Does Amazon Have A Superior Advantage With Inventory Intelligence Supply Chain Data?

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Does Amazon Have A Superior Advantage With Inventory Intelligence Supply Chain Data?



The concept of Enterprise Software to monitor the supply chain is nothing new. Bill Gates wrote about it in his book, calling it the Digital Nervous System of a company, while Larry Ellison (aka God) went out and nearly perfected the model. Today, the supply chain is connected to all business units, and outlets, even to the cash registers at those outlets. Now then, as great as that can be, there are always errors in a system which is human-driven, bad data in, bad data out. Retailers have to deal with employee pilferage, perishables, theft, and complicated problems like bad barcode scan reads, poorly executed returns, etc. - actually the list of challenges is quite long.

Now then, I would submit to you that a company that sells online, like Amazon, has a huge advantage of getting accurate inventory information in real time over any brick and mortar retailer. This slight advantage is a major plus when you are in the competitive marketplace where everything has to be accurate; Six Sigma Style.

In Science Daily News there was an article; "New model could solve inventory problem for retailers," posted on February 1, 2016, which stated; Inventory management has been the focus of three researchers for more than 10 years, Their latest study developed a new mathematical model to apply to inventory problems. This article went on to cite an interesting an interesting research paper in POMS - Production and Operation Management titled; "Managing Inventory with Cash Register Information: Sales Recorded but Not Demands," by Alain Bensoussan, Metin Cakanyildirim, Leng Li and Suresh P. Sethi published on November 17, 2015 (DOI: 10.1111/poms.12511). The abstract states:

"Inventory inaccuracy is common in many businesses. While retailers employ cash registers to enter incoming orders and outgoing sales, inaccuracy arises because they do not record invisible demand such as spoilage, damage, pilferage, or returns. This setting results in incomplete inventory and demand information,"... " We develop an analytical upper bound on the optimal profit as well as an iterative algorithm for an approximate solution of the problem. We compare profits of the iterative solution and the myopic solution, and then to the upper bound. We see that the iterative solution performs better than the myopic solution, and significantly so in many cases. Furthermore, it gives a profit not far from the upper bound, and is therefore close to optimal. Using our results, we also discuss meeting inventory service levels."

As retailers work to deliver ever smaller slivers of profit on increased volumes to remain efficient, the advantage goes to the company with the best data, and can analyze it to the furthest decimal point. When it comes to inventory controls, Amazon would have the advantage and employing such a new algorithm would go a long way to keeping them on top of the retailing podium. Please consider all this and think on it.

Lance Winslow has launched a new provocative series of eBooks on Corporate Business Topics. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net.

Article Source: http://EzineArticles.com/expert/Lance_Winslow/5306


Article Source: http://EzineArticles.com/9308592



_(By Lance Winslow).

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