After an order is placed, the store expects a lead-time of about 1 week. Orders are usually placed on Mondays and arrive in the early afternoon on Sunday. The orders come on small trucks and a manager will use the forklift to remove the pallets and place them in the warehouse. Once the truck is unloaded and the paperwork is signed, the manager will move the pallets to open locations on the rack shelving; there are no assigned areas for specific inventory. As a general rule, liquor and wine is placed closer to the entrance to the warehouse and beer is stored near the freezer.
The size of each delivery varies based on the previous week's demand, however individual quantities for specific products remains constant. This means a number of different products will be ordered but the amount of each product remains constant. A typical delivery will consist of 2-3 pallets containing roughly 30 cases of liquor each.
The size of each delivery varies based on the previous week's demand, however individual quantities for specific products remains constant. This means a number of different products will be ordered but the amount of each product remains constant. A typical delivery will consist of 2-3 pallets containing roughly 30 cases of liquor each.
Critical Operation - The Reorder Process
Currently, The Scarlet Knight uses a "P" system to reorder all of its products. Every Monday, John (one of the two managers) takes a look at the inventory system to see if there are any low inventory warnings. The store does not use a proper ABC system, however certain products are regarded as "top sellers" and therefore an order will not be placed unless one of these "top sellers" triggers a low inventory warning.
If one of the "top sellers" does trigger this warning, an order is compiled for the items listed. As there is no concrete method for keeping track of open warehouse space, John then walks to the warehouse in order to search for open space. If he finds there is room for more than just the "top sellers" he then compiles an order list for additional liquor that may not be a priority. The orders are placed and after a lead time of 1 week, the order is delivered to the store.
This system does have a number of flaws. First, there is a huge inconvenience placed on John, the manager, as he has to manually check for warehouse space and manually compile reorder lists on a weekly basis. Next, if the previous week's demand was low, an order is not placed. This creates inventory issues for the following week because if demand rises, the store may run out of "top sellers". Finally, because the quantity for reorder remains constant, the store often runs into stockouts on its "top sellers" when demand rises above its average level.
This system does have a number of flaws. First, there is a huge inconvenience placed on John, the manager, as he has to manually check for warehouse space and manually compile reorder lists on a weekly basis. Next, if the previous week's demand was low, an order is not placed. This creates inventory issues for the following week because if demand rises, the store may run out of "top sellers". Finally, because the quantity for reorder remains constant, the store often runs into stockouts on its "top sellers" when demand rises above its average level.
Tools & Equipment
The forklift is by far the liquor store's most prominent
piece of machinery. It was introduced to their operations about four years ago
after a suggestion from their distributors. By using the forklift, the store
saves up to 30% on larger deliveries because the system cuts the workload of
their deliverymen to near zero and allows for quicker delivery times. The
forklift also allows for much easier storage in the warehouse. Pallets can
simply be dropped into place instead of unloading hand-trucks manually and
sorting cases on the shelves. Higher shelf spaces can also be used now without
a ladder, saving a great deal of time. The store only has one forklift causing
breakdowns and maintenance to result in a halt of inventory flow.
Before the forklift, hand-trucks were the primary equipment
used to move inventory. They are still used heavily, but only to move inventory
from the warehouse to the floor and to assist customers with large orders.
Warehouse Space
The liquor store does not employ any sophisticated systems or methodology to their inventory management. They make due with the way things have always been done and adapt as needed, but no one has ever suggested a reformation of the way things are done. We believe after analyzing their processes, a number of recommendations can be made to get the store headed on a more automated and cost-saving approach to inventory management.
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