Strategic Partnering: Types of SP: - Quick Response
Strategic Partnering: Types of SP: - Quick Response
Strategic Partnering: Types of SP: - Quick Response
Types of SP
• Quick Response:
– Vendors receive POS data from retailers, and use
this information to synchronize production and
inventory activities at the supplier.
– The retailer still prepares individual orders, but the
POS data is used by the supplier to improve
forecasting and scheduling.
– Example: Milliken and Company: The lead time
from order receipt at Milliken’s textile plants to
final clothing receipt at several of the department
stores involved was reduced from eighteen weeks
down to three weeks.
Strategic Partnering:
Types of SP
• Continuous Replenishment: Vendors receive
POS data and use it to prepare shipments at
previously agreed upon intervals to maintain
agreed to levels of inventory.
– Wal-Mart, Kmart
• Advanced Continuous Replenishment:
Suppliers may gradually decrease inventory
levels at the retailer’s store or distribution
center as long as service levels are met.
Inventory levels are thus continuously
improved in a structured way.
– Kmart
Strategic Partnering:
Types of SP
• Vendor Managed Inventory
(VMI):JITD
– VMI Projects at Dillard Department
Stores, J.C. Penney, and Wal-Mart have
shown sales increases of 20 to 25
percent, and 30 percent inventory
turnover improvements.
Advantages of SP
• Decrease required inventory
levels
• Improve service levels
• Decrease work duplication
• Improve forecasts
Advantages of SP
• Fully utilize system knowledge
– Consider the partnership between White-
Hall Robbins (W-R), who makes over-
the-counter drugs such as Advil, and
Kmart. W-R initially disagreed with Kmart
about forecasts, and in this case, it
turned out that W-R forecasts were more
accurate because they have a much
more extensive knowledge of their
products than Kmart does.
Disadvantages of SP
• Expensive advanced technology is
required.
• Supplier/retailer trust must be
developed.
• Supplier responsibility increases.
• Expenses at the supplier often
increase.
–Why? How can this be addressed?
Conceptual Evolution of
Inventory Management