FootLocker Inventory System

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Foot Locker

Inventory Management

MGMT 5003

November 13, 2019

AADILKHAN PATHAN

4303318

TABLE OF CONTENT

INTRODUCTION

INVENTORY CONTROL SYSTEM

INVENTORY MANAGEMENT SYSTEM

PURCHASING

SHIPPING

RECEIVING

TRACKING

WAREHOUSING AND STORAGE

TURNOVER

REORDERING

COMPARISSION WITH COMPETITORS

ADVANTAGE AND DISADVANTAGE OF FOOTLOCKERS CANADIAN INVENTORY SYSTEM

INTRODUCTION

Foot Locker, Inc. is the major global retailer of shoes and apparel inspired athletically. It was founded by F.W. Woolworth and Santiago Lopez in 1988. Foot lockers headquarter is situated in New York City, USA. Foot locker has 3175 retail stores around the world in 27 countries.

It is present in North America, Asia, Europe, Australia, and New Zealand through different channels like retail stores, online and apps. It operates under the brand names Foot locker, Lady Foot Locker, Kids Foot Locker, Runners Point, Champs Sports, Eastbay, Footaction, and Sidestep. Foot Lockers purpose is to inspire and empower youth culture. Their mission is to fuel a shared passion for self-expression. Their vision is to create unrivalled experience for consumers. Their position is to be at the heart of sports and sneaker communities.

CITATION Foo18 l 1033 (FootLocker,INc., 2018)INVENTORY CONTROL SYSTEM

Footlockers uses the perpetual inventory system which helps them keep track on their real time inventory. Major benefit of using this system is that every time goods are sold or goes out of the business its stocks are updated. This system also helps in maintaining stocks and helps from not getting stockouts. Data received from this system helps in understanding customer preferences and buying pattern. This system is most useful for the stores with multiple location such as footlockers as it allows the centralized inventory management for multiple store.

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This also eliminate the physical labor of counting inventory. CITATION Foo181 l 1033 (FoorLocker INc., 2018)INVENTORY MANAGEMENT SYSTEM

Under perpetual inventory control system, footlockers use the Retail inventory management system to estimate the value of the stores merchandise. Retail Inventory method uses cost to retail ratio/ percentage to measure the cost of goods that builds up the retail price of goods. This method provides footlockers with ending balance of inventory for each product and for each store. Footlockers use this method to determine the cost of retail stores based on last-in-first-out for domestic inventories and first-in-first-out for international inventory. Accompanying this method, they use bar code method to scan item. Footlocker is using new point-of-sales software currently, but they have allocated significant value of capital to implement Radio Frequency Identification (RFID) technology to upgrade their digital platform. This will help them to have better access at inventory management. CITATION Foo18 l 1033 (FootLocker,INc., 2018)INVENTORY MANAGEMENT CITATION Foo182 l 1033 (FootLocker Annual Report, 2018)PURCHASING

Footlocker specialize in athletic branded merchandise purchase and sales. Athletic brands such as Nike, Jordan, Sneaker, Adidas, Puma, Levi’s, Timberland, Lacoste, Kappa, Champion, FILA, etc are found at footlocker’s retail outlet or online website. Footlocker purchases 90% of their inventory from top 5 suppliers out of which for year 2018 66% of merchandise was purchased from Nike. Footlockers supplier provide them with high profile and high demand merchandise based on their internal criteria. As the products are purchased from different countries, exchange rate has an impact on purchasing price of merchandise.

SHIPPING

Shipping can be explained in two parts first Footlockers purchases and second is footlockers sales. Footlockers major operations are done in USA, but they are also present in Canada, U.K., Australia, New Zealand and Europe. Footlocker have 3 distribution centers in USA that ship merchandise around USA and Canada. One distribution center in Germany that ships product around Europe and U.K. one in Australia that ships around Australia and New Zealand. This are the major centers from here merchandise are shipped to smaller stock locators, for instance footlocker’s stock locator for Canada is in Milton. From where products are shipped to stores. Apart from that when an online sales order is made on footlockers site that is shipped directly from distribution center to customer.

RECEIVING

All purchased merchandise is shipped from the original manufacturer to the distribution centers where they are received and are inspected, bar code tagged, and update the data of inventory further they are distributed to stock locators from where they are received by retail store / outlets and consignment is physically checked and then updated to data of product account.

TRACKING

When a sales order is made the goods are shipped by third party logistics provider, which is UPS for footlocker. Goods are tagged with tracking number so whenever customer or business wishes to track the order, they can tract it online with the tracking number on the merchandise.

WAREHOUSING AND STORAGE

Footlocker have 5 major warehouses 3 in USA 1 in Germany and 1 in Netherlands. These warehouses distribute goods to USA, Canada, Europe, Australia and New Zealand. Footlockers has a pallet system for storing and warehousing the products. Their major work is picking with help of bar code and stockman, labeling and packing at warehouse. They provide with correct items being labeled for delivery which is delivered by third party logistics company. Footlockers warehouse management is like Sobeys and Hudson Bay’s warehouses. It operates by workers self-picking orders and storing using pallets. Such warehouses are divided in different areas, such as order picking pallet, order packing and labeling on conveyer belt which takes it to area that stores packed goods ready to deliver. All the warehouses are automated with minimum physical work. The major work they do is to make sure that packed products are going to right delivery area.

TURNOVER

Footlocker’s revenue has been increasing in past few years. Footlockers net income for year 2018 is $547 million. Its inventory turnover ration is 3 times a year. Total sales for year 2018 was $7.94 Billion which is 3.3% increase from year 2017’s sales. Footlockers major sales is done online.

REORDERING

Footlockers controls it inventory by reordering the most trending high profile and high profit and high demand merchandise in advance of 4 months of dispatching them to stores.

COMPARISION WITH COMPETITORS

Major competitors of footlocker are Zappos, Road Runners Sports, Finish Line, Dicks, Adidas, Nike, Puma, Toms, Dunham’s Sports.

Comparisons below specify ranking of different qualities of above companies.

CEO & Chairman Richard A. Johnson has 84% CEO Approval rating, ranking 2nd among all others CEO’s.

Footlockers has $8 billion revenue, also ranking second after Dick’s.

Footlocker again is on second position in maintaining gender equality at work place.

Footlocker ranks at top in maintaining diversity at work place.

Footlocker have highest operating stores which is 3.3k. CITATION Owl l 1033 (Owler, n.d.)ADVANTAGES AND DISADVANTAGES OF FOOTLOCKER’S CANADIAN INVENTORY SYSTEM

In my opinion footlocker should have its distribution center in Canada, that will broaden the online sales market in Canada. They are testing the radio frequency identifier inventory system to maintain their inventory which is a great success.

Inventory management is a tool to save money. There are different ways of doing inventory management. We should take care that first-in-first-out method of inventory is practiced. As footlocker is a fashion company, fast changing trends is one of the most impacting characteristics. That said they should order merchandise keeping in mind about change in fashion market, demand of product, and profitability of product. To maintain that they should consider of minimizing dead stock at all means. Warehousing is a variable cost and impact the storage cost, transportation cost and many other costs, so it should be designed in a way that it helps in reducing all the variable cost. By improving inventory management cash flow also improves. We should set the par levels of every product for maximum and minimum inventory level so that we are saved from dead stock and low inventory. Contingency plans should be made so that in times of distress we are equipped with solution as precautionary measures.

REFERENCES

BIBLIOGRAPHY FoorLocker INc. (2018). Retrieved from

FootLocker Annual Report. (2018). Retrieved from

FootLocker,INc. (2018). Retrieved from

Owler. (n.d.). Retrieved from