Inventory Management by Zappos



Inventory Management by Zappos

Introduction

Operations Management is one of the three functions leading any organization and is fully connected to the other functions of business. All organizations market, finance and produce, which is key for the area of operations / production management in an organization. That is why we study how people organize for production and the way that goods and services are generated. It is the science and arts of making it sure that goods and services are created and delivered successfully to customers. Application of the principles of operations management implies a firm comprehension of people, process and technology and how they are incorporated within business system for creating value. One of the organizations that have the best inventory management is Zappos.com. Zappos is a Las Vegas based online retailer that has been cited in Fortune's list of the best companies to work for and Fast Company's list of the world's most innovative companies. Zappos has created an organizational (warehouse facilities & team) and technology (inventory management) system that can attain their goals of service, while still managing costs. The iterations carried out by them have demonstrated deep systems savvy stimulated by their emphasis on deliverance of a Wow! experience to their customers, in addition to great shoes and other products. (TerriGriffith, 2010)

Discussion

Company Background

During the Internet boom, Zappos was founded in 1999, to sell shoes online. The founding premise of company was to supply its customers the ultimate in selection -all styles, brands, colors and sizes. All aspects of its business were organized by Zappos to offer the best possible service. These services include culture, recruiting, call center, website, supply chain and inventory. From customers to corporate partners and to employees, Zappos wanted to "wow" every stakeholder of the company- everyone who interacted with the company. There was a rapid growth of Zappos, and was profitable with about $650 million net sales (after returns) by 2008. A number of issues were faced by the company as it looked forward. While just about 3 percent of the U.S. market for shoes had been penetrated by Zappos, it had extended its product lines to items like video games and camping gear. (Marks et. al., 2009)

Free shipping is offered by the company to its customer, which mostly arrives the next day. Zappos work closely with UPS for making overnight deliveries and thus increasing efficiency.

Evolution of the Operational Model of Zappos

One of the earliest operational modes of Zappos was the drop-ship model. In this model, on Zappo website, orders were placed and then they were forwarded to vendor and then filed by the vendor. However, the main issue with drop- ship model was that only 95% of information on website was accurate; moreover, Zappos did not know the time of shipment of order and about discontented customers until it was too late.

Brought inventory in-house

Zappos began to stock inventory in November 2000 and bought 30,000 sq foot store in Willows, CA that was 100 miles north of ...