Coping with inventory management challenges in the retail fashion industry : a case study

Abstract

The trade in goods is as old as civilisation itself and involves virtually every being on the planet, in one form or another. The retail industry is very important world wide since it contributes greatly to the economy of every country. In Malta, the Wholesale and Retail trade contributed to 12.1% of the Gross Domestic Product in 2004. The only industries which surpass this amount are the manufacturing industry and the public administration industry. The fashion industry covers a multitude of areas but refers essentially to the retail of clothes and accessories such as shoes and bags, items which are all found at the outlets of the company on which this study was performed. This industry is one of the most complex in existence and one of the greatest challenges faced by the people working in this industry is that of stock management. This dissertation sets to analyse and evaluate how a Maltese retail fashion firm copes with the challenges faced by this industry giving special attention to inventory management and other aspects related to the latter. It analyses and evaluates the practices adopted by the firm to ascertain their efficiency and effectiveness. Several topics related to this industry and to inventory management with respect to the firm in question were tackled. Such areas include the purchasing process, inventory costs and pricing, sales, the IT system related to inventory, management reports amongst others. For all companies in this industry the balancing act of keeping inventory at the necessary level to satisfy demand, while ensuring that they are not left with obsolete inventory, is a major issue. In order to meet their challenges Maltese fashion retailers need to improve the way they operate. Thus new business practices are attracting the attention of the entire industry.