Discussion
Answer to the discussion question
The in-stock availability strategy adopted by a firm determines the amount of service that its customers receive. Firms typically assign greater availability to those products that attract the highest volume of sales and profitability levels. . They maintain different availability levels of inventory for commodities that they sell. Customer service depends on the products that the customers will purchase. The service that is rendered to the customer thus relies to a great extent on the blend of products that he or she purchases. This means that customers with different shopping lists going into the same store will achieve varying allocations of service.
If a firm decides to keep 90% of its inventory available to its customers, this will imply that 90% of the all products offered by the firm have been made available to the customers. These products do not necessarily have to be provided in equal proportions. The inventory availability strategy does not imply that every customer visiting the firm receives 90% service. In reality, firms supply different products in varying percentages to their customers depending on a number of factors. Some of these factors include the frequency of sales of items, durability of the products, safety of stock, managerial model adopted by the firm among other factors.
In summary, inventory management strategies based on the customers are not discriminatory. By pursuing their growth and profitability targets, firms increase the availability of products that are highly needed by their customers.
I agree that inventory management policies based on the customers are not discriminatory. This is because the customer is the center of focus in these strategies. Whether the firm adopts a fair allocation or Distribution Requirements Planning (DRP) strategy, the customer remains to benefit. A fair allocation strategy will ensure that the firm assigns an equal share of the inventory to all its outlets. Customers visiting these outlets from different locations are able to purchase similar items without the inconvenience of moving around to other stores. Similarly, the DRP strategy is driven by the needs of the customers. Basically, highly demanded products are increasingly made available to the customers. This has the effect of boosting customer service and thus satisfaction.
Thank you.
Works Cited
Hines, Tony. Supply Chain Strategies: Customer Driven and Customer Focused. Oxford: Butterworth-Heinemann, 2004. Print.
