Best Buy Inventory

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their business and cause higher costs and lost revenues.

Finally, Best Buy engages key third-party business partners to manage various functions of their business. These include information technology, human resource operations, customer loyalty programs, promotional financing and customer loyalty credit cards, and customer warranty and insurance programs. Anydisruption in these relationships with key third-party business partners or any disruption in the services or systems provided or managed by third parties could impact Best Buy’s revenues and cost structure and hinder their ability to continue operations, particularly if a disruption occurs during peak revenue periods.

Supply chain management

Supply chain management (SCM) is one of the most critical activities in the value chain of an organization. Generally, the value chain of an organization includes activities shown in Exhibit 1. SCM plays a critical role in the first three stages by linking them to the strategy of the organization. SCM not only helps in the planning and control of materials but also helps in improving relationships with suppliers and establish a link between skills and resources found within and outside of an organization. The goal is to develop relationships and ensure smooth flow of products, services and information.

Successful supply chain management encompasses elements of both logistic supply chain management and strategic supply chain management. Exhibit 2 reflects the model of traditional logistics supply chain management (LSCM). It ensures the smooth flow of material from supplier to manufacturer or from manufacturer to customer but ignores the flow of material within an organization. On the other hand traditional supply chain management simply involves obtaining and moving goods and services. It is considered a cost centre rather than a revenue centre.

Levels of supply chain management

Strategic planning

Effective supply chain strategy begins with solid long-term decision-making. The strategy level lays the groundwork for the entire supply chain process, from beginning to end, and is an essential part. Strategy level supply chain decisions are usually the first step of developing a good process and issues addressed at this level are:

• Choosing the site and purpose of business facilities

• Creating a network of reliable suppliers, transporters, and logistics handlers

• Long-term improvements and innovations to meet client demands

• Inventory and product management throughout its life cycle

• IT programs and systems to make the process more effective

Tactical management

Businesses make short-term decisions involving the supply chain at the tactical level. At the strategy level, general planning begins, but processes are actually defined at the tactical level. Tactical decisions play a big role in controlling costs and minimizing risks. At this level, the focus is on customer demands and achieving the best end value and issues addressed are:

• Procurement contracts for necessary materials and services

• Production schedules and guidelines to meet quality, safety, and quantity standards

• Transportation and warehousing solutions, including outsourcing and third-party options

• Inventory logistics, including storage and end-product distribution

• Adopting best practices in comparison to competitors

Operational management

The operational level of supply chain management is the day-to-day processes, decision-making, and planning that takes place to keep the supply chain active. The mistake that many companies make is to jump straight into operational management without focusing on the strategy and tactical levels. Effective operational level processes are the result of strong strategic and tactical planning. Some aspects of operational level management are:

• Daily and weekly forecasting to figure out and satisfy demand

• Production operations, including scheduling and detailed management of goods-in-process

• Monitoring logistics activity for contract and order fulfillment

• Settling damages or losses with suppliers, vendors, and clients

• Managing incoming and outgoing materials and products, as well as on-hand inventories

Best Buy’s Competitive Strategy

Best Buy use “Show rooming” behavior to attract customers. Customers can see and try products before they buy. It also offers the largest selection of electronics at best prices. In order to differentiate its services from the competitors Best Buy is using Geek Squad Expertise and knowledge. Geek Squad is a team of technicians who assist customers in installation of electronic products and also provide them support to resolve technical issues. These Technicians provide timely and effective services and guarantee complete satisfaction- fast and free. They are available by phone, online on site and at the stores. “The purchase orders are processed online and in stores” advised Janine. Each item/pallet is scanned twice once at supplier and again at the warehouse or store to ensure accuracy. The Processing system is linked to head office and information gets updated everywhere as soon as the product gets scanned. In other words Best Buy uses Real time processing to disseminate the information between stores, warehouses and head office.

Supply chain management at Best Buy

Janine Ball, the General Manager at 2220 Cambie St, Vancouver location described Best Buy’s supply chain as efficient, informative and evolving. Organizations can follow one of the three value streams listed below in order to succeed in today’s competitive market:

• Operational Excellence (OE)

• Customer Intimacy (CI)

• Product Leadership (PL)

Companies that choose to focus on operational excellence must concentrate on competitive pricing, lead-time optimization, product-quality and on-time delivery. Customer intimacy can be achieved through exceptional

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