Sunday, February 5, 2012
Cutting your Inventory and Postponement
My local Costco added retail gasoline sales recently and I noticed that they carry only 87- and 93- octane (regular and premium), as opposed to most service stations that carry 3 grades of gas (or petrol for my friends on the other side of the pond). I usually purchase premium for my own car (and regular whenever I have a rental) - I've never seen any statistics on it but it would be interesting to see what percentage of sales each of the typical 3 grades represent.
In addition to reducing the inventory items Costco needs to monitor and replenish they have reduced by 50% the number of underground tanks they install and maintain. I'm not very familiar with gasoline retailing but there must be several other areas of payback that I'm missing. I wonder why other gas retailers haven't followed suit.
I noticed another major company undertaking a new inventory strategy recently. Coca Cola is rolling out new soft drink dispensers that have 106 flavors, which you would think would cause their inventory to surge. That's likely not the case as they are using a strategy of Postponement where the final mixing of recipe/parts is done as late as possible (in this case, literally when the consumer selects "lime diet coke" at the dispenser). They can use generic parts for several final products - in this case that same lime flavoring is used for Coke, Coke One, Sprite etc. I've heard that the machines even send electronic alerts when they need service or flavor refills. If that's the case it still needs some fine tuning as several of the flavors are not available at my local lunch place more often than not .
Have you seen any interesting examples of inventory strategies recently? Please let me know in the comments below.