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E-commerce &Inventory Management:
How inventory ownership affects the supply
chain
by Stavros Petratzas
University of Groningen Faculty of Economics and Business MSc Technology
Operations Management January 29th, 2018
Supervisor: Prof. dr. K.J. Roodbergen
Co-assessor: dr. N.D. van Foreest
Steenhouwerskade 3b2, 9718DA, Groningen
+31 (0) 641770630
Student number: S3185214
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Preface
This thesis is the last part of accomplishing my Master in Technology Operations
Management at the University of Groningen. I would like to express my gratitude to people,
without the valuable support and guidance of whom, I would not be able to complete this
thesis.
First of all, I would like to deeply thank my supervisor prof. dr. K.J. Roodbergen. His
continuous guidance and encouragement throughout the whole process played a crucial role
in accomplishing this thesis. Furthermore, he provided important input regarding participants
for this research. In addition, my appreciation goes to my co-assessor, dr. N.D. van Foreest,
professor of Technology Operations Management at the University of Groningen. He
provided additional feedback whenever I needed it.
This thesis would not have been possible without the participation of all the managers that
were interviewed.
Lastly, I would like to wholeheartedly thank my friends and family for encouraging me
throughout my Master degree.
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Table of Contents
Abstract................................................................................................................................. 5
1. Introduction .................................................................................................................... 6
2. Theoretical Background ................................................................................................. 8
2.1 Inventory management in e-commerce companies ...................................................... 9
2.2 Factors affecting inventory ownership ........................................................................ 10
2.3 Company relationship with suppliers in e-commerce ................................................. 11
2.4 Factors affecting supply chain management .............................................................. 12
3. Methodology ................................................................................................................... 13
3.1 Method definition .................................................................................................... 13
3.2 Case selection ....................................................................................................... 14
3.3 Data collection ....................................................................................................... 15
3.4 Analysis ................................................................................................................. 16
4. Findings…………………………………………………………………………………………...17
4.1 Inventory ownership strategy ........................................................................................ 18
4.2 Relationships between companies and suppliers .......................................................... 20
5. Discussion ...................................................................................................................... 21
6. Conclusions .................................................................................................................... 23
6.1 Conclusions of the research ................................................................................... 24
6.2 Limitations .............................................................................................................. 24
6.3 Recommendations for further research .................................................................. 25
References ......................................................................................................................... 25
Appendix I: Case Study Protocol ......................................................................................... 28
Appendix II: Coding Tree .................................................................................................... 30
List of figures
Figure 3.1 Summarized Coding Tree…………………………………………………………...17
List of tables
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Table 3.1Company data…………………………………………………………………………...14
Table 3.2 Company type and interviewer’s position…………………………………………….15
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Abstract
This paper examines if and how inventory ownership affects inventory management in e-
commerce companies. Previous research has indicated that inventory ownership is
important for the supply chain, but has been focused mainly on manufacturers and their
customers, meaning wholesalers and retailers. This research focuses on wholesalers’ and
retailers’ inventory ownership and if and how this affects their inventory management and
eventually their revenues. Moreover, it examines the relationship between them and their
suppliers to determine whether it affects the wholesalers’ and retailers’ strategy regarding
inventory ownership. Research is conducted by implementing multiple case studies.
Research participants are five companies operating in the Netherlands. Participating
companies follow different inventory management practices in accordance with their product
type and distribution.The research concludes that company managers while taking inventory
ownership under consideration,they are hesitant to implement new strategies towards
improving it. In conclusion, companies’ inventory management strategy is affected by the
relationship with their suppliers.
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1. Introduction
E-commerce has radically changed the practice of business conducted via the Internet. This
enables businesses to easily provide products in large amounts, with a large variety, and in
short time around the world with great profit increase (Zhu, 2004;Davis et al., 2014).
Moreover, e-commerce companies pay great attention to inventory. The term “inventory” is
used in the supply chain to indicate the products that are ready for sale but are not yet
ordered by customers (Diabat & Theodorou, 2015). Inventory is a key factor influencing
companies’ performance by being one crucial asset that determines revenues. This occurs
because companies make a profit if most of the inventory is sold, or suffer heavy losses due
to obsolescence or costly storage of unsold products (Xu et al., 2016). Therefore, companies
take under serious consideration inventory management, meaning the functions and theories
connected to control the inventory, in order to minimize costs, increase service levels and
eventually increase profits (Gunasekaran et al., 2002;Song et al., 2014).
In inventory management, storage location and ownershipof stored products have a big
impact on companies(Davis et al., 2014). Xu et al. (2016), state that inventory ownership
refers to the ability of a company to own the products stored in their own or others’
(outsourcing) warehouses.The authors indicate thatthere are two strategies companies
follow for allocation and ownership of products. In the first one, called “pushed”, the
companies decide to keep the ownership of all their products. In the other strategy, “pull”,
companies have the ability to receive customers’ orders and transfer them to suppliers, thus
avoiding inventory ownership and eventual inventory costs. Therefore, companies following
the second strategy have a drop-shipping arrangement with their suppliers so that the first
receive the orders but the second are owners of products and responsible to deliver to
customers.
These arrangements occur usually in e-commerce (Davis et al., 2014). Despite these
common practices, there is a gap in the literature on the extent of drop-shipping
arrangements in e-commerce concerning wholesalers and retailers. Therefore, it is not
entirely clear what the best strategy is, in regard to inventory ownership in e-commerce.
