Fulfil, package and ship order

Once a customer has placed an order, the next step is to accurately and
expediently fulfil, package and ship the order. If the second step in the process
was optimised, searching for and selecting the products in the warehouse should
be relatively straightforward. Some important aspects to consider when
packaging the product are the customer experience, durability and sustainability.
When shipping the product, be sure to send the customer a confirmation email
with tracking information.
5) Reorder new stock
When reordering new stock, it is crucial to ensure the timing of new orders and
amount of goods are correct. By leveraging the reorder point formula, you can
minimise the risk of both stockouts and deadstock – two problems that
negatively impact your bottom line. Certain inventory management systems
automate the process of reordering, which saves time and prevents any mistakes
from human error.

1.3 Tips to optimise inventory management

We’ll now look at some ways to optimise inventory management. Whether
you’re interested in saving money, making space or wowing customers, there
are countless methods you can apply to manage your stock better. Here are a
few of them:
 Keep on planning
Getting inventory management and control just right is a never-ending task. You
need to consistently track results, monitor stock levels and investigate any
issues that arise. Based on this data, you can then update your management
plans. Continuously tweaking the likes of safety stock levels and replenishment
cycle lengths is crucial. It’s also important to keep an eye on world events,
supply chain news and changing consumer behaviour so that you can adjust
your plans as necessary.
 Put priority products first

Managing all your inventory at once is a daunting task. So start by identifying

critical stock and optimising the process around them.
This probably means zoning in on bestsellers, as well as products featured in
upcoming marketing campaigns. Figures from 2020 suggest that stockout rates
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for top-selling products usually lie between 8% and 12%, so this is definitely an
area worth concentrating on.
Many brands use the ABC Analysis model to pinpoint their most valuable stock.
Then, they figure out which replenishment patterns ensure they’ll never go out
of stock without tying up too many resources.
 Engage all stakeholders

To get your inventory management right, it’s essential that you build a team
with varied areas of expertise. First off, you need a core team of mathematical
modelling specialists. But you should create a culture that ensures they
meaningfully interact with non-math executives.
You also need to involve staff from across all stages of the inventory
management process – from pickers on the floor through to warehouse
managers. It’s a good idea to get input from customer support staff too. You
should also try to build close relationships with your manufacturing team and
external suppliers. This should provide more reliable supplies and new
opportunities to reduce costs.
 Match your approach with your business model

There is no one-size-fits-all solution when it comes to stock monitoring and

inventory management. Every brand has unique needs depending on its size,
delivery methods and location.
When choosing a management system, companies need to consider:
 Transportation networks: Do they require local or international
deliveries? What about the likes of in-store pickup and quick commerce
options?
 Warehouse locations: Based on volume history and geographical needs,
what needs to be available where?
 Manufacturing locations: Where are supplies based in relation to
warehouses?

 Choose the right tools

It’s important to choose software and tools that can scale and change alongside
your business.
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Cloud-based inventory management software usually offers this. They aren’t

affected by power cuts or local tech issues either. Just make sure to choose one
that integrates with the rest of your eCommerce stack and tracks the data you
need to make solid decisions around inventory planning.
It’s also wise to embrace technology like mobile printers, scanners and
computers. This will save time in the warehouse and on the road, allowing staff
to track goods faster and with fewer errors. RFID tags also allow for hands-free,
instantaneous stock counts.
However, it’s worth noting that your tools will only be as good as the
management process you have put in place.

