Inventory Management Nordstroms retailers throughout the country have been ridiculed for its out dated inventory

system. Accenture, an outsourcing management company is collaborating with Nordstrom on one of the companys top strategic initiatives, continuous inventory system. This involves developing tools and processes necessary to provide a continuous inventory at a unit or stock-keeping unit level. The stock position is monitored after each transaction, or continuously. Decisions to reorder stock are based on the total on-hand plus on-order quantity. The total of on-hand and on-order material is called stock position, or available stock. When the stock position drops to a predetermined order point, or reorder point which is referred to as the Q system, a fixed quantity is placed on order by Nordstrom. These tools and processes will provide merchants and stores with information that will allow them to make better decisions about their customers and vendors. Nordstroms customers should benefit from improved "right product, right place, right time" and product locate capabilities.

In the past few years, Nordstrom has updated their system and have made remarkable turnover because of it. The new system, continuous review inventory system, allows merchandisers and management to know where all the goods are at all times. Poorly selling items are now taken off the racks and sold somewhere else rather than moldering in a corner to be sold off in six weeks at a heavy discount Fashion Trends : Nordstrom's stores have been able to attract merchandise from top brand names and designers, which could help maintaing customer traffic into Nordstrom stores. Consistent Growth: Nordstrom has been able to grow net sales, and more importantly same store sales, annually for the last 5 years. The company's consistency can be attributed largely to its loyal customers who enjoy the Nordstrom shopping experience and customer service. Innovative Inventory Management Gives JWN A Competitive Advantage: During the economic downturn, companies had different strategies for keeping customers in their stores. Wal-Mart for example, decreased their prices on some of its already lowest price items. Nordstrom decided to focus on having a better inventory management system and better shopping experience for its customers. Nordstrom's new inventory management system, which has been running for nearly a year now, entails allowing customers to see every item a Nordstrom store and warehouse from the company's website. By linking its inventory to its customers, Nordstrom has simplified and enhanced the shopping experience. Customers can see what is in stock, have items shipped from one store to another, and can even request things be put on hold so they can be tried on in stores. This new inventory management system has allowed Nordstrom to outperform its competitors through the downturn. In the year since the change, Nordstrom's same-store sales have increased by 8%, higher

than the department store average. Additionally, the company's inventory turnover rate is 5.41, an increase from 4.48 in 2005. The new and innovative system puts Nordstrom in a great position moving forward as the economy continues to rebound and as consumers start to spend more money

The case then analyzes how Nordstrom realized that its poor performance was largely due to its not adopting modern inventory management practices. Thereafter, the features and implementation of the new perpetual inventory management system adopted by the company are examined in detail.

The case ends with information on how Nordstrom was reaping the initial fruits of its efforts in late2003. Finally, it provides information on the two general inventory models adopted by firms - the P and Q systems.

Issues: The role of inventory management in the operations management strategic framework for retailing companies in general, and for specialty retailers in particular Various inventory models, their features, applicability and their advantages and disadvantages

Productivity to be increased by Inventory Management Inventory Allocation In-stock Position System Leverage Expenses LeverageTraining on the New Inventory System- Mandatory MONTHLY RECORDS OF Sales and Gross Margins Inventory Quality and Efficiency SCM The new inventory system was showing its results Improved MERCHANDISE tracking Back- to-Track strategies. Benefits of Perpetual management system: More time for Merchandise Buyers to plan. Planning regarding Discounts and Markdown. Reduction in time required to attend the Customers Information about availability of goods.

Effect of Inventory management system: Increase in 2nd Quarter Profit from $36.3 Million in 2002 to $65.9 Million in 2003.Sales per square foot increased from $319 in 2002 to $325 in 2003. Net Income: $242.8 Million in 2003 Revenue: $6.4 Billion Ranked No.1 by Fortune in 2005 in General Merchandise Category.