In the class of logistics we learned reorder point and periodic review method to control inventory. As the giant companies like Amazon and Walmart are taking market share from retailers, so it is really important for retailer to make strategy to reduce inventory in warehouse. Moreover, last class was about making complete warehouse, we decided to get all the order from suppliers in one time and we will store it and use it whenever requires, so that we do not have to rely on suppliers every now and then.
But, retailers do not want to store products and they do not consider it as beneficial. Target Corporation is the second largest discount store retailer in the United States behind Walmart. This company is testing a new distribution strategy to speed up its restocking and cut down its replenishment cycle from days to hours which will help them to reduce inventory in store and can make room for online fulfillment. The Company hopes to send shipments to stores in small quantity as per demand and not in bulk. As Target used 70% of its online volume was handled by stores during the 2017 holiday season. Moreover, they have started implementing this system at the New Jersey “flow center”.
Chief Operating Officer John Mulligan said in a conference call with investors in March on Target’s quarterly earnings. “Shipping more orders from our stores reduces our costs, while allowing us to move faster,” he said.
- Company can take corrective action if the first order was defective.
- Changes can be applied according to customer feedback
- Less holding cost