Effect of Chinese New Year on Inventory Management

Effect of Chinese New Year on Inventory Management

January 27, 2020

The Chinese New Year brings manufacturing slowdowns in China. United States companies must plan on being proactive in managing supply by making early purchases and scheduling transportation before the slowdowns begin.

Building buffer inventory in the United States as a result of early purchases means storage capacity in the United States must be managed proactively as well.


Video Spotlight:


This post is based on the Supply Chain Dive article, Why procurement planning is critical ahead of Chinese New Year, by Amanda Loudin, January 16, 2020, and the YouTube videos in the Video Spotlight. Image source: Shutterstock / Dmitry Kalinovsky.

Discussion Questions:

1. Note in the article that the average shipping time from China to the United States is about 30 days.  How does this lead time impact inventory levels at United States facilities?

Guidance: This question is designed to get students to reflect on the interaction between lead time and inventory levels.   Ask students to suggest better ways to accumulate the additional Continue reading

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Amazon Optimizes Warehouse Space

Amazon Optimizes Warehouse Space

December 22, 2019

As the holiday buying season is underway, Amazon is revising its warehousing system.

As we previously shared, in an effort to cut Prime shipping time from two days to one day the company invested heavily in 2nd quarter 2019 to improve transportation and warehousing. Part of the warehousing problem relates to independent merchants that are using Amazon for fulfillment.  Over half of Amazon sales are from these independent merchants.

Amazon has raised the fees charged to these independent merchants to encourage a reduction in inventory, trying to keep slow-moving items out of their distribution centers.  Because many of these merchants are concerned about the fees, Amazon may not have enough inventory on-hand with holiday sales looming.

Thus, Amazon is implementing Amazon Storage and Replenishment.  Merchants can now store products to replenish Amazon’s distribution centers from nearby warehouses.  The hope is to allow merchants a cheaper storage option in order to keep inventory low in Amazon’s distribution center, but yet not run-out of merchandise that might result in lost sales.


Video Spotlight: Amazon is making one-day shipping the new standard for Prime members


This post is based on the Bloomberg article, Amazon Tests Cheap Warehouses to Make Continue reading

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Organized Retail Crime at Home Depot

Organized Retail Crime at Home Depot

Crime rings targeting retail stores have become well organized.

The stolen goods quickly change hands through a network of criminals and often end up being sold online with little traceability. Fueled by the opioid epidemic, the problem has been growing steadily, causing serious shrinkage in retailers’ inventories. Home Depot and other retailers have increased their crime prevention efforts and are working with law enforcement to protect their bottom line and honest shoppers.


Video Spotlight: Fighting Organized Retail Crime and Sting Operations


This post is based on the CNBC.com article, Inside Home Depot’s Efforts to Stop a Growing Theft Problem at its Stores, by C. Reagan and J. Schlesinger, November 22, 2019, and the YouTube video, Behind the Scenes of Home Depot’s Operation to Take Down Professional Shopliftersby CNBC Television, November 22, 2019. Image source: Â© SIBSA Digital Pvt. Ltd. / Alamy Stock Photo.

Discussion Questions:

1. What is shrinkage and how does it occur? Why is the type of shrinkage featured in the article particularly worrisome?

Guidance: Shrinkage means that the retailer has less inventory than what is shown in accounting records. Theft by customers or employees, damage, defective items, loss of items, Continue reading

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