Specifically, there is not enough data on what wholesalers and retailers do with their
inventories and what are the consequences when they prefer to do drop-shipping.
Furthermore, there is a question concerning the relationship between stakeholders
(companies and their suppliers) and how this affects inventory. For example, if a
manufacturer is in some way not trustworthy in drop-shipping by not delivering the agreed
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product quality and quantityor is unable to deliver an order immediately for any number of
reasons such as poor communication, then customers are dissatisfied and there is a profit
loss. Therefore, the reliability of the stakeholders, as they should be trustworthy, and
transparency, as the contracts signed have to state clearly what are the obligations of its
stakeholder,are two important factors influencing transactions (Schnackenberg & Tomlinson,
2016). Wholesalers and retailers must be confident in their relationship with suppliers,
particularly in regard to prompt delivery of products to the customer. Alternatively,
stakeholders must consider the option of keeping inventory in order to maintain customer
satisfaction despite the increase in cost this might entail.
This paper investigates how wholesaler or retailer inventory managementis conducted when
cooperating with suppliers on inventory ownership. The objective of this thesis is to address
the following question:
What is the effect of inventory ownership in e-commerce supply chain?
This research question is divided into three sections:
• Is the relationship between retailers, wholesalers and their suppliers a significant
factor influencing inventory ownership?
• What is the importance of inventory ownership in the portfolio of logistics options for
e-commerce?
• What are the advantages and disadvantages of inventory ownership choices of
wholesalers and retailers?
The research focuses on wholesalers’ and retailers’ inventory management. First, multiple
case studies are done within e-commerce companies in the Netherlands.
Specifically,multiple case studies that are based on in-depth research of five company
inventory management and the relationship of these companies with their suppliers, are
presented. Subsequently, structured interviews with managers from the five companies
operating in the e-commerce sector are conducted, analyzed and compared with
conclusions drawn from the existing literature research.
Furthermore, an analysis of these results is presented.
The final chapter concludes this report with limitations, conclusions, and recommendations
for management and future research.
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2. Theoretical Background
This chapter presents a general picture of inventory management in e-commerce and the
factors that influence it.
A part of inventory management is inventory ownership. The importance of inventory
ownership for companies is investigated in relation to the dynamics between stakeholders,
meaning e-commerce companies and their suppliers, and the advantages and
disadvantages of information exchange. This analysis examines what companies do with
their inventories and how companies decide on inventory ownership.Finally, similarities and
differences between current research and older research are shown.
In today’s context, managing the demand for a wholesaler or a retailer can present
challenges. Therefore, both groups focus on inventory management to make sure that they
will have a wide assortment and enough quantity of products to satisfy their
customers(Cheong et al., 2015).Inventory management is influenced by the relationship with
the suppliers (Davis et al., 2014). It is crucial for a company to investigate which strategy is
the best, “pull” in which company shares inventory and eventually inventory cost with
suppliers or “push” where the company manages inventory on its own. Factors influencing
this choice are the contract signed and the willingness of the company to have improved
relationship through e-mails and Skype meetings with suppliers (Davis et al., 2014). When
companies do not want to share inventory costs by storing their products on suppliers’
warehouses (push strategy), they sign one-order contracts and they take full responsibility of
the inventory cost, meaning that they have their own warehouses or they outsource (Guan et
al., 2015). When companies choose to implement a push strategy they take control of prices
and distribution, and they offer better customer support and service, (Stern et al., 1996;
Schnackenberg & Tomlinson, 2016) which may lead to higher profit margins. However, there
are significant disadvantages when managing large inventories: large inventory costs
concerning warehouses bought or rent to store the products,the salaries of the employees
dealing with them, and a risk of product obsolescence (Talavera et al., 2015).Therefore, the
company, that chooses to own the inventory, needs to deal with high fixed overheads and
risks related to keeping the inventory in good condition.
On the other hand, in case the supplier has the capability of pooling, meaning aggregating
products, and the wholesaler or retailer not, in which case it is from a supply chain
perspective better to have supplier keeping the inventory. So the risks related to inventory
ownership are transferred to the supplier. When companies share inventory with their
suppliers (pull strategy) they usually sign long-term contracts and build closer
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relationships(Davis et al., 2014). This practice can lead to profit increase by avoiding
inventory costs and enhanced sourcing of market information (Stern et al., 1996; Lee et al.,
2016). Specifically, companies can reduce inventory costsas they do not own or rent
warehouses and they do not hire employees to maintain them. Moreover, suppliers through
close relationships can provide useful market information to the company considering
product demand, assortment, and quality (Lee et al., 2016). However, as stated before,
companies that do not own their inventory may face problems with distribution and customer
service as the supplier who owns the inventory and is responsible for distribution may be
unreliable or untrained and fail in product delivery (Schnackenberg & Tomlinson, 2016).
Thus, it is immensely important for a company to investigate the consequences ofdecisions
involving practices of wholesalers and retailers, taking in consideration inventory
managementand, eventually, how inventory ownership will change the relationship with
suppliers (Elsayed & Wahba, 2013).
2.1 Inventory management in e-commerce companies
Information flows, which indicate the way companies exchange information about product
availability, demand, and assortment, are a key factor for inventory reduction (Wu et al.,
2014).
Firstly, companies search for ways to improve information flows. The synergy of Internet-
based e-commerce with a company's IT infrastructure leads to the improvement of the
stakeholders' coordination along the supply chain. Several studies on electronic data
interchange indicate that effective information flow between the suppliers and the
manufacturer in order to coordinate material transportation results in inventory reduction and
significant cost reductions (Mukhopadhyay et al., 1995; Allison, 2017).