2. Case Study: Inventory Management Practices at

WALMART

2.1 About Walmart

 Wal-Mart Stores, Inc. is the largest retailer in the world, the world’s second-
largest company and the nation’s largest nongovernmental employer. Wal-
Mart Stores, Inc. operates retail stores in various retailing formats in all 50
states in the United States.
 The Company’s mass merchandising operations serve its customers
primarily through the operation of three segments. The Wal-Mart Stores
segment includes its discount stores, Super-centres, and Neighbourhood
Markets in the United States. The Sam’s club segment includes the
warehouse membership clubs in the United States.
 The Company’s subsidiary, McLane Company, Inc. provides products and
distribution services to retail industry and institutional foodservice
customers. Wal-Mart serves customers and members more than 200 million
times per week at more than 8,416 retail units under 53 different banners in
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15 countries. With fiscal year 2010 sales of $405 billion, Wal-Mart employs
more than 2.1 million associates worldwide.
 Nearly 75% of its stores are in the United States Wal-Mart but Wal-Mart is
expanding internationally. The Group is engaged in the operations of retail
stores located in all 50 states of the United States, Argentina, Brazil, Canada,
Japan, Puerto Rico and the United Kingdom, Central America, Chile,
Mexico, India and China.

2.2 Walmart Inventory Management

 Wal-Mart had developed an ability to cater to the individual needs of its
stores. Stores could choose from a number of delivery plans. For instance,
there was an accelerated delivery system by which stores located within a
certain distance of a geographical centre could receive replenishment within
a day.
 Wal-Mart invested heavily in IT and communications systems to effectively
track sales and merchandise inventories in stores across the country. With the
rapid expansion of Wal-Mart stores in the US, it was essential to have a good
communication system. Hence, Wal-Mart set up its own satellite
communication system in 1983.
 Explaining the benefits of the system Walton said, “I can walk in the satellite
room, where our technicians sit in front of the computer screens talking on
the phone to any stores that might be having a problem with the system, and
just looking over their shoulders for a minute or two will tell me a lot about
how a particular day is going. On the screen, I can see the total of the day’s
bank credit sales adding up as they occur. If we have something really
important or urgent to communicate to the stores and distribution centres, I,
or any other Wal-Mart executive can walk back to our TV studio and get on
that satellite transmission and get it right out there. I can also go every
Saturday morning around three, look over these printouts and know precisely
what kind of work we have had.”
 Wal-Mart was able to reduce unproductive inventory by allowing stores to
manage their own stocks, reducing pack sizes across many product
categories, and timely price markdowns. Instead of cutting inventory across
the board, Wal-Mart made full use of its IT capabilities to make more
inventories available in the case of items that customers wanted most, while
reducing the overall inventory levels.
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 Wal-Mart also networked its suppliers through computers. The company

entered into collaboration with P&G for maintaining the inventory in its
stores and built an automated reordering system, which linked all computers
between P&G and its stores and other distribution centres. The computer
system at Wal-Mart stores identified an item which was low in stock and sent
a signal to P&G. The system then sent a re-supply order to the nearest P&G
factory through a satellite communication system. P&G then delivered the
item either to the Wal-Mart distribution centre or directly to the concerned
stores.
 This collaboration between Wal-Mart and P&G was a win-win proposition
for both because Wal-Mart could monitor its stock levels in the stores
constantly and also identify the items that were moving fast. P&G could also
lower its costs and pass on some of the savings to Wal-Mart due to better
coordination.
 Employees at the stores had the ‘Magic Wand,’ a hand-held computer which
was linked to in-store terminals through a radio frequency network. These
helped them to keep track of the inventory in stores, deliveries and backup
merchandise in stock at the distribution centres. The order management and
store replenishment of goods were entirely executed with the help of
computers through the Point-of-Sales (POS) system.
 Through this system, it was possible to monitor and track the sales and
merchandise stock levels on the store shelves. Wal-Mart also made use of the
sophisticated algorithm system which enabled it to forecast the exact
quantities of each item to be delivered, based on the inventories in each
store. Since the data was accurate, even bulk items could be broken and
supplied to the stores.
 Wal-Mart also used a centralized inventory data system using which the
personnel at the stores could find out the level of inventories and the location
of each product at any given time. It also showed whether a product was
being loaded in the distribution centre or was in transit on a truck. Once the
goods were unloaded at the store, the store was furnished with full stocks of
inventories of a particular item and the inventory data system was
immediately updated.
 Wal-Mart also made use of bar coding and radio frequency technology to
manage its inventories. Using bar codes and fixed optical readers, the goods
could be directed to the appropriate dock, from where they were loaded on to
the trucks for shipment. Bar coding devices enabled efficient picking,
receiving and proper inventory control of the appropriate goods. It also
enabled easy order packing and physical counting of the inventories.
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 In 1991, Wal-Mart had invested approximately $4 billion to build a retail

