Inventory Management

          Inventory Management, which is the planning and controlling of inventories in order to meet the competitive priorities of the organization. This is an important concern for managers in all types of businesses. Effective inventory management is essential for realizing the full potential of any supply chain. The challenge is not to trim inventories to the bone to reduce costs or to have plenty around to satisfy all demands, but to have the right amount to achieve the competitive priorities of the business most efficiently. Much of inventory management involves lot sizing, which is the determination of how frequently and in what quantity to order inventory. Lot size is the quantity of an inventory item management either buys from a supplier or manufactures using internal processes (Krajewski). The type of inventory Best Buy has for the I-Phones for accounting purposes is finished goods only (no raw materials or work-in-progress) because they do not make the product, they only sell the product. Efficient supply chains work best in environments where demand is highly predictable. The focus of the supply chain is to keep inventory to a minimum. 
          The system used by Best Buy to control inventory is called RSS (Retek Support System). The system is self sufficient that controls all inventory from becoming too high, or to keep it from dwindling to levels too low. Balancing the various tasks of inventory management means paying attention to all aspects of any inventory from order process to shrink. Most important for this release is understanding how long it takes for a supplier to process an order and execute a delivery. When it comes to the Iphone, Apple controls how much can be released at a time to each company. There are about 30 to 40 orders fulfilled daily from online to in-store when a new release occurs. Inventory management also demands that a solid understanding of how long it will take for those materials to transfer out of the inventory be established.  Best Buy uses the P system to control their inventory. That is a periodic review system, sometimes called a fixed interval reorder system or periodic reorder system, in which an item's inventory position is reviewed periodically rather than continuously. The RSS system takes up to hour accounts of inventory. That is, every time a product is sold the system removes it from inventory and generates an oder at the end of the week for the next shipment. The supply chain is being relied upon to improve the flow of information. Sales associates are able to access detailed information on product updates from the time an item is manufactured to its arrival at the store with the system. This creates a more accurate date to when products will be actually available. Knowing these two important lead times makes it possible to know when to place an order and how many units must be ordered to keep production running smoothly.