Recommendations

Throughout our analysis of Rite Aid's processes we recognized several areas that could use improvement.  The first suggestion would be formal inventory management training for all store level management.  The majority of the management team have been promoted through the ranks of the company, starting as cashiers or lower level shift managers.  While the extensive company experience is invaluable as a store manager, the lack of formal education or training leaves an opportunity for company growth. 
 
Rite Aid Store Manager Job Qualifications

There is a training program for managers that have not been with the company for a certain pre-set amount of time, but this training does not include the inventory management strategies used by the company.  A greater understanding by the store level managers of the decisions and processes made by the corporate team would benefit the company.

Since the inventory system being used now is the Optional Replenishment System, there are min/max levels set for each item in each store.  These amounts are determined by the size of the store as well as general sales volume but the store itself is not stocked for it's unique needs.  The Whiting store has an extremely high senior citizen population which creates needs for specific items that most stores do not have, such as denture cream and adult incontinence products.  In most stores the min/max levels for these items would never exceed two per SKU, but the increased demand for these items unique to this store leave these min/max levels completely inadequate.  At this point the only way to ensure minimal stock out situations for these items is to monitor the inventory levels and manually order them on a weekly basis.  This is extremely labor intensive and could be better handled by allowing the store managers to adjust the individual min/max levels for high demand items in their store.  As of now these changes need to be made by submitting a request via email to a district manager who then has to submit that request to the regional vice president and then on to a category manager in a corporate office who has no idea what the needs for this individual store are.  Improving the training for the store managers, as mentioned above, would give them the skills to better manage their own inventories without having to go through this many people to approve such a change.  Perhaps a control should be set in place where changes exceeding a 10% increase in stock on items valued over $10.00 should require a district manager approval, but basic changes to min/max levels should be allowed by qualified management.

The last recommendation would be a system to allow stores within geographical proximity to each other to be able to draw on overstocked items instead of being supplied from the distribution center.  When an item is ready to be reordered, the inventory system should first be able to scan other stores nearby to determine if there is an excess of that item in another store and generate a transfer order to be picked up by the truck delivering their next warehouse order.  This would reduce waste and stagnant inventory by moving it to locations where it would best be utilized, reducing inventory storage costs and creating a more efficient inventory turnover.  In the Whiting store, there is approximately $1000 of baby diapers being stored in the stockroom that will most likely never be sold from that locations since there is no demand for it there.  No more than 10 miles away there is another Rite Aid store that sells a high volume of baby diapers and has consistent orders for them being delivered from the Distribution Center while a full stock is available for transfer down the road.  Connecting the inventory needs for these stores would improve the process flow and support a lean inventory system that is responsive to customer demands for each individual location.