Three inventory models in MRO indust
Source:    Publish Time: 2010-06-16 07:06   1215 Views   Size:  16px  14px  12px
How to cut down inventory cost and increase supplier margins in MRO industrial markets? It is essential trends to economic compete in coming supply chain management era,now there’re three inventory models to solve and serve better for ending customer(such as distributor,retailer or manufacturer) in MRO markets.

Drop-Shipping Model

Drop-shipping has some very strong advantages and a few disadvantages. Let's look at the advantages first.


  • No inventory costs.

  • Drop-shipper is transparent.

It almost sounds too good to be true. But there are two major problems:

  • Lower margins.
  • Crippled customer service.


Inventory Model

The tried-and-true retail method is to order an item from the manufacturer or distributor and keep it in stock until you receive an order. This has some advantages:


  • You can ship immediately.

  • You can provide excellent customer service.

Inventory, of course, has its disadvantages, too:



  • Paid for inventory can sit on your shelves, tying up capital.

  • You must have an efficient fulfillment system.


Fulfillment House

A third common Internet distribution model is the fulfillment house (actually a subset of the inventory model). A fulfillment house, the offspring of the direct marketing industry, will handle some or all of the aspects of getting the product to your customer. They will maintain inventory, order new product, assemble, pick, pull, pack, and ship, all according to your specifications and with your labels. They will also handle the order taking, the Internet shopping cart, and provide an ordering and customer service call center if you need one. In other words, you can run an entirely virtual business, outsourcing everything to the fulfillment house, if you like.

Which of these three models should you use? No one can make that decision for you. But armed with the pros and cons, you'll be able to make a thoughtful choice that will leverage the advantages and minimize the disadvantages of one of these models, and include it as part of your Internet Marketing Plan.