- When should a company handle its logistics needs in-house, and when should external sources be used?
The adoption of supplier managed inventory program depends on the specific conditions of the company and how much control over the distribution channel the company has. For example, on a domestic supply chain, there is only very limited uncertainty, supplier only need to focus on the POS data and local traffic situation to plan their replenishment but for companies that operates on an multinational environment with multiple origins and diverse concentration of suppliers, the coordination work usually takes more than simply handle the logistical work in-house. The ultimate goal of supplier managed inventory program still lies on the efficiency issue. The cost to integrate the information flow between the supplier and retailer should be measured against the potential benefit in order to make the wise decision.
- What other types of business partnerships can be used to improve supply chain performance?
Collaborative forecasting is also a good way to increase the supply chain efficiency. In the traditional approach, retailers collect and analyze POS data to prepare their sales plan while in collaborative forecasting, data are not only collected in the retailer’s POS, consumers and suppliers also play important roles in sharing their own opinion. The collaborative forecasting is usually more accurate because the forecast is integrated with the suppliers’ feasibility, the retailer’s sales plan and the customers’ preference.
Collaborative CRM is another example of business partnerships. By sharing the customer complaint information among various company departments like marketing, sales, purchase and the vendor, the company can improve the product quality or features more efficiently. The suppliers can get to know the deficiencies of their products while the companies can cooperate with the suppliers to design the products to better fit their customer’s demand.
- Can pressures such as the ones described in this case be used to a company's advantage?
In the case, the retailer is under the pressure of keeping diapers in stock and making it as cheap as possible in order to trigger sales. However, we can view it differently. For example, the customers are generally very price driven for diapers, which means as long as the company keeps good track on their supply chain management of these products, the company can save tons of money in marketing these products and can also leverage the products’ ability to attract customers to the store to trigger other sales. As in this case, Costco leveraged Kimberly-Clark for the diaper inventory management, Costco then in turn can turn to focus on marketing other products such as baby lotion or baby food to stimulate its revenue.