Inventory pooling: Your text explores the strategies of transshipment and inventory pooling in Chapt

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Inventory pooling Your text explores the strategies of transshipment and inventory pooling in Chapter 7. List and describe at least two similarities between transshipment and inventory pooling strategies.

Transshipment is the delivery of items between distinct facilities at the same level in the supply chain to meet some current demand (Simchi-Levi, Kaminsky & Simchi, 2008).

More frequently, transshipment is measured at the retail level. Transshipment is a process in which one central location synchronizes all inventory/supplies, enhances productivity, and overall costs of replenishing resources or goods. Additionally, maintaining a substantial position in charge of inventory management and allowing transshipment among locations that supply inventory results in an enhanced and efficient method of servicing the requests of consumers, while decreasing the price of the entire inventory (Benge, V. n.d.).

Inventory pooling is the storage of an item(s) at a mutual point, with the objective of distribution to different retailers in various markets. Inventory pooling refers to the collaboration of multiple inventory settings into one. Inventory locations may be associated with various products, geographical sites, and various customers. It decreases both the optimal cost and the optimal amount of safety stock. Inventory pooling assists with component commonality, delay and supply flexibility of customer demands. Pooling goods in inventory at one locale is a general practice utilized to reduce costs, while concurrently enhancing customer service. Inventory pooling and transshipment approaches can be effective when there is a substantial array of products, so that demand for certain end products is reasonably small, and difficult to forecast (Simchi-Levi, Kaminsky & Simchi, 2008).

Identify two companies or supply chains of that use transshipment strategies and why is transshipment a good strategy for them?

Grainger Integrated Supply Operations (an industrial distributor) and Okuma America Corporation (a machine tool manufacturer) utilizes transshipment processes. Through inventory transshipment, the retailer can potentially accomplish greater service levels at minimal cost (Shao, Krishnan & McCormick, 2010). Additionally, manufacturers promote transshipment by increasing the payoffs to transshipping retailers. In certain instances, the manufacturer’s capability to regulate the transshipment cost is limited. For instance, in the case of Grainger Integrated Supply Operations (GISO), “written contracts with supplier’s identify the products it will provide” and “the suppliers set the costs of the goods themselves” (Narus and Anderson, 1996 as cited by Shao, Krishnan & McCormick, 2010). According to Shao, Krishnan, and McCormick (2010) analysis indicated that when retailers control the transshipment cost, they will select a price that is too low from the manufacturer’s standpoint.

Why would inventory pooling not be a better choice for these companies or supply chains?

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There are numerous variables that influence the supply chain approach. Each of these decisions rely on the nature and characteristics of costs, products and the customers; as to which concept performs best (Simchi-Levi, Kaminsky & Simchi, 2008).

References Benge, V. (n.d.). Can we apply the transshipment models to inventory applications?

Retrieved from https://smallbusiness.chron.com/can-we-apply- the-transshipmentmodels- to-inventory-applications-32298.html Shao, J., Krishnan, H. & McCormick, S. T. (2010). Incentives for transshipment in a supply chain with decentralized retailers. Retrieved from https://pdfs.semanticscholar.org/657b/4cbea2ab5fcbfd700f876b066667a1f0b314.pdf Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and managing the supply chain: Concepts, strategies and case studies (3rd ed.).Retrieved from https://www.vitalsource.com

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