Challenges Of Obtaining Accurate Inventory Forecasting In Retail Distribution Channels Essay.

Distribution channel management is increasingly experiencing challenges due to changes in both domestic and global markets. Choose any one (1) challenge listed below. Briefly discuss the operational impact of the challenge and how it may be eased or resolved.

• The challenge of obtaining accurate inventory forecasting of retail distribution channels.
• The challenge of managing the operational costs of retail distribution channels.
• The challenge of different levels of competence in logistics of retail distribution channels within a single supply chain.

The Challenge of obtaining accurate inventory forecasting of retail distribution channels

Keeping the accurate information is very vital for the development of retail distribution channels. However, this has become obvious seeing a number of retail distribution channels are struggling to grow since much of their time is spent in handling the stock (Ruankaew and Williams, 2013). Another challenge faced by these channels is the problem of informing their clients on the state of deliveries. Hence, the need to have a well-managed inventory to avoid such errors. This piece will be highlighting some of the challenges linked to obtaining accurate inventory forecasting the retail distribution channels. Then the impact of accurate inventory on the accessibility of goods and services in Australia, and lastly it will offer a recommendation.

The inventory forecasting plays a crucial role in the retailer channel distribution since it overwhelms the prediction of the sales' demand and the patterns for the different products. This will make sure that the optimum levels are maintained with no high cost incurred due to inaccurate inventory (Ruankaew and Williams, 2013).

A number of the inventory planners at the moment can prove that forecasting the distribution channels is very difficult compared to predicting the past events. The plan for the demand is one of the operational activities of historical analysis of the transactions and sales data to establish a reliable forecast that will enable the replenishment of inventory and make orders. Sufficient demand planning must be a very stable system and should act as a guide for the inventory planners. The proper preparation of the inventory facilitates the accuracy in forecasting and meeting the actual demands of the customers hence enabling profitability in distribution channels (Faber, de Koster and Smidts, 2013).

Lack of obtaining the accurate inventory has mostly been facilitated by the wholesalers, the distributors, manufacturers and the retailers. The managers in these areas have the repetitive orders for the similar products hence the uncertainties in replenishing the inventory (Accorsi, Manzini and Maranesi, 2014). This is a big challenge especially when the manufacturers want to establish the plan demand planning strategy. The goal of every business organization is to reduce the levels of inventory while being in a capability of filling the orders as the desired order filling rate. This will always enable such businesses to keep a reliable prediction of the consumers' satisfaction level.

One of the fundamental factors in retail distribution channels is the movement of retailers with the inventory of their commodities to meet the potential demand in the market. The essential response in the demand doubts within the retail distribution channel is facilitated by appropriate system s of information. Proper information within the distribution channels contributes significantly to the accuracy of the inventory (Askin, Baffo and Xia, 2014). This aspect, therefore, helps in aligning the inventory holding thus allowing the retailers to respond to the customer's demands quickly and forecasting. One of the factors that have caused a significant challenge in obtaining accurate inventory is the imperfect demand information. Inappropriate demand data will produce the negative results within the misalignment of the inventory.  Hence resulting in the possibility of many manufacturers to opt to sell their products to the retailers at a wholesale price but with an agreement of taking back the unsold products (Karasek, 2013).

How this challenge will affect the accessibility of goods/services in Australia

The management systems regarding the inventory have been put in place to control the accessibility, determining the prices and scheduling of the products and services. The accessibility of the products, is one of the ways in which accurate inventory attempts in establishing the satisfaction of the customers. The knowledge on the effects associated with challenge of obtaining accurate inventory helps the retail distribution channels to understand the link that exist between good inventory management processes and customer’s satisfaction. The technique of the accuracy of the inventory has acquired substantial attention in some business organization in Australia. Inventories are regarded as an essential asset and very critical for the success of businesses. According to (Zasada, 2011) the fate of the retail distribution channel depends on the capability of managing the inventory. This section will focus on the effects associated with the challenges of obtaining accurate inventory in accessing goods and services in Australia (Töllner, Blut and Holzmüller, 2011).

The first impact linked to the challenge of obtaining accurate inventory is the time spent in accessing the services and goods. The failure to get precise inventory has led to an increasing of time needed in managing the inventory processes. Therefore, many retailers in Australia spent more time in researching discrepancies, providing the concerns and correcting the system's data. Thus, leading to a delay in delivering the services to their consumers.

The second effect is the cost. In case the inventory is not accurate, this will negatively impact the financial performance of any business organization regarding the products and the services sold. In Australia, the inaccuracy of the inventory has dramatically increased the cost of shipping, expediting, labor and the cost of goods and services production. This has made accessing of products and services very hard by the consumers living in Australia (Hakim, Karia and Bujang, 2016).

The other effect associated with the challenge of obtaining accurate inventory in Australia is the risk. The influence the inventory accuracy has on the accessibility of goods and services is excel excellent. Therefore, the business organizations and companies need to determine how to minimize the risks associated with the inaccuracies of inventory. For instance, if the physical inventory counts are not accurate, it will be the noticeable effect the decision made in organizations because of lacking reliable information. Failure to obtain precise inventory will increase the risk of terminating the orders or rescheduling the line of production hence impacting directly the services offered to consumers (Lam and Bae, 2014).

