Research On’A’ Company’s Commodity Classification Method And Ordering Strategy

With the rapid development of retail, companies are increasingly concerned about the inventory control. How to utilize the scientific inventory control methods and appropriate ordering strategies to reduce capital tie up, improve inventory turnover rate, reduce inventory costs and increase economic efficiency of enterprises have become a problem faced by all the companies.A is a national chain of IT products retail business. With the popularity of electronic products, the amount of A’s business is also growing. However, with the surge in the volume of business and market competition intensifies, A’s inventory management showing more and more inadequate, and therefore, how to improve inventory management levels became the major concern of A.Firstly, an in-depth research of A was conducted for a comprehensive understanding of the A’s management overview. Then compared A with the leader in the same industry in the business scale, operational efficiency and profitability to identify the existing main problems of A and analyze the reasons for its formation.Secondly,30 kinds of goods sold by A were selected to have a category classification. The indices of classification include price, the average monthly sales volume, gross margin, inventory turnover days, product number (SKU number) as well as the average monthly stock SKU number. The 30 kinds of goods were classified by cluster analysis and were divided into four categories: general commodities, structured products, targeted goods and profitable commodities.Again, ordering policies were improved for each type of goods according to their different characteristics.Finally, examples were used to have a comparative analysis of the costs or benefits between the improved order policy and the original order policy to verify that the improved ordering policy can really bring costs decline or higher revenue.