Although Alliance Supermarkets utilizes a point-of-sale system to track its inventory levels and keep constant records for each location’s on-hand quantities, the firm still experiences several problems with regards to effective and efficient inventory management. As stated in the case study, “sudden changes in demand for a particular item can catch the company by surprise as it bases inventory replenishment on historical demand patterns.
Further, demand patterns and preferences may vary from one store to another depending on the customers served y each, but the inventory system groups all demand information together and treats each store equally. Finally, the manufacturers that make the products stocked by Alliance Supermarkets are always pressuring Alliance to help them target appropriate customers for special promotions and sales. A positive element of the firm’s procedural design is that Alliance utilizes a periodic inventory system, as opposed to perpetual inventory systems, which allows for inventory levels to be updated following the completion of each transaction, resulting in a more accurate inventory measurement on a daily basis. For this kind of business, continuous monitoring can be quite advantageous when multiple area locations are in operation, as it allowed for “item locator” services and inter-store transfers to be possible.
Additionally, Alliance Supermarkets’ Chief Information Officer, Merchandisers, and Purchasing Managers can analyze the inventory levels for specific products between locations, along with variances in purchasing trends between the locations. With such information, the firm can implement inter-store transfers to properly distribute researched to the locations high rapid sales performance for a given product.
For example, suppose Store A is shown to have had rapid sales for a particular Snapped beverage, and is now completely sold out of the product. Miles away, Store B has sold very few units of the same product. The firm’s current inventory system groups all demand information together and treats each store equally, so at the beginning of each restocking cycle, both stores will receive the same inventory levels, leaving Store again undercooked, and Store B now overstocked because of slow product sales from he previous cycle.
By properly utilizing the full features of the perpetual inventory system, Alliance could better identify what it is that its customers want and need, designing a campaign that creates and spreads word of the product’s availability, and ensures customer loyalty and confidence in the company by maintaining adequate inventory levels of in-demand products by location. In following with the previous example, analysis of Store A & Bi’s sales and inventory levels could prompt an inter- store of the Snapped product, whereby replenishing inventory levels of Store A and reneging up shelving space for other merchandise at Store B.
This adjustment would not only reduce the costs associated with marketing and stocking a slow-moving product at Store B, but increase sales a Store A, which benefits both Alliance and the products’ manufacturers. If the retailer were able to obtain purchasing information for individual costumers, several new approaches could be utilized to increase the effectiveness of its marketing and strategic plans. Finch (2012) explains that market segmentation is the important process “of dividing the total market into distinct
Alliance Supermarkets By aviators characteristics” (P. 1-1). In creating segment profiles based on consumers’ demographics, behavioral characteristics, purchasing power, and way of living, marketing teams are able to structure their marketing campaign to best suit the lifestyle and needs of the potential buyers. Identifying the various forces that make up and influence the external environment would enable the organization to develop a “strategic plan that is more responsive to that environment and likely to be implemented successfully’ (Moslem, 2009, p. ). Calculators and demographic forces are crucial factors to be examined as they affect the way customers and potential customers spend their money and determine which products or services to purchase. For example, if information regarding an individual’s particular purchasing habits could be acquired, the firm could issue customized coupons or weekly mailers targeted at the particular market segment they fit into.
Collection of this kind of data would also enable Alliance to better examine purchasing trends by anemographic, by location, so as to structure their marketing and inventory strategies to appeal to the most active market segments, as well as identify underrepresented and under-marketed-to segments that present significant areas of opportunity.