Effective supply chain management (based on collaboration between a manufacturer and retailer) allows companies to reduce costs and anticipate the demand. Another important factor is improved technology (the internet connection and computer databases) which improves coordination and control mechanisms (Simchi-Levi et al 2008).
2. In order to improve the situation, the companies should cooperate and plan their activities together. Also, they should pay a special attention to scheduling stage. Scheduling of production/operations covers detailed planning of quantities and times, facilitating the efficient and continuous operation of the process. Where smoothing is difficult to achieve, scheduling could play the role of a cushioning device. For example, it is difficult to make customers change their buying behavior, to buy diapers size two instead of size one. Instead of smoothing demand (externally) companies try to deal with the problem internally by producing at a constant rate throughout the year and building up inventories or by stepping up the production rate as the seasonal peak in demand occurs. Even if Kimberly-Clark opens its own stores, it will not benefit the company and can damage sales in Costco stores. ...Show more