Introduction
Having quality and quantities of stock at any one time is a competitive advantage mechanism in retail businesses. However, determination of adequate and appropriate inventory is problematic. There are constant changes in supplies and logistics; coupled by an ever changing consumer need, it makes the business world a constant change field. Responding to the changes require a quick response to customer changes, which can only be attained if a business has an effective rapid response and good relations with its suppliers (Kirstenewatson, 2007). This paper discusses the advantages that a grocer would have by maintaining limited stock in his business.
It saves on Cost
Retailers/grocers retain some stocks in warehouse to cater for an increasing demand (Fernie, and Leigh 2009,P4). However, these warehouses are expensive in terms of management and rent. On the other hand, the stock kept in these warehouses has value and a continued warehousing may lead to loss of value. This is an extra cost to a grocery operator. Other than costs on the warehouses, many are the times that transport is required to transport inventory from the warehouses to the shop. This is an extra cost in terms of buying the vehicles to ferry good and their running expenses. When limited inventory is maintained, then these costs would not be incurred.
Maintaining a just in time supply management system will be of greats cost effective to a grocer. It will ensure that supplies are available when they are needed at minimal warehouses costs. If an effective supply chain management is operated in an organization, then stocks will be available at an appropriate cost, in the right quality and quantity (Fernie, and Leigh 2009,P39).
It results to a competitive advantage
The needs of customers are constantly changing, they are also unpredictable. To maintain loyalty in customers, a business should ensure that it stocks what the customers are willing and are able to buy at one particular time. When there is constant supply of adequate inventory, without holding any in warehouses, a business will be able to respond to the changes in the market and customers expectations. This will build confidence to the customer and result to customer loyalty. Grocery, is a business that requires fresh supplies at any one time, people are more willing to buy fresh produce. When an effective supply chain management is adopted, then a business will be able to provide its customers with fresh produce instead of keeping them in warehouses (Fernie & Leigh 2009,P 5-8)
Having limited stock reduces chances of overstocking
Making the decision to know the amount of stock to keep in a warehouse is a challenging task if a grocer maintains stocks in the warehouse. What is enough for a certain period of time is hard to determine. If a business is having real time stock management, predicting the amount to order at a certain time is easy. For example during valentine a grocer expects a high demand in Rose flowers, the amount of flowers to stock should be determined based on real time trends in the market. If such a case is determined through a speculation with stocks in the warehouse, the business is not likely to suffer from overstock.
There are times that the price of stocks in the market deteriorates; if a business had held stocks in its warehouses, it is going to suffer from such a price reduction (Fernie, and Leigh 2009,P7).
Conclusion
It is advantageous for a grocer to keep adequate limited inventory in its stores. This benefits a business by reducing chances of overstocking, saves costs associated with warehousing and leads to a more satisfied customer. However to operate under limited inventory, a grocer requires to adopt an effective and efficient supply chain management with quick response mechanisms.
References
Fernie, J. and Leigh S. (2009). Logistics & Retail Management: Emerging Issues and New Challenges in the Retail Supply Chain. Kogan Page.
Kirsten watson. (2007). Supply Chain Response Management. Web.