Attaining operational excellence is critical for any business as organizations cannot afford to have quality issues, high-cost operations or even long market cycles (Oracle 3). Notably, one of the core advantages that businesses often attain to achieve is effective inventory management to not only ensure high-quality fresh products but also lower costs. Optimal inventory management is vital for any business organization. The core benefits of having a much leaner inventory include a reduction in operation costs, higher customer satisfaction, and increased sales. Indeed Lee (1) points out that the key differentiator between poor performing and high performing companies is the ability to increase inventory turns.
Inventory management can be a daunting task for a mass retailing business with hundreds of products coming from a wide array of suppliers. Such a challenge can be even greater when the suppliers are located in different echelons of the organization’s distribution network. Usually, most retail chains often use central distribution centers which source products from the suppliers and distribute them to the retail stores. Though this proves effective in most cases, if not well managed and executed, it may result to excess inventory in terms of redundant safety stock, stock-outs, and product allocations that are not optimal (Lee 2). This paper analyses LuLu’s hypermarket’s inventory management to identify a weakness and propose a re-engineered improved operation.
Lulu Group operates some of the biggest and well-performing hypermarkets, Lulu Express and shopping malls in the United Arabs Emirates and in other cities within the Gulf region (Retail Business Review 1). The hypermarkets which are the retailing division of EMKE Group, a multinational company dealing in a wide array of sectors, prides itself in providing high-quality consumer merchandise across the Gulf region through its 103 stores. Like any other mass merchandising store, LuLu hypermarkets offer a wide array of consumer goods and services under one roof (LuLu Hypermarkets 1. Hemalatha and Sivakumar 52).
LuLu hypermarkets deal in a wide array of products ranging from grocery products, apparel products, baby products, cleaning products, beverages, health and beauty aids, electronic products, pet supplies, seasonal merchandise, home furnishings and home decor, kitchen appliances, tools and power equipment, office supplies, outdoor living, gardening products, as well as footwear. All these products are from a wide array of brands, in different sizes and type. Lulu hypermarket deals both in well-known brands such as Weetabix to private label items specifically under Lulu owned brands such as Ikon products (mainly home electronic appliances) and the Lulu branded products (mainly household consumer products such as baby wipes, jam, etc) (Lulu hypermarkets (a) 1).
The company has an average of 480,000 shoppers per day, in its 103 stores located in 21 countries (LuLu Hypermarkets 1). Within the UAE, there are a network 78 Lulu stores with more than 320,000 customers daily.