DL - Technology & Cost in Channel Management [LESSON]

Technology & Cost in Channel Management

Technology is used to keep track of inventory. Inventory management is maintaining inventory levels that are neither too small nor too large. Tracking inventory is keeping tabs on how much inventory you have. This is the first step in controlling inventory levels. Below are three different ways to track inventory:

  • Physical Inventory Systems : Looks at how much inventory is on hand and compares it to what is wanted on hand.
  • Perpetual Inventory Systems : As inventory is sold, it is subtracted from the inventory list.   As new inventory arrives, it is added.
  • Just-in-time (JIT) Inventory Systems : The responsibility of inventory is shifted to the vendor and is delivered just before it is used.

As mentioned before, warehouse management systems often utilize Auto ID Data Capture (AIDC) technology, such as barcode scanners, mobile computers, wireless LANs and potentially radio-frequency identification (RFID) to efficiently monitor the flow of products.

Inventory Cost

  • Financing Costs : The interest you pay to borrow money to purchase inventory.
  • Opportunity Cost : Loss of the use of money tied up in inventory.
  • Storage Costs : The amount of money spent on renting or buying the space needed to store the inventory.
  • Insurance Costs : The amount spent to insure the inventory on hand against loss.
  • Shrinkage Costs : Money lost when inventory items are broken, damaged, spoiled, or stolen.
  • Obsolescence Costs : Money lost when products or materials become obsolete while in inventory.

Distribution Cost

Many factors go into determining the distribution costs of a product:

  • Channel or channels used
  • Transportation method used
  • Intensity of distribution
  • Inventory costs
  • Who does the selling
  • Buying and shipping
  • Economic issues

If distribution and inventory cost can be minimized the savings can be passed along to the customer or can be used by the business.

Career Highlight

Program of Study Retail Management

A retail management program of study will prepare you to work in retail. For instance, at Best Buy, the GAP or PetSmart.

Your course work will cover topics like:

  • Managing customer service
  • Accounting
  • Retail promotion
  • Retail merchandising
  • Retail management

And other business courses like, business writing economics and selling.

Students can get an associate's degree (2 year degree from a technical school) or a bachelor's degree (4 year degree) for a retail management major. You can also work your way up to a management level position in a retail company.

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