Specifically, this latter form of collaboration allows the manufacturer to charge higher wholesale prices and, interestingly, is associated with lower retailer, and consequently manufacturer, stock outs. In contrast, collaboration on the handling of excess and defective retailer inventory (i.e., reverse logistics) results in higher manufacturer stockout levels, on average.” (Kulp, Lee & Ofek, 2004)
Based on the information collected in the supply management system, the company will also be able to perform detailed statistical analysis of the demand and supply mechanisms for its different products in the market. This would greatly aid the distribution planning and production planning department which would be able to take proactive measures to fulfill the orders of the dealers and the affiliates thought realistic forecasts based on actual real time information. Aside from this the problem of stockpiling of finished goods inventory of the established products will also be eliminated through proper forecasting of demand and elimination of the speculative and panic purchasing behavior by regulations and procedures imposed by the supply chain management system.
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