Case Study:
PwC has been approached by a retail company that sells clothes both online and offline. The company is facing issues with inventory management and wants to optimize their inventory levels to avoid stockouts and overstocking. They have provided you with their sales and inventory data for the past two years along with their suppliers' details.
They want you to analyze the data and recommend a plan to improve their inventory management.
Round Interview Question:
Based on the provided data, what steps would you take to optimize the inventory management of this retail company? Also, how would you prioritize the recommendations you make to them?
To optimize the inventory management of the retail company, I would take the following steps:1. Analyze the sales data:
I would use the sales data to determine which products are selling the most and which products are slow-moving. This would help me identify the top-performing products to keep stocked and plan for markdowns or promotions for the slower-moving products. 2. Analyze the inventory data:
I would examine the inventory data to identify patterns of overstocking and understocking. This would help me optimize the inventory levels by avoiding stockouts and decreasing the overstocking of non-performing products.3. Conduct a supplier analysis:
I would review the suppliers' details to identify the lead times of the products and the reliable suppliers. This analysis would help me to predict the inventory levels and avoid the impact of delays in the supply chain. Additionally, finding reliable suppliers would avoid stockouts and reduce the risk of non-performing products.4. Implement an inventory management system:
I would recommend implementing an inventory management system that can track the sales and inventory levels in real-time. This would help the company identify overstock or understock situations and reduce the risk of stockouts.5. Suggest automation:
I would suggest automating the inventory management process to reduce human errors and improve efficiency. The automation process would enable the company to save time and costs on manual inventory management operations.To prioritize these recommendations, I would follow a framework based on effort, impact, and feasibility analysis. I would list each recommendation with a score based on these three criteria, and the highest-scoring recommendation would be the most prioritized.In conclusion, to optimize the inventory management of the retail company, analyzing sales and inventory data, conducting a supplier analysis, implementing an inventory management system, and suggesting automation would be the most effective steps. Prioritizing these recommendations based on effort, impact, and feasibility would ensure a successful implementation of the optimized inventory management solution.References:- 5 Inventory Management Best Practices for Retailers- How to Optimize Your Inventory Management:
6 Steps to Greater Profitability- Why Inventory Management is Important for eCommerce