Analysis

Inventory Management

Inventory management is "the process of efficiently overseeing the constant flow of units into and out of an existing inventory." This involves controlling the number of units in order to prevent the inventory from becoming too high, or decreasing to levels that could put the operation of the company into jeopardy. Effective inventory management is all about knowing what is on hand, where it is in use, and how much finished product results.

To prepare for each day, Ms. Espinosa says each day is the same as the last in terms of coming in and setting up the store. All ice cream cabinets must be inspected to ensure they are all at the correct temperature for daily operations. She must turn on all machinery, as well as preparing her work station for cake decorating. Ms. Espinosa usually arrives at the store 30 minutes to an hour before the store opens to guarantee that everything is in place from the night before. To keep up with the inventory, it is ordered and delivered weekly to the store based on a periodic review system, which involves counting and documenting inventory at specified times. There is no computer software systems installed, so everything is done by hand on a sheet of paper. When she notices that certain supplies or ingredients are running low, her job is to write it down and call in the order by the end of the morning. Each item has its own number code, and she needs to ensure that enough supplies are ordered to last the store the entire week (See Appendix A for Flow Chart).

One advantage of Carvel's inventory system is that there is very low spoilage of inventory occurring. The entire inventory that is ordered is used because very little is thrown away, leading to less costs and higher net income. As the owner, Mr. Woodward has no plans to have any software installed to help regulate his weekly inventory. He says he has been accustomed to doing things without it and that it has worked for him thus far.