Course 3 Case Work - How Kimberly-Clark Keeps Client Costco in Diapers
1.In a vendor managed inventory situation, suppliers must be sure that customer inventory levels of the products they supply never run out. Explain how it is possible for the supplier to meet customer requirements and still reduce the level of inventory that they carry in their warehouse. 2.Thinking of the future, are there any ways for Costco and Kimberly-Clark to improve this situation? Individually? Together? 3.List and briefly discuss the advantages of supply chain management identified within this case. 4.Briefly debate the issue of handling logistics needs in-house versus using external sources. Are there more advantages versus disadvantages for one method over the other as the organization grows larger? 5.What other types of business partnerships can be used to improve supply chain performance?
When we discuss about Vendor Managed Inventory, we will remember in Strategic alliances that we could do instead of to perform all of the key business functions in-house that may not always be effective. Steps must be taken so that the function is performed by the appropriate firm. Strategic alliances typically lead to long-term strategic benefits for both partners. One of the most important types of Strategic Alliance is Retailer-supplier partnership, as follow:
Retailer-supplier partnership (RSP) will lead us to know that suppliers have a greater knowledge of their lead times and production capacities than retailers, and as margins get tighter and customer satisfaction becomes even more important, it makes sense to create cooperative efforts between suppliers and retailers in order to leverage the knowledge of both parties, VMI is one of the best practices in this world, and also in SCOR (P1, P2, P4, S1.1, S2.1, S3.3, ES.7, D1, D1.5, D1.6, D2.5, D2.6, D3.5, D3.6) as the supplier takes responsibility for the operational management of the inventory within a mutually agreed framework of performance targets, which are constantly monitored and updated to create an environment of continuous improvement.
VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.
Most important requirement (especially a RSP towards the VMI end) is advanced information systems, on both the supplier and retailer sides of the Supply Chain.
Data exchange needed to relay POS information to the supplier and delivery information to the retailer.
Bar coding and scanning are essential to maintain data accuracy, and inventory, production control, and planning systems must be on-line, accurate, and integrated to take advantage of the additional information available as an essential to cut down on data transfer time and entry mistakes.
The vendor can further decrease total cost by coordinating production and distribution for several retailers, as long to optimize the entire system by coordinating production and distribution. Now, some VMI are moving to consignment relationships (i.e., supplier owns goods until they are sold), not as ownership of goods transferred to the retailer when goods were received. The benefit of this to retailer—lower inventory costs. (Consignment arrangements are beneficial to the supplier because it allows the supplier to coordinate distribution and production, thus reducing total cost) In addition to the transfer of customer demand information to suppliers, but also the supplier makes ordering decisions, this partnership completely controlling the variability in order quantities, and by this knowledge can reduce overall system costs and...