Inventory management is crucial, as extremes like stockouts and overstocks can adversely affect a company’s performance. Walmart experienced both conditions, with stockouts during the pandemic’s onset and overstocks in 2022 due to shifts in consumer spending towards perishables and travel-related items, influenced by food and fuel inflation and changing post-pandemic buying habits. This situation, also faced by competitors like Target, has forced price reductions on accumulated inventory, resulting in decreased profit margins and a drop in annual earnings.
Supply Chain Course Project
Applying MRP approach for large discount stores
BACKGROUND
This project aims to identify and solve a supply chain issue faced by an established company in the retail sector during a pandemic. The case company I chose was Walmart, and the issue identified was with regard to overstocking and soaring inventories. The approach is to identify an MRP (material requirements planning) algorithm that can replace or work in congruence with the just-in-time and cross-docking strategy used by Walmart. Therefore reducing the chances of overstocking and stockouts.
Challanges faced
Current Stratergy
Cross Docking
- Inbound shipments from vendor are unloaded directly into outbound trailers at distribution centers
Vendor based Inventory management
- Suppliers have access Walmart's inventory data and customer buying trends
Just in time
- Reordering when inventories reach below a certain threshold
Suggested Approach
Categorize demand in two categories:
- Category I - Constant demand throughout the year (less fluctuation in monthly percentage change)
- Category II - Seasonal Demand (significant rise and drop observed during particular seasons)
Apply MRP for Category II goods and use the existing method for Category I
I applied the following three MRP approaches
- Economic Order Quantity
- Part Period Balancing
- Wagner Within Algorithm
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Year
2023
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Client
Raven Studio
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Services
Web Design
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Project
Dynamic
Description
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