Case Study: Nordstrom

Due to global competition, there is a variety of products that are competing in different markets ranging from apparel to computers. Despite the many benefits that these products might provide to customers, this phenomenon is making it more difficult for retailers and manufacturers to predict which of their goods will sell effectively.
According to Schermerhorn (2013), “forecasting is the ability to predict the future” (pg.123) which means that the process of forecasting can become an important tool to quantify the proper balance between supply and demand. Likewise, in order to maximize sales and its effectiveness, businesses have to work in predict the future customer demand and use this information to lead the business operations to distribution effectively. However, inaccurate forecasts happen and along with them there is a cost.
In the case of Nordstrom, providing products in response to the current level of customer demand with a minimum of overstocking reduces stocking costs and distribution expenses, leads
to a reduction of the sales unit price of products but at the same time, leads to a boosting in profit margins.
Nordstrom has demonstrated accurate response in order to improve planning and production processes.
But this company has not only relied in demand forecasting, it has also make the supply chain more flexible and faster so their scheduling systems can match supply with demand. Even though the company has reduced prices in certain items in order to remain competitive with other retailers, the integration of the perpetual inventory has put Nordstrom ahead of any other department store without compromising what should be a priority for any business: an excellent customer service.
On the other hand, Nordstrom has identified many effective strategies from other retailers in order to improve and prosper without failing along the way. They have identified what the customer wants and/or needs in an uncertain economy. Also, their inventory management process has become a long-term investment which other retailers like Macy’s or Saks have not been able to
match.
Demand has become heavily dependent in a variety of factors that are difficult to predict like weather or fashion trends yet, Nordstrom effectively responsiveness to our constant changing technologies have help them to differentiate. Moreover, their organizational strategies have provided guidance and direction that other companies have lost like JC Penney relying mostly in its “doorbusters” or coupons that in a long-term will affect its profits or, like Target when the brand Lilly Pulitzer was introduced and sold out in less than a week, the organization failed to anticipate the demand creating a huge disappointment between its customers.
In other respects, Schermerhorn (2013) defines participatory planning as “the inclusion of persons who will be affected by plans and or/who will be asked to implement them” (pg.126). Effective management requires a detailed understanding of the processes involved in decision-making but, the process is not complete when the sale has been made as the consumer may experience varying degrees of satisfaction with the outcome. In this case, creating satisfied customers is essential because assists in customer retention and can lead to new business through satisfied customers becoming advocates for the business. Furthermore, feedback from team members through reports can allow the company to have more information about customers’ needs and allocate specific resources to improve the planning process. As an example, I work for JCPenney as an associate, and currently top management has asked all associates to fill out a survey about many aspects that the retail chain have left out for a long time like associate retention, fast-turning inventory, and customer service. This demonstrates that participatory planning is a central element because the mutual exchange of ideas and discussions allows optimize the decision-making process.