Furthermore, through e-commerce, visibility of information flow can aid companies to
forecast future demand, coordinate activities more efficiently by exchanging information and
cooperating with suppliers, and make it easier to reach a better product flow (transportation
and tracking of products) (Milgrom & Roberts, 1988;Wu et al., 2014).
In conclusion, when the quality and speed of information exchange through the
establishment of electronic information linkages is improved,inventory decreases in the
whole supply chain (Zhu, 2004; Christopher & Ryals, 2014). Specifically, through electronic
information linkages the company achieves better demand forecasting, meaning less
product variability which leads tolower safety stock, that is the quantity of a product kept in
inventory to prevent that the product will be out of stock, and eventually lower inventory.
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With the improvement of information exchange, wholesalers and retailers have to reconsider
if they want to own their inventory, do drop-shipping or do both and to what extent (Xu et al.,
2016). Davis et al., (2014) indicate how important inventory ownership is for companies
offering multiple examples of bankruptcy due to bad inventory ownership choices.
Theauthors state that strategies concerning inventory ownership are important for a
company in order to avoid losses. There is a third, additional strategy to the “push” and
“pull”,referred in the introduction. This strategy in inventory ownershipis based on a vendor
managed inventory model. Vigtil (2008) states that in some cases, third party service
providers may keep the ownership of a regional warehouse, while the costs for maintaining
and operating the warehouse are transferred to customers. Moreover, Vigtil (2008), indicates
that in a vendor managed inventory model the supplier has ownership of the warehouse and
determines product inventory levels. The customer is responsible for most of the necessary
costs mentioned except costs associated with depreciation and communication technology
for which the vendor is held responsible.
The information presented offers an important background in order to understand what
companies have in mind regarding inventory ownership and subsequently to study in more
details which factors influence it.
2.2 Factors affecting inventory ownership
As mentioned before there are two major strategies concerning inventory ownership, push
and pull. In both strategies, there is demand uncertainty, i.e. the companies’ inability to
accurately forecast demand. Xu et al. (2016), indicate that if a company follows a push
strategy then it has to forecast demand as accurately as possible, set its inventory
accordingly and have some safety stock, stock in case the company runs out of products. In
contrast, in a pull strategy demand uncertaintyis a significant factor motivating companies to
pursue sharinginventory ownership (Milgrom & Roberts 1988; Davis et al., 2014; Wu et al.,
2014).Wu et al. (2014), indicate that companies deal with this uncertainty by increasing the
information flow with suppliers. Boyacı & Gallego (2002) also depict through their model that
better cooperation between companies and suppliers can lead to better inventory ownership
strategies, as information “flows”between companies and their suppliers helping companies
to take better decisions concerning inventory management and eventually inventory
ownership. Moreover, the authors assume in their model that because of demand
uncertainty companies giveinventory ownership to their suppliers because they dopooling,
so for suppliers, the inventory costs are significantly less, and they gather and pay a
percentage of the sales to companies when orders are delivered to the final
customer.Additionally, according to Shen et al. (2016), the existence of information flow
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between companies and suppliers is really important for inventory ownership as both sides
have to often exchange information on demand, product assortment, and delivery times in
order to keep customer satisfaction levels high (i.e. the percentage of customers who are
satisfied by the company’s services).
Furthermore, according to each strategy, there are one-order(push) or long-term(pull)
contracts.Therefore, another important factor affecting inventory ownership is contracts
signed between companies and their suppliers (Davis et al., 2014; Cheong et al., 2015). The
authors state that inventory ownership is connected with contracts as the number of
products, the place, and the way they are stored depends on the deals between companies
and suppliers. Moreover, drop-shipping contractshave to be clear in order for the company to
avoid costs for unfulfilled orders as the supplier is responsible for ownership and distribution
(Cheong et al., 2015).
In order for e-commerce companies to increase information flows and eventually their
revenues, they have to determine their strategy concerning the relationship with their
suppliers. In the next chapter, this relationship is analyzed.
2.3 Company relationship with suppliers in e-commerce
Porterfield et al. (2010), examine the role of information in e-commerce. Relationships
between stakeholders are usually characterized by the volume of information and the
frequency of transactions. Porterfield et al. (2010), argue that there are two kinds of
relationships considering information flow between stakeholders.
First, they achieve “arms-length” relationships which are characterized by limited or no
information exchange and distinct market transactions. In this situation, inventory is stored in
companies’ warehouses and it is transported to the customer when it is necessary. On the
other hand closer relationships in which “joint ventures, vertical integration, and
partnerships” take place (Lambert et al., 1996) lead to “innovation, trust, responsiveness,
and quality”(Porterfield et al., 2010). The companies’ performance is significantly enhanced
with information exchange as companies cooperate in a more efficient way by coordinating
their activities. This significantly affects inventory since, for example, a customer may delay
purchasing materials and follow a policy that approaches a “just-in-time” model by using
supplier knowledge who can share quantity information. Moreover, as mentioned
before,information exchange and the collaboration in the supply chain can significantly
improvecost performance, quality, and revenue (Goffin et al., 2006). Specifically, through
information exchange companies achieve reducing inventory and eventually inventory cost
by forecasting demand using data provided from suppliers concerning product demand and
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quality of the products they need to have in stock resulting in the increase of revenues.
