I have a family business in my home country, Colombia, a plastic pipe manufacture plant. The first year we conducted market research and competitor’s analysis. • The competition was composed by 3 multinational companies with 95% of the market and 4 national companies with the remaining 5%. • These companies had solid brands, enough financial resources, experienced personnel, well-structured distribution channels, effective logistic strategies and high market commonality and resource similarity. • The business model was the same for each of these companies: o Sell product to Distributors. • For distributors the investment was low because Manufacturers sell product on 30 day credit. • Distributors sell product to retailers on credit as well. • Retailers sell product on cash. The second year we constructed the facility and bought the machinery and equipment. We spoke with several distributors and they agreed to buy the product once we start operations. The third year we started operations, and distributors didn’t buy a pipe, they said that we were new in the market, and they didn’t know the quality of the product. After 6 months of poor sales, we had to restructure the overall strategy. We invested in trucks to deliver the product directly to retailers, giving an introductory price, slightly lower than the current market price. We knew that the likelihood of response was very high, and it happened. The leaders of the market attacked our product quality, telling distributors and retailers how bad our product quality was. We knew that was going to be the first attack of the competitors, so we started bringing all distributors to our production plant, where we compared, in the quality control laboratory, our product against the leaders of the market product, and the results were exceptional for us. Our quality in average was slightly above all the other brands, and distributors immediately told this to the big players. The next month, the big companies gave more credit days to distributors, from 30 to 60 days. We didn’t have the capital to compete with that, so we continue building our own distribution channels. Distributors got worried about their decreasing volumes on sales and started to buy small quantities of our product, to test our on time delivery and overall customer service. We delivered product on time, always, and if they had any questions our response was immediately. We used the same tactic with retailers; on time delivery was our main goal and retailers benefited from this. Retailer investment on inventory were reduced, their inventory turnover increased as well, and they never had a product claim from final customers.
Per Kalogeropoulos (2016), the company is better able to ensure product availability while managing their costs because of their latest logistics initiative. They have recently created a network of deployment centers that reduces the time between when the product leaves a supplier to when it hits the shelf at the Home Depot store which drives profits higher. Parnell (2014), relays that companies who use low-cost strategy seek distribution channels that minimize cost. Home Depot’s new logistics initiative provides the company with economies of scale and a market advantage because it adds to their low-cost
Inventory would no longer be a good option for them since holding inventory in a rather quick selling environment is deem bad for the company, showing inability to sell based on consumer demand and has to pay inventory cost. They would also need to implement and focus more on consumer demand, increasing the need to hire market researchers and so on to evaluate the right amount of products to supply. Great customer service will be required in order to satisfy large amount of end users rather than just dealing with a few B2B
marketplace no matter what the product is when a company begins sacrificing at the customers expense people take notice quickly. This is when the buyer thinks they would be willing to give a little more in the price to be happy about their purchase. This is when Papa John steps in and reminds us all that they have been number one three years in a row in customer satisfaction. People take notice of the decisions that other people make. If they see an empty Papa Johns box in the trash of their next door neighbor they will take notice.
When analysing the actual distribution model, we find out several faults. Firstly, the inventory management is much decentralized and there are few formal replenishment methods. The regional warehouses managers just define the stock goals and call central warehouse daily with a list of restocking needs. This lack of control can lead to an excess of stock, creating a higher inventory cost, or to a situation of stock out. When the latter happens, regional warehouse manager must order the required product from central warehouse and in order to compensate costumers he offers a discount of 4.000lires per piece.
...ng luxury, not many people want to wait two weeks to receive their product. When an item is ordered, it is needed immediately, and if it is received immediately then it not only improve the relationship to the customer. But it will also add value to the purchase which makes that customer that much more likely to buy the product again in the future, as opposed to your competitors. If you have customers in remote areas you do not have the luxury to send their shipment in a large batch of items, you must pay more to have that item shipped individually, which is costing more money.
Having such a small distribution allow them to have a more control over how the product is sold to the customers.
