We can all recall a time in our life when we walked into a store looking for a product, only to find out that the product is out of stock. Today, the retail market is extremely competitive and thus the slightest advantage can have a meaningful impact. As we discussed inventory management last class, we were presented with our own challenge to see just how difficult it is to manage inventory; however, we did learn that there is an optimal amount of inventory. Optimal is an interesting word, because optimal doesn’t always mean right.

Let us take a moment to examine a few companies where inventory management has taken a sour turn. Research in Motion (RIMM), better known as the makers of BlackBerry products, has had a tremendously difficult time dealing with inventory. As recently as two months ago, RIMM had to devalue its inventory significantly, further hurting their already deteriorating business. The trouble is stemming from fierce competition from rivals such as Apple, and inferior products. The sales of BlackBerry PlayBook have been dismal, forcing RIMM to drop the price 60 percent. This in turn, forced RIMM to cut the value of its inventory, directly impacting their bottom line.

Best Buy has also caught itself in various troubles regarding inventory management, some of which have caused people to be fed up with the retailer. Last year, Best Buy ran out of the popular smartphone Nexus S, but continued to inform their customers that the phone was in stock. Or what about the incident this year, which resulted in many people not receiving their Christmas gifts on time? As we can observe, Best Buy is having a difficult time managing their inventory. From the information I have been able to gather, people are saying that Best Buy’s inventory management system is greatly inferior to other inventory management systems.

One doesn’t have to go further than Amazon to showcase what great inventory management is all about. Amazon shows you how many products are left in stock, and it even goes to inform you when the product will be in stock if it is currently unavailable. When a company is willing to go this far to inform and satisfy their customers, it speaks great volume.

Over supply or insufficient stock are major problems for companies that carry inventory. Take Best Buy’s recent troubles with over supply of HP TouchPads, which forced them to cut the price and take a hit on the value of their inventory. While over supply is certainly a cause for concern, under supply is also a major problem. The recent story about AirBus taking it to Boeing because of the significant delays of the 787 Dreamliner shows how insufficient supply can give your competitors the upper hand. Take a moment and reflect on the times you were shopping for a product and were told it was out of stock. Additionally, can you think of other companies who struggle or thrive when it comes to inventory management?

 

http://www.foxbusiness.com/technology/2011/11/22/rim-trims-300-from-blackberry-playbook-prices/

http://news.consumerreports.org/electronics/2011/08/best-buy-struggling-to-sell-its-inventory-of-hp-touchpads.html

Welcome to the world of BMW! It is undoubtedly one of the most iconic brands in the world, both respected and hated at the same time. During class we briefly touched on the ten strategic operation management decisions companies routinely make. As our discussion carried on, my attention shifted to a show I recently caught on CNBC. BMW: A Driving Obsession is a show that goes behind the doors of one of the most successfully managed brands and companies in the world — BMW. During the remainder of class I attempted to relate BMW to the things we were discussing in class.

What does one think of when someone mentions BMW? Is it the blue and white logo that stands as the symbol of the prestigious, high-performance, luxury cars? Or is it maybe the expression “the ultimate driving machine?” Whatever it happens to be, BMW has done a magnificent job marketing its brand to consumers. However, marketing is only a small part of a company’s success. So what makes a BMW so special one might ask? After watching the documentary on CNBC and having the privilege of visiting BMW’s factory in Munich, its hard not to fall in love with the brand. Take a moment and recall the sounds your car makes, from the seatbelt warning sound to the turn signals clicking. If I told you that BMW employs two full-time acoustic  scientist whose sole jobs are to work on those very sounds you’d say I’m nuts. If that’s not enough to gain your attention, how about the fact that BMW employs numerous doctors who are assigned the task of making the car seats ideal for one’s spine, while also being luxurious and comfortable.

It’s not hard to say that BMW is overdoing it, but isn’t that the reason we love the brand? Car and Driver has ranked BMW 3 Series as 10Best for an unmatched 20 years in a row, a feat no other car has managed! The quality of a BMW goes beyond what the naked eye can see. It is the numerous hours of labor that go into things we often overlook, such as the way the rearview mirror is shaped (I can’t recall anyone turning down a car just because the rearview mirror looked wrong).

This is a brief showcase of BMW, but it allows one to see how a company takes a certain OM decision to the highest standard. Four year no-cost maintenance is just a small part of BMW, as is their outstanding supply chain management. It is often said that their just-in-time inventory system is along the best in the world, and that is un-doubtful because of the amount of capital BMW dumps into their supply chain management.

With that said, can you reflect on other companies that people envy for their operations management?

 

http://viewer.zmags.com/publication/b1edb9bc#/b1edb9bc/2

http://www.cnbc.com/id/43395673