Porterfield et al. (2010), also argue that information exchange between suppliers and
companies is essential for coordinating the holding and transportation of resources.
According to Porterfield et al. (2010), in some cases, opportunism is developed between
stakeholders. Williamson (1981) and Huo et al. (2016), argue that opportunism leads to
substandard collaboration between stakeholders that can subsequently endanger the supply
chain. An example connected with inventory is when a company has only one supplier; if the
supplier thinks in an opportunistic way, he may “push some of its inventory on to the
company or even refuse to fulfill a company order” (Porterfield et al., 2010). Therefore, the
company has either to comply with this with unpleasant results such as customer
dissatisfaction due to unfulfilled order or choose a different supplier with potentially serious
risks, such as new supplier's untrustworthiness. (Porterfield et al., 2010; Lambert et al.,
1996).
2.4Factors affecting supply chain management
This chapter explores inventory ownership relation to supply chain management.Firstly, the
literature shows that product quality is significant for companies (Matsa, 2011). It is not only
before the delivery that a company has to promise good quality products to its customers but
it also has to be reliable after the delivery, meaning that the products have to be in good
shape to keep the customers satisfied, thus improving the company’s reputation so that
more customers purchase its products (Matsa, 2011; Stevens & Johnson, 2016). Moreover,
the assortment of products is a significant factor for company revenues (Matsa, 2011;
Rodríguez & Aydın, 2015). Companies prefer to have a big assortment of products to draw
in more customers. It is crucial to provide as many products as possible to customers in
order to beat competitors and take a larger market share, meaning the percentage of sales
that a company has over total market sales (Rodríguez & Aydın, 2015). Another factor
influencing sale revenues is the development of IT platforms (Stevens &Johnson, 2016)
since companies want to increase information flows between their suppliers and customers
(Stevens & Johnson, 2016). Specifically, companies in e-commerce have flexible and easy-
manageable platforms for their customers to easily pick products and their suppliers to
upload their products without communicating in-between with the company. This usually
happens in drop-shipping as suppliers have access to company platforms to directly sell
their products and take advantage of company’s advanced software (Dennis et al., 2016).
Although the referenced articles depict some of the factors influencing inventory
management and explain the importance of information flow for inventory ownership, they
focus on transactions between industries, meaning manufacturing companies, and their
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suppliers. So, there is a lack of information concerning the transactions of wholesalers and
retailers and the way they can manage their inventory in order to increase their revenues.
Concerning articles referring to the inventory management of wholesalers and retailers,
there is a similarity between them and this research. Thus, it is reasonable to look at the
methodology followed. Lambert & Cooper (2000) along with Tsay & Agrawal (2004) focus on
factors such as inventory, supplier relationship, and distribution system. Tsay &Agrawal
(2004) developed a model to examine different parameters and Lambert & Cooper (2000)
used a case study, interviewing managers in depth about the factors that influence the
supply chain. The managers represented different functions, levels, and processes of their
companies. There are many similarities with current research as the questions covered
topics such as customer service management, order fulfillment, procurement cost and
inventory management. However, this research concentrates on inventory management and
attempts, via the interviews, to examine the significance of inventory ownership as a factor of
wholesalers’ and retailers’ sustainability and growth. Therefore, it aims to fill the literature
gap on what are the inventory ownership strategies of wholesalers and retailers and how
inventory ownership affects their performance and eventually the whole supply chain.
3. Methodology
3.1 Method definition
Gioia & Pitre (1990) give a definition of theory “as any coherent description or explanation of
observed or experienced phenomena” and state that theory building is the process to test,
generate and refine the description of these phenomena. This research examines if and how
inventory ownership affects inventory management. As was stated in section 2 there is a
lack of information on how inventory ownership affects inventory management and
eventually the supply chain. Theory-building research can examine if and how the supply
chain is affectedby inventory ownership. Thus, this research is theory building, as it is the
most suitable type to answer the research questions.
An exploratory study is conducted in order to gain further insight on wholesaler and retailer
strategies concerning inventory ownership and its effect on the supply chain. The most
suitable method for this type of research is multiple case studies in order to reveal new
knowledge about inventory ownership in e-commerce companies. This is done through
primary research by collecting the data needed from companies. Furthermore, through
literature the choice of multiple case studies is validated as Karlsson (2016) states that case
studies are used to explore unveiled areas. Specifically, multiple case studies are necessary
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in order to find if revenues are increased with a different strategy on inventory and which
factors influence revenues.
3.2 Case selection
The setting is set in a supply chain environment in order to examine what companies do with
their inventory, meaning if they decide to own it or mandate the ownership to their suppliers,
and according to their decision what is the relationship with them. The companies are three
wholesalers/retailers, meaning that they perform wholesaling and retailing and two retailers
in the Netherlands. The two wholesalers/ retailers own big warehouses where they store a
large assortment of spare parts for electronic devices and they sell them mostly in the
Netherlands and in central Europe (companies 2 and 5). The third wholesaler/retailer
company differs in that it does not sell just a specific kind of products (company 4). The two
retailerssell respectively children equipment (company 1) and clothing (company 3). All
companies participating in this research are selected because they perform e-commerce.
This research investigates how products are bought, stored and delivered to the customer as
it is uncertain how inventory ownership influences profits of e-commerce companies. Table 1
summarizes information concerning each company and choices on suppliers, use of
warehouses to store their products, and drop-shipping.