Recommendations

The study has also shown that the principal methods used in managing the accuracy of the inventory cannot be able to track the dynamic nature of the distribution market. This can negatively impact the retail distribution channels within Australia since it can trigger premature ordering which can result to excess inventory (Xiao, Zhang and Kaku, 2011).

The information in making the right decision becomes reliable when the retailers learn to reduce the discrepancies associated with the entries in the inventory.  These errors are raising the cost hence increasing the cost of production. Therefore, this piece is recommending the following to all the retail distribution channels managers in Australia and another part of the world.

1. The first recommendation is for retail distribution channels to embark on training. Educating all the individuals linked to inventory processes should be established and where applicable certification for the jobs should be incorporated. Clarification regarding the inventory management should be utilized to eliminate the erroneous variances within the inventory.
2. Appropriate procedures should be developed to enable the documentation of the inventory from the beginning to the end to make sure there are accurate records for the inventory. That means to receive the right inventory report; the recording process should start with the first individual to receive the product. The guidelines, checklist and all procedures should be clearly outlined in steps. The other recommendation linked to the method is setting up a consistency guideline for calculating the products like used containers and other products with the specific unit of measure.

Thirdly, accountability is the next aspect to ensure the inventory remains accurate. This can be achieved by designating individuals who will be responsible for accounting the accuracy of inventory for the products that require physical counting. Also, the leadership in the distribution channel should follow up and sort out any issue linked to record keeping immediately (Nyemba and Mbohwa, 2017).

4. On the subject of scheduling, the cycle count is needed to be carried out on the regular, and this should be done when the production or the distribution process has been stopped to get the exact number of the inventory. This should be improved in the line of efficiency to allow the consistency of the distribution cutoff.
5. Lastly, the retail distribution channel can adopt the modern technology systems. This overwhelms the use of EPR (Enterprise resource planning) systems. Where possible all the products should be marked using barcode and identified with the inventory part numbers. Also, the retail distribution channels can use the RFID (Radio-frequency identification) technology. The technology can be applied within a discrete goods production with the aim of monitoring the processes of producing goods at the exact time to improve the quality and the efficiency. The cost of controlling products using the RFID technology can be compared with the charge of monitoring the same with no technology. According to research conducted recently, the organization that is using the technology can save about 20-30% overall cost in the production of goods and services (Zhu, Mukhopadhyay and Kurata, 2012).

References

Accorsi, R., Manzini, R. and Maranesi, F. (2014) ‘A decision-support system for the design and management of warehousing systems’, Computers in Industry.

doi: 10.1016/j.compind.2013.08.007.

Askin, R. G., Baffo, I. and Xia, M. (2014) ‘Multi-commodity warehouse location and distribution planning with inventory consideration’, International Journal of Production Research. doi: 10.1080/00207543.2013.787171.

Faber, N., de Koster, M. B. M. and Smidts, A. (2013) ‘Organizing warehouse management’, International Journal of Operations and Production Management. doi: 10.1108/IJOPM-12-2011-0471.

Hakim, T. A., Karia, A. A. and Bujang, I. (2016) ‘Does goods and services tax stimulate economic growth? International evidence’, Journal of Business and Retail Management Research.

Karasek, J. (2013) ‘An Overview of Warehouse Optimization’, International Journal of Advances in Telecommunications, Electrotechnics, Signals and Systems. doi: 10.11601/ijates.v2i3.61.

Lam, E. T. C. and Bae, J. (2014) ‘Confirmatory factor analysis of the Purchaser Style Inventory for Sport Products (PSISP)’, Sport Management Review. doi: 10.1016/j.smr.2013.08.003.

Nyemba, W. R. and Mbohwa, C. (2017) ‘Design of a 10-digit Inventory Codification System for a Tube and Pipe Manufacturing Company in Zimbabwe’, Procedia Manufacturing. doi: 10.1016/j.promfg.2017.02.064.

Ruankaew, T. and Williams, P. (2013) ‘The Impact of Inventory Inaccuracy in the Food Manufacturing Industry: A Case Study.’, Business Management Dynamics, 2(10), pp. 28–34.

Töllner, A., Blut, M. and Holzmüller, H. H. (2011) ‘Customer solutions in the capital goods industry: Examining the impact of the buying center’, Industrial Marketing Management. doi: 10.1016/j.indmarman.2011.06.001.

Xiao, Y. Y., Zhang, R. Q. and Kaku, I. (2011) ‘A new approach of inventory classification based on loss profit’, Expert Systems with Applications. doi: 10.1016/j.eswa.2011.01.127.

Zasada, I. (2011) ‘Multifunctional peri-urban agriculture-A review of societal demands and the provision of goods and services by farming’, Land Use Policy. doi: 10.1016/j.landusepol.2011.01.008.

Zhu, X., Mukhopadhyay, S. K. and Kurata, H. (2012) ‘A review of RFID technology and its managerial applications in different industries’, Journal of Engineering and Technology Management - JET-M. doi: 10.1016/j.jengtecman.2011.09