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Love | Is Wal-Mart a low-inventory or high-inventory retailer? |
I just read an article which described Wal-Mart as a "low-inventory" retailer but I think the author meant to say "high-inventory." After all, Wal-Mart is able to offer "low prices every day" because they buy in bulk and store their inventory in large warehouses, right?
Maybe somebody with an MBA could clarify this for me. |
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William C
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Extremely low inventory. This is how it works. You buy a box of soap. The cash register reorders that box of soap from the manufacturer until enough soap has been ordered to make a truck load. Then their computer sends the order to the manu. and they either ship the truck or Walmart schedules a truck to go by the manu. and pick up the load. The pick up is called "Back Haul", and W/M is paid to haul the load vs running an empty truck back to their warehouse. W/M then has 20 days to pay for the shipment and they receive a 2% cash discount for the prompt payment, other wise they pay the full cost without a discount. W/M prefers to sell/turn the shipment within one day so they have no investment for 20 days. I won't try and explain the economies of turnover. Product they turn on a daily basis are sold at or about the same price they paid for the product. Otherwise, the only profit they make is the 2% cash discount. Products are sold at the very lowest price by the manu. when only one SKU or item is shipped in the truck. If more that one SKU is in a truck, the price is higher. W/M is capable of buying full truck, one SKU, more than any other retailer in the world thus paying less for the product. Low inventory is your answer because of the primary economic and profit driver, TURNOVER.
As a side note, the cash register reordering system, is called "continuous replenishment or computerized replenishment, or automatic replenishment. They were an inovator of this program which now is used by most mass merchandisers. |
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metroidfan220
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I think they mean that Wal-Mart uses a low inventory management (i.e. at the end of a financial year, there is very little kept in stock), hence why you see 90% off Valentines stuff on February 15th. High inventory management simply keeps until an item is sold. |
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Sludge Factoryâ„¢
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I love your avatar.
Alice In Chains are my second favourite band.
And I think they're low inventory..it'd make sense, to me anyway. |
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Bruce T
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Wal-Mart is a low-inventory retailer. Wal-Mart's distribution centers are supplied inventory "as needed" by all suppliers of product. Most inventory is scheduled in "time frames", i.e., weekly, monthly, etc., for the suppliers to automatically make delivery of product(s). As the stores need product only necessary supplies (product) are delivered at that time.
Wal-Mart signs with its suppliers what is called "Quantity Purchase Agreements" or QPA. This is a guarantee by Wal-Mart to purchase a determined quantity from suppliers and price breaks are given in accordance with same. |
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Dylan
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no, yes, maybe so, why the hell should i tell you? |
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