Table 3.1 Company data
Company Products Suppliers Warehouse Drop-shipping
1 Children
equipment
Central Europe-
“Far East” Yes No
2
Spare parts for
electronic
devices
Central Europe-
“Far East” Yes Yes
3 Clothing USA No Yes
4
Large
assortment of
products
Global Yes Yes
5
Spare parts for
electronic
devices
Central Europe-
“Far East” Yes Yes
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3.3 Data collection
The participants in this investigation are operations and supply chain managers. Eisenhardt
(1989) states that "the concept of a population is crucial because the population defines the
set of entities from which the research sample is to be drawn". Hence, it is important to
choose the participants in this research in order to have as trustworthy results as possible.
The managers chosen have vast experience in their respective fields and can provide high-
quality information on inventory. Furthermore, the types of companies needed for the
research are three. Specifically, type A is for one-order contracts, type B for long-term and
type C for long-term but here the company follows only drop-shipping.The table below shows
the type of the company compared to the contracts it prefers to sign with its suppliers.
Moreover, it depicts the number and the position of the interviewees within their companies.
The goal of this research is to assemble information on inventory ownership and secondly on
how it can influence inventory management and eventually the companies’ performance in
the supply chain. Multiple case studies are conducted because they support a statement
with convincing evidence (Gustafsson, 2017) and increase the external validity as the
research results can be generalized through large data gathering. On the contrary, a
singlecase study leads to deep investigation, though there is a limitation generalizing the
conclusions (Karlsson, 2016). So, due to the volition to have a deeper investigation on a
particular factor influencing revenues, time limitations and to increase external validity case
studies in five companies are conducted.
Table 3.2 Company type and interviewer’s position
Company Company type Interviewer’s Position
1 A Manager in Supply Chain
2 B Operations Manager
3 C Operations Manager
4 B Manager in Supply Chain
5 B Operations Manager
Data is collected through semi-structured interviews. Semi-structured interviews are selected
because questions are pre-determined, answers are not pre-determined, and other
questions may come up from the dialogue as there might be issues that are not considered
before the interview (Whiting, 2008). In order to be more specific, managers are asked pre-
determined questions about inventory management and relationship with their companies’
suppliers in order to elaborate on their thoughts and give a general picture of how their
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companies’ perform considering not only inventory ownership but inventory management.
Thus, the open questions allow for more detail and thought in each answer, which adds
value to the research.
Blumberg, Cooper & Schindler (2014) and Tellis (1997) suggest the construction of a
detailed research protocol which helps the interviewer to check every question when he
faces the interviewees. The authors also indicate that data validity and reliability are
increased with protocol use. Tellis (1997) mentions that a protocol must include an overview
of the research, needed procedures, case study questions for the interviewees and a format
guide for the report.
The interviews are structured in a way that helps determineif and how inventory ownership
influencesinventory management. They are conducted through Skype or at the interviewee
workplace. The interviewees have to be prepared, so the protocol is sent one week before
the interview. The interviews last about 40-60 minutes and the whole process is recorded
with the managers’ permission. They are structured in two parts. The first part contains
general questions about the interviewees. The second part contains questions about
inventory strategy, relationship with the suppliers and reasonsdetermining inventory
decisions. After the transcription, the interviews are sent back in a written form to be
evaluated for possible errors. Finally, there is the last contact with the interviewees for
corrections needed and for confirmation.
3.4 Analysis
According to Karlsson (2016) after the visits, the data has to be transcribed in order to not
waste time and neglect writing significant information and to get ready to correct any
mistakes after the re-examination of the interviewees. Then, organization and categorization
of the answers take place. Specifically, answers are coded and counted for frequency. Thus,
qualitative data can be easily reproduced by following the same coding sequence and the
same protocol can be used in other settings. The figure below represents the coding tree.
The appendix contains the detailed coding system. The next stage consists of analysis and
comparison of the results with other cases results.
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Figure 3.1 Summarized Coding Tree
Finally, in order for this research to have validity and reliability and avoiding bias,
triangulation method is performed. Specifically, by combining data findings from semi-
structured interviews and literature the results are more valid and reliable.
4. Findings
The data analysis offers an opportunity to further investigate the relationship and the
influence of inventory ownership on the supply chain. In the first part, we discuss factors that
influence a company in choosing a particular inventory strategy. In the second part, we
explore the relationships between the companies and their suppliers. The decisions are
made after examining the coding tree. The first order codes (interview data) are analyzed
from the perspective of inventory ownership. This helps to categorize the first order codes to
second-order ones. The second order codes are further grouped in third order codes which
are inventory management, relationship with suppliers and reasons determining inventory
decisions. Through the findings, we try to find the interaction between inventory ownership
and those three categories.
inventory maagement
inventory info
inventory placement
demand forecast
relationship with suppliers
supplier selection criteria
info on emergencies
buyer-supplier relationships
relationship with
manufacturers
contract strategy
reasons determining
inventory decisions
inventory prerequisites
joint relationship
efforts
revenues' influencers
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4.1 Inventory ownershipstrategy
First, we want to investigate the connection between inventory ownership and inventory
management. Therefore, according to each inventory ownership strategy (push or pull), we
examine how inventory management is implemented. In order to facilitate that, inventory
management is divided into three categories, inventory information (general information
about inventory), inventory placement and demand forecast. In addition, we consider the
reasons determining inventory decisions (inventory prerequisites, joint relationship efforts,
revenues' influencers).
