Discuss the use of Information Technologies/system for efficient and effective management of inventory. Provide a real-world case that used information technologies/systems successful for their inventory management.

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Physical Distribution Management

Assignment Q1: Discuss the use of Information Technologies/system for efficient and effective management of inventory. Provide a real-world case that used information technologies/systems successful for their inventory management.

Introduction

In June 2003, the world’s leading retailer - Wal-Mart first announced its plan to implement RFID technology in its supply chain by January 2005; this caught many of the suppliers unawares. Though the plans envisaged compliance from the top 100 suppliers, around 129 suppliers jumped into the tussle, afraid of being left behind in the race.

RFID technology was invented in 1969 and patented in 1973; after thirty long years Wal-Mart has demanded its implementation. Expectations are high; unfortunately RFID technology is still in its infant stage.

Wal-Mart is banking on this technology to manage inventory more efficiently, reduce numbers of data entry errors, and lower human labour costs in a distribution center.

A New Business Strategy

Wal-Mart has the intention to use the implemented RFID’s data to keep track when stock is running low on shelves or when items have been stolen. The other advantages expected are:

  • The movement of inventory can be tracked.
  • Goods can be received and shipped faster.
  • Ease of predicting product demand.
  • Shoppers can save time.
  • Out of stock situations can be avoided.
  • Shoppers get a better deal as system becomes more efficient.
  • The right products are available at the right stores at the right time.
  • Boost sales.

Information Technologies/System

Information Technology (IT) is any computer-Based tool that people use to work with information and support the information and information-processing needs of an organization. Information technology can be an important enabler of business success and innovation. ((Haag et al, 2008, p. 8).

There are many type of Information Technologies/System in the market or currently in use which Wal-Mart could chose from before deciding on the RFID implementation. By uunderstanding the various Information Technologies/System will help the company to identify a suitable and well fitted system that enable the efficiency of the retailer’s efficient and effective management of inventory system.

a)        Electronic data interchange (EDI)

EDI is the structured transmission of data between organizations by electronics means. The benefits of using this technology in the warehouse help to save cost by reducing the use of paper and paper processing activities. By using electronics means to transfer data and information will result in reducing error from data entry and eliminate repetition. This quick transfer of information and reduce errors allow the management of the inventory to be more efficient and thus result in having a lower cost, higher productivity and reduced order cycle time.

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The disadvantages of using EDI are that there are too many standards and these standards are always changing. To effectively take advantage of this technology, the automation system in the company must be integrated. The system must have the same standard and format to be able to communicate with external parties (Suppliers and Customers). The cost of setting up a fully integrated EDI system may be costly and the limitation on business opportunity may be a setback for the EDI technology.

b)        Bar-code system

A barcode is parallel lines and spacing (widths) which show data of certain products. ...

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