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- June 20, 2012 -

 
     
 

Supply Chain Graphic of the Week: Changing Patterns of Who Holds the Inventory

 

Retail Inventories Levels have been Flat, While Rising Sharply at Manufacturers and Wholesalers Since 2005

sU
     
 

By SCDigest Editorial Staff

 
 

 

Among the many interesting data points in the Annual State of Logistics report from Rosalyn Wilson and CSCMP is the following, which frankly caught us a bit by surprise.

As shown in the chart below from the report, there has actually been a rather dramatic shift in progress relative to where inventories are being held in the supply chain.

 

As can be seen, since at least 2005, retail inventories have held basically flat, while inventory levels at manufacturers and wholesalers have climbed rather steeply, with the exception of the 2008-09 recession years.

 

Keep in mind the this data is based on absolute dollar levels of inventory, not percentage changes or relative to sales, but we suspect the basic pattern would hold true for those two metrics as well.

 


 

 

Apparently retailers really are ordering lower quatities more frequently. We thought it might be an urban legend.

 

You can find our full review and comment of the 2012 State of Logistics report here: State of the Logistics Union 2012.

 

 

 
 
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Feedback
2008-10-03

Oct. 3, 2008

There are valid reasons for both the DC and DSD distribution models, but neither should determine the store assortment, which depends on the consumer.

The Distribution Center model makes sense when you have many prepackaged products which are continuously replenished and require little in-store servicing. With the facility justified, you can also add seasonal and holiday 'in and out' products which can share the distribution network.

The key is to manage the time supply of inventory in the warehouse and distribute it efficiently.

The Direct Store Delivery model can be implemented purely as a distribution method or also allow the manufacturer to manage some of the in-store merchandizing.

I do not see any advantage of using DSD simply to deliver merchandise. Although it may help the 'mom and pops' that are on the same route as a large retailer, the DSD model must be more expensive. Once the big drops are removed, it will become more costly to reach the independent retailers but the larger retailer must benefit.

If DSD is used to support in-store merchandising, then you have a different story. The manufacturer's representative can give their products the individual attention that increases their sales. The bad thing is that they can also load up the store with inventory if no one is watching.

Bill Bittner
President
BWH Consulting



 


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