Considering inventory placement for a company applying a push strategy, in order to be able
to take the stocking decisions (the number of products stored), a substantial initial
investment in warehouses and employees is needed. Companies are willing to make such
investments since by handling their own inventory they can guarantee the availability of their
products and control their distribution. This is apparent from Manager 4 who states “we have
our warehouses because we want to control our stock and deliveries." Additionally, by
following this type of inventory ownershipstrategy, they can avoid getting involved with
suppliers that are deemed unreliable to make deliveries on time. This also follows from
Manager 2’s statement who states that “we keep inventory only in this building. However, we
do in some cases drop-shipping with trusted suppliers to save time and money”.
Furthermore, another reason for which a company might consider owning their own
warehouse, and as such avoid the aforementioned risks, is that the total costs are
decreased in the long term. Besides, through the revenues' influencers, category Manager 2
states that "revenues are also increased through inventory as the cost of each product is
decreased”. Moreover, some companies invest initially in warehouses to check the quality
and add value to their products.This is also the case for companies dealing with refurbished
and used products, as they have to first test these products to assure that their customers
receive a good service. In addition,as the number of products to be tested is large they
prefer to accumulate them in a warehouse before testing them.Manager 5 says “… testing
the products, which is really important as it is our policy to gather and test them before
reselling them because most of them are used and refurbished. Except those situations, we
cannot risk selling untested products, because of the strong possibility to be broken. Then
we have to search for new ones, spend more money and dissatisfy the customer.”However,
in cases of limited initial resources, companies might choose differently, andperform drop-
shipping.The reason for not considering other choices (e.g. loan, investors) is that it is hard
to find people to invest in their companies, or they are afraid of the economic consequences
of a loan.This is apparent from Manager 3, who states:“we only do drop-shipping as we
cannot invest money to keep inventory at the moment or take a loan as we are new in
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business and we have not decided yet if it is the right time to take a loan and develop, so
there is only one way to do it. The satisfaction level of the customer is not influenced by the
customers' sacrifice delivery time for quality."Finally, some companies choose to direct their
limited available resources towards marketing rather than operations due to their belief that
one of the most important revenues’ infuencers is brand. Manager 1 states that “brand is
one of the most important factors influencing revenues because through the years we are
famous for our products and this keeps us on top of the market. We put lots of effort to keep
it up.”
On the other hand, because e-commerce is hectic and the business market is unstable, the
future is difficult to forecast. Thus, regardless of their initial inventory strategy, whenever
possible, companies perform drop-shipping rather than extend their inventories. This is a
rational move, as companies are cautious with new products and try not to risk staying with
unsold inventory.Manager 2 indicatesthat“however, we do in some cases drop-shipping with
trusted suppliers to save time and money. For example, we collaborate with a supplier for
house products such as washing machines, because he is more experienced in this domain
considering demand through the year, and we want to do it like this to see how this
newinvestment goes.”Additionally, in some cases,after forecasting demand, due to
warehouse space limits, companies decide which products to store and which to have drop-
shipped. The advantage of this approach is that they can sell more products than they can
stock. Therefore, they transfer the risk of keeping stock to their suppliers, trading-off delivery
times of their products to the final customers. Manager 4 supports this by stating "It is not
possible to stock all of our products. So we decide which products we want to stock and
which will be sold via our sellers. The demand is different for each product so we forecast for
each one differently.However, the satisfaction level is lower when doing drop-shipping as we
cannot deliver the next day because the supplier usually delays delivering.” In
addition,Manager 2 supports also that one of the reasons affecting inventory decisions is the
quantity companies want to keep in their warehouses by stating that "we already do drop-
shipping to avoid amassing inventory and if we reach our inventory threshold we will do it
more.”Suppliers take this risk because of inventory pooling, as they want to reduce variability
and serve many customers with the same inventory. Furthermore, e-commerce companies
might follow a different strategic approach, that is, drop-shipping by outsourcing their
inventory. This strategy dictates that companies outsource their inventory. This approach is
beneficial for companies since while the products are owned by them, they are not occupied
with inventory management and distribution. This is apparent from Manager 1, who says “we
do outsourcing, it is more cost-effective. There are pluses and minuses, for example, we do
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not care about the distribution to stores, because the other company will deliver, but of
course we pay rent each year."
Additionally, companies might choose to performdrop-shipping based on other factors as
well, such as a big assortment of products. It is of crucial importance to e-commerce
companies to allow their customers to choose from a wide variety of products. However, this
is impossible for companies with limited resources and time. As such, they consider drop-
shipping as an effective option. Manager 4 states that "in order to offer our customers big
assortment, the inventory is not only our inventory but what is available in the country.”
Finally, another factor for performing drop-shipping is time pressure. Due to the customers’
urgent needs companies cannot purchase the product and resell it, so they choose to let
their suppliers make the deliveries. Manager 5 says that “when a customer is in a hurry we
do drop-shipping after informing him,..."
4.2 Relationships between companies and suppliers
Relationships developed between companies and their suppliers are another crucial point
concerning this research. Specifically, companies answer how the buyer-supplier
relationships and the contract strategies (for how long the contracts are signed and why)
influence their inventory ownership strategies.
The inventory strategy of each company determines the relationship with its suppliers. In
particular, companies following a pull strategy need to develop increased information flow
with their suppliers. Therefore, they exchange information with their suppliers on the number
of products and delivery time, due to their willingness to deliver products to the final
customer on time and keep the satisfaction level high. Manager 3 supports that by indicating
that "communication is really important as drop-shipping needs perfect communication for
the company in order to define the return policy and track products’ route. So communication
serves in satisfying our customers and be prepared to deal and replace undelivered orders."
