Supply Chain & Logistics
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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?
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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.
In a vendor managed inventory situation the suppliers meet the customer requirements because they have access to the retailers stocks and movements on the shelves, this allows them to adjust their own production so that their own inventory levels fall.
For example , if the vendor knows that the retail stocks will last for another 20 day and the shipping time is three days he may not commence his manufacturing seven days before the stocks are expected to run out at the retailers. This way he can make the goods in two days and ship them in three days. How does it help? This delay in manufacturing helps the vendor reduce his own inventory of finished goods as well as ensure that the retailer does not run out of its products. The vendor may also delay the purchases of raw materials so that inventory of raw materials also does not ...
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