Third-Party Logistics and Inventory Replenishment

SCM645 Scenario A


Don't use plagiarized sources. Get Your Custom Essay on
Third-Party Logistics and Inventory Replenishment
Just from $10/Page
Order Essay


Feets is a chain of retail athletic wear stores. The company headquarters is located in Sacramento, California, near the western warehouse. There are seven geographically dispersed warehouses to serve the needs of Feets’ 400 stores. Tedra Grav, supply chain vice president, had this to say about the Fashion Squared store, a new location in Sacramento.

The product mix in the Fashion Squared store is new to Feets. There are many new products and many new vendors. Our western distribution center is set up to serve the set of stores in California. It was not set up for all these new products and new vendors. This has caused us problems because of the small quantities of some of these new products, which are not used in any other store. All of this may cause us problems in the upcoming summer sports season. I have informed the rest of the management team of the nature of these problems.”

Third-Party Logistics

Feets uses third-party logistics firms to move the goods from warehouse to store. With the exception of the Fashion Squared store’s daily shipments, the stores receive orders twice weekly. Feets uses a small package carrier to make transshipments between stores.

Tedra feels efficiency as opposed to responsiveness in the Feets supply chain is important. As is common in retailing, buyers forecast trends, determine how those trends affect demand at the stores, and order from vendors accordingly. Efficiency is important, so vendors ship large quantities to the Feets warehouse relatively infrequently. The warehouse has a computer program to help team members determine where to store these large quantities of goods as they are received.


A buyer specializes in one or more departments depending upon volume, allowing the buyer to be familiar with the products. This allows for better identification of customer demand and utilization of supplier’s manufacturing practice knowledge.

Feets’ business is very fashion oriented. Each year, 80% percent of the product that comes into the distribution center is new. Even if the product is very similar to one ordered last year, it is considered new. Customers demand new colors and styles; product is normally not replenished. Instead, a particular item is purchased, distributed to the retail stores, and sold. As a result, determining the amount to be purchased can be difficult. The buyers can look at how a similar product sold last year. However, that may be misleading due to changes in taste.

The normal lead time quoted by a supplier is 6 months even though it only takes 2 to 3 months for the company to produce the product. The buyer is faced with anticipating what will be in demand 6 to 12 months into the future. These difficulties are compounded by the life of a new style being less than 6 months.

The buyers determine the order quantity from forecasts of demand done at the store level. The historical distribution of sizes sold at each store is part of the calculation and then adjusted by projections made by each store. The supplier collects orders for all stores at one time. If too many items are ordered, then the result is to discount the item at an outlet store for discontinued styles. If too few items are ordered, there is no chance to reorder.

When orders arrive from the supplier, the majority of product is immediately shipped to the store. The amount distributed is calculated from the original order with adjustments made for store closings and new openings. The remaining order, about 40%, is stored in the warehouse to be used for replenishment.

Inventory Replenishment

Feets has an automated replenishment ordering system. The way this works is that the computer at the distribution center collects data from each store about what was sold that day. There are two systems for collecting the data. Some stores have a high-speed Internet connection and transmit sales data in near real time. Other stores have only dial-up connections and transmit their data once per day. Once the data have been collected, the computer calculates the amount of inventory in each store by SKU. That inventory level is compared against predetermined minimums, and any replenishment is placed in an order.

Because the buyers place just one order for any particular style during the course of a season, available stock for replenishment is limited. Consequently, when inventory on that item is exhausted, no more replacements can be done. At this point, transshipments between stores help Feets meet the demands of its customers.

Feets has a few stores that are outlet stores. These stores do not sell the full Feets line. At the end of a SKU’s life (where there are very few items left in inventory), the inventory is sent to these stores to be sold at substantial discounts.

The Need for Inventory Accuracy

In general, inventory records need to be accurate. In the Feets distribution chain, inaccurate inventories would cause stockouts. That is, if the central computer had an inventory record for a particular SKU that was too high, it would not order replenishment.

In the warehouse, a stock picker will pick up an order for a store, pick the items on the order, put those items in cartons, and put the cartons on a pallet. Human error plays a role in what a store receives for each shipment. Sometimes the wrong items are put in the carton, sometimes the wrong cartons are put on a pallet, and sometimes the wrong pallet is put on the truck. Therefore, those stocking the store must carefully check orders.

The Feets auditor requires the company to take a complete physical inventory including the stores and the distribution center twice a year. A company specializing in inventory auditing performs store inventory. The same outside company also counts the distribution center quarterly.

Performance Measures

In retail companies, the two most useful metrics are inventory turns and stockouts. The Feets inventory turn ratio currently runs at about two. Feets uses its centralized computer to calculate stockouts. Tedra feels that the current stockout level of 5% is a little high but to be expected.

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.

Read more

Free-revision policy

The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

Read more

Privacy policy

The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.

Read more

Fair-cooperation guarantee

By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Open chat
You can contact our live agent via WhatsApp! Via +1 817 953 0426

Feel free to ask questions, clarifications, or discounts available when placing an order.

Order your essay today and save 30% with the discount code STARS