This stands true since companies want to strengthen relationships, build trust and eventually
ensure the suppliers' compliance with the long-term contracts signed, to perform effective
drop-shipping. Manager 2 supports this by stating that “communication is definitely
important; if it is bad then the cooperation won't work. We plan trips to the Far East to
improve relations and on a daily basiswe communicate by e-mail and Skype”.The
companies’ decision to build up the relationship with their suppliers is also supported by the
statements of Managers 4 and 5 that “we offer a lot of market information to the supplier to
inform him about future demand and be prepared for future orders. The supplier must be
accurate about the content and the delivery time, otherwise we stop
21
cooperating"and“communication is really important in broker business. We have close
contact with our suppliers and we build trust through the years.”This situation where
companies implement drop-shipping differs from the one, where there is no drop-shipping,
as the companies with drop-shipping sign long-term contracts and they want to have perfect
cooperation for the whole contract duration. So, companies that perform drop-shipping need
to be in touch with their suppliers to strengthen their relationship due to both sides
dependency from each other, as the companies want their products to be on time and in
perfect condition to the customer and the supplier wants the cooperation to expand and sell
more products.
On the other hand, companies tend to opt for a different inventory strategy, when they sign
one-order contracts, i.e. when the supplier is responsible to deliver just one order. In this
case, there is no need for a strong relationship between the supplier and the company, since
the deal is temporary. As such, the relationship between the companies and their suppliers
is kept on a basic level, meaning that companies only share information concerning the
availability of suppliers’ products in order to make an order. The suppliers, in contrast, need
to be aware of the companies needs, so they share information only to ask companies about
possible future orders.Manager 1 supports this by stating that “communication is not much
improved considering logistics, marketing, and sales prices, but the supplier has to think with
you, meaning that the supplier thinks what is the best way of delivery, the best way of
packaging, so we think as a supply chain. In this business, we are not that far yet, we think
about the quality of the product, then price and we are that busy with the supplier to do it, so
we haven’t improved much communication for the other areas of interest.”
5. Discussion This study investigates the effect of inventory ownership on the supply chain and how we
can generalize the results found. In order to understand this effect, we try to answer three
sub-questions which can show to what extent this effect exists in the supply chain.First, this
study examines what strategies are implemented concerning inventory ownership and what
is the importance of inventory ownership for inventory management. Therefore, we look into
the impact of different inventory ownership strategies on companies (Davis et al., 2014).
Moreover, we examine if eventually, inventory ownership is a key factor for companies'
profitability (Shen et al., 2016).Finally, we examine the relationship of the companies with
their suppliers to observe its influence on companies’ inventory ownership strategy.
We perform interviews with managers of 5 companies, throughout which we try to
understand which strategies and why are implemented amongst wholesalers and retailers
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concerning inventory ownership.
First, we find that companies implement drop-shipping due to their willingness to increase
profitability based on cost decrease.In addition, there is an effort to identify which trade-offs
are made considering inventory according to each strategy. This comes to an agreement
with Davis et al. (2014). Furthermore, we expect to find an increase in communication and
eventually an amelioration in relationships between companies and their suppliers when
companies implement drop-shipping (Xu et al., 2016). Finally, we assume that
manufacturers, being the most important suppliers of companies play a significant role in the
supply chain, influencing companies’ inventory ownership strategies(Shen et al., 2016).
In our results, we find that companies face different risks concerning inventory ownership
when implementing different strategies. Specifically, each strategy allocates the risk of
unsold products to different parties. Although by following a push strategy,companies have
the control of the distribution (Schnackenberg & Tomlinson, 2016), theyface the risk of
unsold products. On the contrary, in a pull strategy, the risk is transferred to the suppliers
who have control of the distribution. Even though most of the companies in this research
follow a push strategy, we observe that companies can adapt to a pull strategy and
implement it adequately. Therefore, the findings are in compliance with Davis et al. (2014),
indicating that even if companies want to own their products and have control of the
distribution, they tend to transfer the risk of ownership whenever they can. However, in our
study, which examines only e-commerce companies we observe a greater tendency of the
companies to perform both inventory strategies, than the one described by Davis et al.
(2014). This may occur due to the rapidly changing nature of e-commerce itself, that forces
companies to always be in line with new products and although implementing a push
strategy they change it to pull for these new products based on the suppliers’ experience of
storing and delivering them.
Furthermore, we find that although Davis et al. (2014), and Shen et al. (2016) indicate the
risks considering inventory ownership and how companies implement drop-shipping, they do
not state why. There are three different reasons indicated by the companies. First, it is
indicated that some companies implement drop-shipping when the suppliers are
experienced in delivering a certain product category and trusted, so the company has fewer
inventory costs. Second, some companies do drop-shipping as there is not enough space for
all the available products. Finally, some companies do it when a customer wants the order
delivered immediately, so there is not enough time to acquire and test the product before the
delivery.
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Furthermore, one of the examined companies follows a pull strategy. However, based on our
research results, it does not have the opportunity to choose between a push or pull
strategy.This is not in accordance with the findings of Davis et al.(2014) who suggest that
every company can choose between the two inventory ownership strategies.The reason for
the discrepancy between research results and those reported by the authors is that this
company does not have the budget to invest in a push strategy, so it implements only drop-
shipping (pull).
The next step in this research is to examine the information flow exchange and the
relationship between the companies and their suppliers. We find that companies which
follow a push strategy concerning inventory ownership and sign one-order contracts, do not
exchange much information and they do not develop close relationships with their suppliers.
