Problem 2:

High Inventory Cost

In recent years, Shopko is facing higher-than-average inventory costs due to gross

mismanagement, which was why they are having trouble and cannot provide the product at an
everyday low price compared to other competitors Walmart. There are numerous ways to
properly manage the inventory with a lean production system[ CITATION Tom19 \l 1033 ].
Inventory management is a crucial part of reducing the production cost as well as contributing
to its success. We need to introduce some critical technology to optimize inventory
management performance properly. As there is much competition in the market, their success
is highly dependent on the high inventory management efficiencies and proper approach
towards product development. Just-in-Time Cross-Docking is one such method where effective
inventory management is possible, increasing Shopko's efficiency and reducing wastage. This
process involves measuring the activities to minimize storage and relevant costs. [CITATION
ROB19 \l 1033 ]

Solution:

Just-in-Time (Inventory Management)

Japanese manufacturers were faced many challenges like lack of money, lack of space in the
warehouses, and lack of resources. These factors were limiting the Japanese manufacturer's
potential for industrial success and were necessary to remove their efficient performance.
Then, Toyota, one of the largest automobile manufacturers at that time, introduced the lean
production technique, Just-in-Time to their manufacturing facilities to make their production
efficiency and reduce related costs and wastage. Their management was built upon just in time
inventory management, which is a very efficient system that minimizes related costs and
supports customer needs. Now most popular industries throughout the world are using the
Just-in-Time inventory management practices like Dell, McDonald's, and Walmart. [ CITATION
Kan18 \l 1033 ]
This lean philosophy helped some organizations properly utilize their resources to achieve
sustainability and manage resources more effectively. In summary, Just-in-time Inventory
Management is not a strict guideline and is more kind of philosophy when it is properly
adopted. It also helps the organization to sustain its competitiveness in the market. Just-in-time
helps companies to:

 Eliminate nonvalue added activities and Reduction of wastage.

 Product quality is improved and its efficiency to produce it.

 Efficiently management of expenses and increased productivity.

Just-in-Time Cross-Docking in Shopko's Inventory Management

Just-in-time inventory is nothing but an application of the just-in-time (JIT) method to inventory
management. This method's operational objective is to minimize the storage area and related
costs to it. It can be in the form of Cross-docking. [ CITATION Kan18 \l 1033 ]
 Image 2.1 - Cross-docking Terminal [ CITATION Pau11 \l 1033 ]

This logistics procedure involves distribution directly to the retail chain from the manufacturing
cost, thereby reducing the handling time and storage time. The cross-docking, which occurs in
the distribution docking terminal, usually has the truck's dock door on two (inbound and
outbound) Sides, as shown in the image. The name itself explains how products are revised at
the inbound dock, and unloading, screening, sorting, and reloading is done and then transfer to
the outbound dock. After that, the truck, when receiving the product, delivers it to the Shopko
stores across the regions.[ CITATION Pau11 \l 1033 ]

One of the reasons the cross-docking has been used here at Shopko is that it minimizes the
inventory size. Fewer goods can now be stored, and the inventory is less costly to maintain.
With cross-docking, Shopko can deliver the products in less time, resulting in reduced handling
cost and storage cost. The most crucial aspect fluctuations in demand and changes in the
market can be addressed rapidly. Thus, if this Just-in-time Inventory Management is applied to
Shopko, it will increase operational efficiency and maintain a competitive advantage over
others.[ CITATION Pau11 \l 1033 ]

Once the implementation of JIT is booming throughout the inventory, the company will have an
enhanced cash flow due to less stock and more cash for the business. Just-in-Time is also
helpful to reduce down the wastage. As the wastage is reduced and the cost of goods declines,
it only benefits the business and its customers. The customer can buy the products at a lower
price, and the company can sell the goods at cheaper rates than other retail stores.
Conclusion:

In this study, the findings and implementation of solutions to Shopko's problems have
theoretical and practical implications. It enables a better perception of the complexity of
customer satisfaction, performance, and types of strategic action firms might undertake to
capitalize on improved operations. While a comprehensive evaluation has been considered,
these are the three solutions we have proposed that guide Shopko towards operational
efficiency and business resilience. Firstly, the Lean production system initiates the appropriate
strategy to deal with a competitive market and benefits cash flow and profitability. Secondly,
with Just-in-time implemented successfully throughout the inventory, the company will have an
enhanced cash flow due to less stock and more cash. Moreover, it reduces wastage, thereby
reducing the cost of goods, it benefits the company and its customers. Lastly, with the proper
evaluation, the customers' needs can be identified, and it can be implemented to attract new
customers and lead the market. All these solutions will help Shopko in a competitive advantage
over other retail businesses and operational efficiency with better business performance and
customer satisfaction.