South-Western - Management  
99 Bottles of Beer: The Beer Store Returns 99% of all Bottles Back Through Its Supply Chain
Topic Managing Service and Manufacturing Operations
Key Words Inventory management, supply chain, recycling
InfoTrac Reference A114284884
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News Story

Through its 437 stores and distribution network to restaurants and entertainment facilities, The Beer Store is responsible for delivering about 91% of all the beer consumed in Ontario. An impressive 99% of all the beer bottles and 83% of the cans are returned to the stores for recycling.

Canada enforces tight controls over the sale of alcohol, governed by the individual provinces. Beer can only be purchased from The Beer Store - wine and other alcohol are sold only in government-run stores.

In a fixed-price environment, customer service and convenience are the differentiating factors. The Beer Store stocks more than 300 brands of beer from more than 70 brewers. To keep product in stock, their supply chain is tightly integrated with the brewers. Brewers either ship directly to the stores, or to a distribution center. Seasonal spikes in demand and a limited shelf life pose significant logistical challenges for The Beer Store. There are also weekly spikes from Thursday to Sunday.

It is difficult to keep the most popular brands ion the shelf during peak selling times. To address this, The Beer Store is implementing a pilot project that automatically alerts the company when a brand or package is out of stock. The goal is better in-stock percentages, improved put-through, and more efficient inventory management. The new system will give them real-time information on sellable vs. nonsellable (expired) product.

Questions
1.

Define inventory. What kind of inventory does The Beer Store manage?

2.

Why is it important to closely manage inventory, and what can happen if you don't?

3.

What type of inventory management system does The Beer Store utilize?

Source "99 Bottles of Beer: The Beer Store Returns 99% of all Bottles Back Through Its Supply Chain," Chain Store Age March 2004.
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