Presented by:

DARSHANA DEVI

MOHAMMADSALEEM MALIK

ABDULLAH

SAHIL GOEL.

A CASE BASED PRESENTATION ON INVENTORY MANAGEMENT (L L BEANS)

Inventory management involves in creating a purchasing plan that will ensure that items are available when they are needed and keeping track of existing inventory and its use. There are two inventory management strategies available in the operations contrast and they are.JIT method and materials requirement planning.

Inventory management

To carry out the effective operation in a industry the concept of inventory management is a most required term.

The overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the items it will sell as well as the overseeing and controlling of quantities of finished products for sale.

Relation between inventory management and operation management

if the inventory manager fails to estimate the raw material for the production the operation department of a industry will fail to produce the goods in terms of supply meeting demand.

So forecasting the inventory is most important thing in industry.

Continued…

A business inventory is one of its major assets and represents an investment that is tied up until the item is sold or used in the production of an item that is sold.

It also costs money to store, track and insure inventory.

Inventories that are mismanaged will create significant financial problems for a business.

And also every department of a industry is related in assessing the inventory and production department is more relied on the inventory management after financial department.

How it happens in a industry?

In 1912 Leon wood bean invented the Maine hunting shoe (a combination of lightweight leather uppers and rubber bottoms).

He obtained a list of non-resident Maine hunting license holders, prepared a descriptive mail-order circular, set up shop in his brothers basement in Freeport, Maine, and started a nationwide mail-order business.

About the company

when L.L. Bean died in 1967, at the age of 94, sales had reached $4.75 million, his company employed 200 people, and an annual catalogue was distributed to a mailing list of 600,000 people.

L.L.’s Golden rule had been “sell good merchandise at a reasonable profit, treat your customers like human beings , and they will always come back for more.”

Continued….

When Leon Gorman L.L.’s grandson, succeeded him as a president in 1967, he sought to expand and modernize the business without deviating from his grandfather’s rule.

By 1991 L.L. Bean, Inc was a major cataloguer manufacturer, and retailer in the outdoor sporting specialty field.

Catalogue sales in 1990 were $ 528 million , with an additional $71 million in sales from the company’s 50,000 square-foot retail store in Freeport.

Continued…

Twenty-two different catalogues (often referred to as “books” by company employees)- 114 million pieces in all –were mailed that year. There were six million active customers.

The mail-order business had been giving way to telephone orders after the company installed nationwide “800” service in 1986. By 1991, 80% of all orders came in by telephone.

Continued….

L.L. Bean had not expanded its retail operations beyond the one store in Freeport, Leon Gorman contrasted the direct-marketing (catalogue) and retail businesses.

“The two approaches require very different kinds of management. Mail-order marketers are very analytic, quantitatively oriented. Retailers have to be creative, promotional, pizzazz, merchandised-oriented.

It’s tough to assemble one management team that can handle both functions.

Raise of the company and its growth of operations.

CompetitorsMajor competitors include:Land’s EndEddie BauerCabela’sBass Pro Shop and many other.

Primary Target Customers include:Avid(Marked by keen interest and enthusiasm)Outdoorsmen/Outdoorswomen.Typically between the ages of 35 and 54.No plans to target the younger “urban” segment

Product lineMerchandise Groups:Men’s accessoriesWomen’s accessoriesMen’s ApparelWomen’s Apparel(shirts/t-shirts

/pants/skirts ,jackets/sweaters)Men’s FootwearWomen’s Footwear

Problems of Inventory Management

Overlap in circulation: The best customers received almost all the catalogues.

Replenishments of same catalogues. The completed fall 1991 catalogues were in the hands of customers around August 1.As the catalogues generated demand ,Inventory managers decided an additional commitments to vendors , sculled replenishments ,handled backorders, etc. this catalogue remained active through jan,1992;

Inventory left over that time might be liquated ,marked down and sold through special promotions

Item ForecastingEach catalogue has a gestation period of

about nine months , and its creation involved merchandising , design, product and inventory specialists.

Product managers developed preliminary item forecasts by book in the Dec,1990 to Mar ,1991 time frame. Layout and pagination of the books began in Jan ,1991.initial commitments to vendors were made in Jan and Feb.

Cont… In subsequent months, item forecasts were

repeatedly revised and finally “frozen” by May 1.By early July a black-and-white version of the layout was available internally. At this point , the product managers handed off their product line to the inventory managers

Production commitmentProduction lead time for most domestic

orders was 8 to 12 weeks. In case of observing early season demand, a

second order can b placed in sufficient time to meet late season demand

One shot commitment

Solutions Various solutions to reduce the losses

occurred due to planning inventory Analyze each step of inventory chain (raw goods , goods in progress , finished

goods) based on past turnover and sales pattern.

Conduct regular inventory revise to help you asses trends and manage the risks of holding too little or too much stock

Cont…Always check goods against delivery receipt

when they come in.Checklists on inventory receivedSecure expensive and potentially hazardous

products. If necessary, identify expensive inventory that is portable.

Recent Techniques of inventory ManagementAverage inventoryABC Analysis Just in timePerpetual inventory systemEconomic Order Quantity(EOQ)

THANK YOU