Caterpillar Inc. - Strengths and Weaknesses Caterpillar Inc., sought to better determine customer demand by leveraging the Internet. Using i2 Demand Chain Management, Caterpillar created an online dealer storefront that is accessible to both dealers and end customers, and the company has expanded its sales coverage, reduced the cost of sale, and increased productivity. Caterpillar’s Building Constructions Product Division needed to predict and rapidly respond to customer demand. The company wanted to empower its dealer network to provide the highest levels of service to the end customer. Company executives knew that the Internet was critical to their strategy. Caterpillar wanted to leverage the Internet to provide more visibility into customer buying habits. In doing so, it could save millions of dollars in inventory by building and configuring those products that customers demand, rather than stocking excess inventory. The company wanted to promote specific product lines and associated work tools using a combination of traditional (dealer) and nontraditional (Internet) channels th...
There was an understanding of what the customers valued – good quality at a good price.
We serve the evolving distribution, logistics, and commerce needs of our customers worldwide, offering excellence and value in all we do.
their dispatch of customer orders are promptly and accurately. We can see this with this case when they timely started the removal of contaminated products ( Tylen...
In today’s highly competitive market there is an overabundance of companies providing consumers comparable products and services. For a company to be competitive and remain solvent within the market business owners and managers must analyze and utilize multiple strategies to maintain and increase their market share. Of the many strategies the two most commonly utilized are the low-cost and best-cost providers. To understand these two commonly utilized strategies one must review the companies that have successfully implemented them.
In the current business environment, Supply Chain Management is experiencing a period of rapid change and influence within organizations. It is no longer simply about reducing costs, but more importantly, it is about enhancing business value and embracing proven disciplines to leverage the supply chain for competitive differentiation, financial return, and demand driven operational and innovation excellence. Sears Holdings Corp.’s supply chain operations always tries to improve to meet the company’s needs in a different location, but also customers in matter of delivering the items in short time. Sears has piloted a few new supply chain models that leverage existing inventory and existing retail distribution centers, meaning a small number of store locations now fulfill online orders, and to help the company manage its distribution network. Which include forty five distribution centers and a hundred market delivery operation sites for cross-docking to ensure its almost two thousand and five hundreds retail locations remain stocked and that online orders are fulfilled. Sears now is able to ship products to about 85% of the country in two days or less. This is accomplished by making the delivery process predictable, focused and tightly controlled while simultaneously applying supply chain best practices through experienced industry professionals.
.... - Authorize individuals in production to release vendor delivery quantities against blanket purchase orders, purchasing agreement, or contract. - Establish inventory policy code for each item based on the method of inventory control and the method of transaction reporting and recording. - Review and establish minimum economical order quantities and safety stocks required by just-in-time production. - Measure inventory performance to determine effectiveness of just-in-time production and inventory management (Naylor). Just-in-time will change our conventional thinking concerning the management of inventories and streamline our methods for inventory control. Proper selection and implementation of these methods will yield substantial benefits by improving customer service, shortening delivery lead times, and significantly reducing inventory investment. It does not, however, eliminate the need for sound inventory planning.
Having an effective logistics, production and shipping strategy can give companies an advantage over their competitors. Producing and getting products to customers can be costly. Having an effective strategy can help reduce costs and increase profits. Colgate works closely with suppliers in order to increase quality, cost effectiveness and innovation. The company only chooses to work with suppliers that share the same values as the Colgate-Palmolive company (Colgate, 2011).
Dell has managed to become remarkably successful in a short span of time by following a direct "business to customer" model. By selling computers directly to customers, they have been able to best understand their needs and provide effective solutions to meet those needs. Dell built PCs to order, so customers received only what they wanted. Dell's just-in-time inventory system allowed them to order only parts that customers demanded, thus keeping the minimal inventories and enjoying the cost-reductions which in turn were passed to customers. Dell's extensive use of e-commerce contributed to further cost minimization, reduced the order and delivery time for customers, and customization. There are three golden rules at Dell: disdain inventory, always listen to the customer, and never sell indirectly.