Inventory Management Systems{14}

When running a business, proper inventory management is essential to ensuring financial success. Inventory management may be defined as the overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the items it will sell as well as the overseeing and controlling of quantities of finished products for sale. Smart planning and controlling of inventories in order to meet the competitive priorities of the organization falls in line with inventory management because a business’s inventory is one of it’s major assets. Until items are sold, sitting inventory equates to an investment that has not returned a profit yet; additionally, it may be incurring costs for storage, tracking, and security. Mismanaging inventory includes both shortages and surpluses; both are important challenges to tackle. How does a company properly manage inventory to make the most out of sales? Is it possible to extract other vital information through inventory management? Some companies today excel at performing both of those tasks.

A successful management system ensures that stock is available when required (for example, the proper amount of stock is on the floor when a customer is looking for it) and keeping track of other inventory that may be stored in a warehouse. The just-in-time method is a common strategy that allows companies to receive stock as required so that high levels of inventory are not being stored. Additionally, materials requirement planning schedules deliveries of materials based on forecasts of sales. When it comes to large companies, one or multiple databases must be used to tie all of the components together.

To illustrate, Walmart is well known for successfully managing their vast amount of inventory; stores are able to increase sales through the collection of data while also improving efficiency. Self-developed, Walmart has a system called Retail Link that enables users to keep track of sales, identify trends, manage inventory, and communicate with inventory suppliers. Their system follows a standard set of inventory management guidelines: Monitoring, Tracking, Automation, Optimization, Radio Frequency Identification, Reporting, and Prediction.
Monitoring generally keeps track of inventory levels at all the different locations it may be stored; on the sales floor, the warehouse, etc. Because Walmart primarily focuses on selling already completed products, rather than manufacturing, they do not have to worry about managing different components for various products to be manufactured. Tracking manages the movement of the inventory from one place to another; it is always critical to know where assets are.

Automating certain tasks, such as fulfilling online orders, increases the workflow efficiency. Optimization is completed through utilizing data; for example, identifying what inventory is moving quickly, slowly, or not at all. Radio Frequency Identification (RFID) includes different types of sensors and barcodes that are essential to managing stock levels. This technology is commonly found on nearly every product and is scanned at checkout; the scan references information to the system about the product. Statistics regarding inventory movement can then be generated by a reporting feature in the management system. Using these reports, future sales trends may be predicted, and physical item management may be improved. Furthermore, infrastructure such as a linked computer network with intranet connection to each store and corporate offices, powerful servers capable of processing large amounts of data, bar codes, and scanners, support the management system.

The product database plays a significant role in their management software. The system is notified each time a product is purchased so that the stock levels may be adequately managed and turned over quickly. Aside from the product identifier, key fields such as total inventory, allocated inventory, available inventory, and inventory due from supplier may be included information. All of this data, which is stored in the central database, culminates to sales improvements. Additionally, consumer shopping habits (purchase quantity per basket, number of baskets, and purchase frequency) may be reported. In the case of Walmart, Retail Link serves as the main database hub holding all of this information.

It is clear that inventory management plays a vital role in a successful large-scale business, and in the case of Walmart, their system would not be possible without information systems. The linked systems between stores helps maintain standards for business and sales; in fact, their entire organization relies on a well-managed, streamlined system. Reduced overstock, costs, and resources, and a centralized hub of sales information are other key factors in their system. Upper-management and key decision makers are able to look at sales information to make decisions, while lower-level employees are able to focus on their respective tasks. A strong IT department is needed to uphold the system and perform updates.

Competitors such as Target, Kmart, Costco, and Best Buy may use similar management systems, however, Walmart seemingly has the best handle on inventory management when related to sales and revenue. Ultimately, Walmart’s system relates to our class through it’s Retail Link inventory management system which relies heavily on the use of databases. Product and sales data are stored and converted into useful information to create an efficient work environment. Personally, I find it fascinating how a company can create and successfully implement a system that increases productivity; a system so powerful that other business adopt the system, or a similar one. Without the system, Walmart would surely lose sales and efficiency, probably translating into higher costs for the customer.

The following are some examples of the types of information available via the Retail Link system:

Retail Link Sample Reports (Source:

Business Information at a glance

Overall business report

Purchase Frequency

Purchase Quantity

Performance by Brand

Sample Brand Report


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