Case : Audio Duplication Service, Inc.
1. Why are ADS 's customer 's moving toward VMI arrangements ? Record companies are adopting VMI agreements because the national retailers are pressuring them to manage their own supply of cds , tapes and other products . This would be more cost efficient for the retailers and in return the companies will have more access to the monitoring of the point of sales which would also be beneficial to the company .
2. How will this impact ADS 's business ? How can ADS management take advantage of this situation ? With direct shipping to retailer stores, ADS has to come up with a better and more efficient delivery system as well as improve their monitoring and inventory of the products that they deliver for their customers. Obviously, the said changes would mean that ADS will need to change how they provide services to their customers. Instead of just duplicating and delivering it to the retailer, they should integrate logistics in their delivery and charge the customers for the delivery of the goods instead of relying on other delivery systems .
3. How should ADS manage logistics ?
ADS can manage logistics by taking over the list of retail stores and the amount of products to be delivered to the specific retail stores , in this way ADS would be able to provide a more complete service to its customers in keeping with the arrangements of the VMI .
4. Why are the large national retailers moving toward a direct shipment model ? Retailers are moving towards a direct shipment model because it would be more cost effective for them . The retailer actually distributes and sells the products in their own stores with a small margin of profit , and then they have to incur costs for delivery which they have to pass on to their consumers . At the same time , the inventory and monitoring of the sales and the stock of the product are additional work for the retailers .
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