Tuesday, June 14, 2011

Choice and Supply

No, this is not a commentary on the Republican Debate.  If you want a quick rundown, go to the Althouse blog, where the debate was live-blogged.

This is about going to Market Basket in Stadium Plaza and trying to buy some 12oz bottles of Caffeine Free Diet Coke.  They were out.  They had the short cans and the 12oz cans and the taller bottles.  They had a variety of regular Coke options and Diet Coke options and, I think Caffeine Free (regular) Coke.  But, not the specific item, in the specific form I was looking for.  Today I purchased what I wanted at Hanaford's, in the same general location.

Frankly, I think that at the time I made my purchase today I could have found what I wanted at Market Basket.  The thing is we have such a variety of options that the shelf space won't support a large stock of each item, or at least won't support the wide variety in a store smaller than a large aircraft hanger.  The solution is the use of Supply Change Management to ensure the arrival of what is next to be sold just before it is sold, thus reducing inventory in the stores to a manageable level.  Some might call this "Just in Time" delivery of product to the stores, which was an earlier articulation of this concept.  However, sometimes "just in time" is just a little late.

The problem with this approach is the danger of a disruption in the logistics pipeline.  A rail or trucker strike, or bad weather in the Pacific Ocean can cause a delay that impacts what is delivered.  Thus forecasting becomes very important.

We have seen small snippets in the news about problems with the delivery of parts for auto manufacturing due to the earthquake in Japan.

Variety, while desirable, brings with it problems.  Every solution has within it some future problem.

Regards  —  Cliff

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