link system. More than 10,000 Wal-Mart retail suppliers used the retail link
system to monitor the sales of their goods at stores and replenish inventories.
The details of daily transactions, which approximately amounted to more
than 10 million per day, were processed through this integrated system and
were furnished to every Wal-Mart store by 4 a.m., the next day.

 In October 2001, Wal-Mart tied-up with Atlas Commerce for upgrading the
system through the Internet enabled technologies. Wal-Mart owned the
largest and most sophisticated computer system in the private sector.

 The company used Massively Parallel Processor (MPP) computer system to

track the movement of goods and stock levels. All information related to
sales and inventories was passed on through an advanced satellite
communication system.

 To provide back-up in case of a major breakdown or service interruption, the

company had an extensive contingency plan. By making effective use of
computers in all its company’s operations, Wal-Mart was successful in
providing uninterrupted service to its customers, suppliers, stockholders and
trading partners.
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3. Case Study: Inventory Management Practices at

AMAZON

3.1 About Amazon

 Amazon.com, Inc. is an American multinational technology company

focusing on e-commerce, cloud computing, online advertising, digital
streaming, and artificial intelligence. It has been referred to as "one of the
most influential economic and cultural forces in the world", and is one of the
world's most valuable brands. It is one of the Big Five American information
technology companies, alongside Alphabet (Google), Apple, Meta
(Facebook), and Microsoft.
 Amazon was founded by Jeff Bezos from his garage in Bellevue,
Washington,[7] on July 5, 1994. Initially an online marketplace for books, it
has expanded into a multitude of product categories, a strategy that has
earned it the moniker The Everything Store.
 Amazon has earned a reputation as a disruptor of well-established industries
through technological innovation and "aggressive" reinvestment of profits
into capital expenditures.
 In 2021, it surpassed Walmart as the world's largest retailer outside of China,
driven in large part by its paid subscription plan, Amazon Prime, which has
over 200 million subscribers worldwide.[16][17] It is the second-largest
private employer in the United States.
 Amazon also distributes a variety of downloadable and streaming content
through its Amazon Prime Video, Amazon Music, Twitch, and Audible
units. It publishes books through its publishing arm, Amazon Publishing,
film and television content through Amazon Studios, and has been the
owner of film and television studio Metro-Goldwyn-Mayer since March
2022. It also produces consumer electronics—most notably, Kindle e-
readers, Echo devices, Fire tablets, and Fire TVs.
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3.2 Amazon’s inventory management

 1st month of operations - Amazon shipped books to 45 different countries

 Within few years- Several new e-ventures were introduced and were threat
to Amazon
 Counter Action

 Value proposition Minimum download time

 Selection from wide product range
 Had inventory of millions of items
 Book lovers can post/read reviews on the site
 Book search option- by author, subject, title or publication 40%
discount on selected feature books, 30% on hard covers and 20% on
paper-backs
 Shipment within one week
 Notification to customers via e-mails
 Secured online payment gateway
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 Advantages
 Increased range of products and services to its customers
 Increased revenue in the form of marketing fees from its partners
 Amazon’s stake in these companies increased its market valuation

 Amazon tried to promote each of its partners by sending e-mails to its

customers and by including their marketing materials in the shipments made
to the customers.

