Case Study : ' Too Many Emergency Shipments '

However, forecast errors will also lead to unhappy customers, lost sales, and excessive inventory. To minimize errors, retailers should find the right demand forecast. Retailers do not want to have a lot of inventory sitting in the back room and too little inventory that will cause out of stock. Holding huge inventory will cause a retailer to have more expenses and decrease their profit if item is not sold especially if the product is innovative type like electronics. The challenge is to balance the inventory with demand. Communication and contribution from people in functional area is also important to create better information and improve overall accuracy. At this time, customer satisfaction will start to decrease. For example, MPRNews says one of Target loyal customer, Ann Hendricks, she is disappointed with target store in St.Paul. “Too many times, she says that store is out of the milk, coffee, bread, pasta and other staples she wants. At Target, sometimes the whole section of cheeses is blank. There's nothing in there” (Moylan). A loyal customer like Ann Hendricks goes to the Lunds & Byerlys store in downtown St. Paul to buy her grocery

If the operation have not reordered all the goods they need, this can lead to irritated customers and lower revenue for the operation.

The retailers had to estimate their customers’ demands well in advance of the selling season and place bulk orders for each season’s inventory. This involved high risk for the retailers as over-estimation would lead to unsold stock; whereas under-estimation led to stock outs and loss of potential sales.

The process is riddled with wait time and defects – two of the “Seven Deadly Sins.” Many of the orders languish in certain parts of the company and are filled out erroneously within a non-digitized system.

High risk of huge inventory returns from the distributors if they are not able to sell in reasonable timeframe. This will increase huge sales return in B&L books in the following year.

ii. The store managers would also constantly call to check on the delivery status of merchandise, as a result of which the staff had to follow up the orders with suppliers and transportation service providers.

The customers, wholesalers and retailers may order in large quantities with the expectation that they will receive a greater allocation of products that are in short supply. The impact on the supply chain is significant as the forecasted demand is greatly, and unrealistically, increased with these inflated orders. Eventually orders disappear and cancellations pour in, making it impossible for the manufacturer to determine the real demand for its products

Office Depot uses multiple inventory strategies to order products. 90% to 95% of goods are ordered through automatic replenishment, manual replenishment, pull replenishment, and global sourcing are also used depending on channel, volume, velocity and cost. (Office Depot, 2015). The accuracy of the inventory from both a DC and store perspective is critical to the organizations success. Heizer and Render (2014) state that record accuracy is a prerequisite to inventory management, production scheduling, and sales. Accuracy is maintained by either periodic or perpetual systems (p.479). In Office Depot, the stores are required to cycle-count technology items such as laptops, desktops computers, and tablets five days a week. Discrepancies are entered in the system and bounced off the local DC’s on-hand inventory discrepancies. Office Depot is a “blind receive” organization meaning the stores receive pallets of products and simply unwrap and put them away. The only way a store knows if a product is missing is through the cycle-count program. This system was put into place to speed up the receiving process and eliminate unnecessary steps once the product was received at the store level. Office Depot conducts a full physical inventory once a year through a third party and trues up the inventory shrink at this time.

We became aware of this problem when we saw a decrease in the sales orders and smaller quantities on the orders that were replenished. After brainstorming, considering the facts and generating ideas, we narrowed down our suggestions to two possible solutions (Adair, 2013). We feel either would be simple to

Because the product was leaving the warehouse and getting to stores quicker, I was able to reduce the storage space which was an initial problem so the increase of costs because of it decreased. The stores showed a moderate increase in profit.

When offers of reduced pricing are accepted for equipment, meeting delivery expectations becomes an important part of enhancing the customer experience to maintain satisfied loyal customers. An inventory specialist in the current distribution center would be given the additional task of segregating and maintaining inventory levels to meet the needs of the customer loyalty department.

Produce more products so there is less restocking issues but not more than the market calls for (supply and demand),

Lower quality of good: as the store is trying to concentrate on the middle income group the type of products used is not of the most superior quality and most of neither the times nor this may dissatisfying certain customer

SF does not want the product overproduced, provide timely reporting of product sales in order to avoid this problem. For this reason, the company's inventory becomes a serious problem.

The confusion with numbers in case of big orders that how many units picked and how many left for same product.