Goldfield’s Electronics
Goldfield’s Electronics
Introduction
Goldfield’s Electronics (GFE) is a private distributor of electronics. GFE distributes a wide range of consumer electronics including DVD players, televisions, MP3 players, stereos (home and auto), digital cameras, etc… They have operated out of their single distribution center in Boone, Iowa since 1979.
As most of the big box retailers of these products tend to self-manage their distribution channels, GFE’s customer base is dominated by small and medium sized electronic retailers. Over the years, GFE has developed the reputation of providing consistent and timely service. This reputation has fueled their growth as they have secured a number of long-term customers.
Growing Concerns
While GFE is known for its high quality customer service, it has had some recent service failures that have worried Bobby Goldfield, the company’s President. In fact, one of their customers since 1982 has recently defected to a competing distributor due to GFE’s increasing inability to meet demand requirements out of inventory.
There are a few key economic trends cited by Mr. Goldfield as contributing factors to this decrease in service. When GFE began operations over 3 decades ago they managed and distributed approximately 45 stock keeping units (SKU’s) from a limited number of domestic manufacturers. Today, with the emergence of international producers, and the sheer variety of electronic gadgets available to consumers, GFE manages and distributes over 400 SKU’s. This has resulted in GFE increasing its estimated annual cost of carrying inventory from 20% of unit cost in the past to the current 35%.
In light of these recent service disappointments, Mr. Goldfield has requested that the inventory management team evaluate the current situation and propose possible improvements to the system. Upon discussions with key customers, Mr. Goldfield has determined that a customer service level of 97.5% is an appropriate target.
Current
Introduction
Goldfield’s Electronics (GFE) is a private distributor of electronics. GFE distributes a wide range of consumer electronics including DVD players, televisions, MP3 players, stereos (home and auto), digital cameras, etc… They have operated out of their single distribution center in Boone, Iowa since 1979.
As most of the big box retailers of these products tend to self-manage their distribution channels, GFE’s customer base is dominated by small and medium sized electronic retailers. Over the years, GFE has developed the reputation of providing consistent and timely service. This reputation has fueled their growth as they have secured a number of long-term customers.
Growing Concerns
While GFE is known for its high quality customer service, it has had some recent service failures that have worried Bobby Goldfield, the company’s President. In fact, one of their customers since 1982 has recently defected to a competing distributor due to GFE’s increasing inability to meet demand requirements out of inventory.
There are a few key economic trends cited by Mr. Goldfield as contributing factors to this decrease in service. When GFE began operations over 3 decades ago they managed and distributed approximately 45 stock keeping units (SKU’s) from a limited number of domestic manufacturers. Today, with the emergence of international producers, and the sheer variety of electronic gadgets available to consumers, GFE manages and distributes over 400 SKU’s. This has resulted in GFE increasing its estimated annual cost of carrying inventory from 20% of unit cost in the past to the current 35%.
In light of these recent service disappointments, Mr. Goldfield has requested that the inventory management team evaluate the current situation and propose possible improvements to the system. Upon discussions with key customers, Mr. Goldfield has determined that a customer service level of 97.5% is an appropriate target.
Current