 Objectives of Amazon’s Supply Chain Management

a) Have a clear understanding of customer’s delivery needs

b) Coordinate with wholesale suppliers and independent
c) Producers to make available to customers both current and the soon to
be released books
d) Provide two-day delivery on most orders
e) Allow customers to query the status of their purchases and track their
own shipments
f) Align, supply and delivery to other functions such as marketing, sales
and customer services, Jeff aimed at „hassle-free operations‟,
customer satisfaction, time and cost efficiency
g) Building warehouse cost was around $ 50 million and to finance this
Amazon issued $ 2 billion as bonds
h) In 1999, Amazon added 6 warehouses (10 in total) in Nevada, Kansas,
Kentucky, Georgia and North Dakota
i) It increased its warehousing capacity from 3,00,000 sq ft to 5 million
sq.ft
j) The return rate was only 0.25% compared to the return rate of 30% in
many segments of the online retail industry
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k) Excellent use of technology – coding, computer signals etc

l) Systematic Procedure
m) Developed proprietary software
n) In 1999, adopted the strategy to store all possible product range.
o) In 2000, Amazon managed to reduce the size of its inventories
because of efficiently managing the warehouse
 Careful decision about “product”, “supplier” & “distribution centre” i.e.,
which product to buy”, from “where” & “which centre” it would send its
product to
 Decided to buy its books, CDs, videos etc from publishers
 Maintained good relationships with vendor
 Huge investment in infrastructure (revamped the layout of its warehouse)
and technology (refining its software helped in demand forecasting)
 Aimed at cutting down expenses via outsourcing some of the routine
activities.
 Partnered with other companies for shipping the inventory

 In early 2001, Amazon decided to outsource its inventory management with

a reason to earn more profits
 Keeping a stock of frequently purchased/ popular items
 Acted as a trans-shipment centre between distributor to the customer
 Main Distributors:
 Ingram Micro – whole sale distributor, handled books & computer
 Cell Star – handled cell phone sales
 In August 2001, Amazon entered into an agreement with Ingram
Micro Inc (largest wholesale dealer of electronic goods & SCM
services) to provide logistics & order fulfilment services for
desktops, laptops etc at computer store at Amazon.com. The aim
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was to maximize operating efficiencies, streamline supply chain

logistics and reduce inventory costs.

CONCLUSION

o A streamlined inventory management process is not only a competitive

advantage in today’s world of eCommerce, but a must for business
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performance. Now that we’ve gone over the steps and tools needed to get
started, you’re well on your way to better managing your stock and
fulfilment – which will lead to positive results for your business’s bottom
line.

o Agent system, can support several forecasting methods and it reacts to

changes in the environment.

o According to experiments, it can be concluded that timely reaction to

changes in the environment can propose better results. This can be done by a
human or decision support system comparing the forecasted demand with
real and making corrections in orders, or this can be done by an agent as it is
proposed here. The next step of the present research will be the application
of achieved results of demand forecasts, safety stock and reorder points into
simulation software in order to achieve more accurate results. Inventory
management can improve company’s inventory control existing situation and
decrease costs of the company.

o Inventory problems of too great or too small quantities on hand can cause
business failures. If an organization experiences stock-out of a critical
inventory item, production halts could result. Inventory management
indicates the broad frame work of managing inventory. The inventory
management technique is more useful in determine the optimum level of
inventory and finding answers to problem of safety stock and lead time.
Inventory management has become highly developed to meet the rising
challenges in most corporate entities and this is in response to the fact that
inventory is an asset of distinct feature.

BIBLIOGRAPHY
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What is an Inventory Management Process? A Comprehensive

Guide@ www.chanelsight.com

Case Study: Inventory Management Practices at Walmart@

www.mbaknol.com

Amazon’s inventory management systems@ www.slideshare.net

A case study report on Inventory Management at Amazon.com

@www.scribd.com

A guide on Amazon inventory management for your export

business@ www.sell.amazon.in

Inventory Management- A case study@ www.academia.edu.in