On the other hand, an increased information flow is observed in companies that follow a pull
strategy and sign long-term contracts: they develop a close relationship with their suppliers,
which they try to improve throughout the contract duration. Therefore, the findings are
consistent with previous research conducted by Davis et al. (2014), Shen et al. (2016), and
Xu et al. (2016), in that the relationship between companies and suppliers plays an important
role in inventory ownership. A possible explanation about companies that follow pull strategy
choices considering relationships with suppliers, is that they pick their suppliers cautiously,
so they can extend their cooperation in the future and implement more drop-shipping without
influencing customer satisfaction. This happens as the suppliers get familiarized with
companies and deliver the orders faster.
6. Conclusions
The main goal of this research is to investigate how inventory ownership affects inventory
management. Specifically, we examine the inventory ownership strategies and the reasons
why companies choose to follow each one of them. Moreover, we examine the relationships
developed between companies and their suppliers and how these influence the companies’
inventory ownership strategies. Finally, we investigate if and how industries affect the
companies’ inventory strategies, seeing that they have a leading role in the supply chain.
In this qualitative study, we perform multiple case studies to investigate if and how inventory
ownership affects the supply chain and how the results concerning inventory ownership can
be generalized. Specifically, after interviewing managers from 5 companies and after
gathering, transcribing and summarizing our data, we compareit with the literature to extract
our results and find possible gaps which may lead to further research.
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6.1 Conclusions of the research
Formost of the companies interviewed, it seems more feasible to follow a push inventory
ownership strategy and keep control of inventory than training suppliers to perform drop-
shipping. However, when they find a good opportunity for drop-shipping they implement it.
Our findings indicate that there are three main reasons explaining why they do it. First, they
implement drop-shipping when their suppliers are deemed trustworthy and experienced with
certain product deliveries, in order to decrease their inventory costs. Another reason for
performing drop-shipping is the limited warehouse space to store their products. Finally,
companies that want to purchase and test refurbished and potentially defective products,
have customers that require immediate attention. As such, companies do not have time to
perform the necessary tests before reselling the products, so they implement drop-shipping.
Moreover, the relationship with their suppliers influences the companies’ strategy.
Considering contracts, there are certain strategies to determine the criteria for selecting
certain suppliers and eventually determine the inventory management.Specifically,
companies that sign long-term contracts implement drop-shipping when they are presented
with the opportunity and have an increased information flow with their suppliers as in most
cases they want to extend this cooperation. Moreover, in some cases, companies do not
have available resources to spend on keeping inventory so they implement only drop-
shipping.In contrast, companies signing one-order contracts try to improve mostly their brand
name through marketing and they do not focus on improving relationships with their
suppliers as they do not want to invest their available resources in that area.
Finally, the managerial implications of this research are presented. We provide managers
with information about inventory ownership strategies and reasons to choose the most
suitable for their companies. For example, if their company follows a push strategy and there
is not enough space to store all the products needed, then it should be wise to implement
drop-shipping. In addition, after implementing drop-shipping the manager should consider
strengthening the relationship with its suppliers in order to assure that the products are
delivered to the final customer intact and on time.
6.2 Limitations
Although the inventory ownership strategies and the relationship between companies and
their suppliers are described, there are still limitations to this research. First, although there
are enough type B companies to safely generalize the conclusions regarding this company
category, there are not many participants of type A and type C company categories, by
cause of time limitations. Moreover, although there are several statements indicating that in
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the future the strategy considering inventory ownership may change, there is not enough
information on how this could happen and with what cost.
6.3 Recommendations for further research
Based on the findings of this study two recommendations can be presented for further
research. First, the companies’ statement that drop-shipping can be extended, but it will take
time and money to train suppliers to meet the expectations should be investigated further. In
addition, there should be a research on the subject of which companies and to what extent
can do drop-shipping, as well as how long it will take for them to adapt to the pull strategy.
Moreover, from a practical point of view, type A companies should investigate further in
order to check if their current inventory management is the most profitable or if they can
follow a different path like type B companies and invest in drop-shipping.
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Appendix I: Case Study Protocol
Research overview
The interviewer aims at investigating the influence of inventory ownership on inventory
management. Furthermore, he seeks to find the relationship of other factors that may come
through the research about sales revenues. Finally, five interviews expose information about
the way a company handles inventory.
Interview procedure
The whole procedure will last approximately one hour. During the interview, there are
several questions without pre-determined answers that will be asked. Most of them concern
material flow, logistics, shipment transportation and volume and relations with other
stakeholders. Afterward, there is space for conversation on data processing. The data
gathered are transcribed and summarized in order to exclude research conclusions. After
the data is transcribed is sent to the interviewee for the last check. Finally, the interviewer is
at the interviewee's dispose of for any question during, before and after the procedure.
Notes
The interviews are recorded after the interviewee’s consent and interviewer’s reassurement
regarding information confidentiality in order to interpret correctly all the given information.
Hence, the audio files are not redistributed, are only for research use and will be destroyed
after thesis approval. Furthermore, the interviews are conducted anonymously, meaning that
there will be no further impact on the interviewee or the company he works for. If there are
any questions please contact the interviewer. Thank you for your participation.
PART A
QA.1
1. What is your role in the company?
2. How long do you work at this company?
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3. In your present position?
4. What positions have you worked within the company?
5. How did you become a manager? Briefly describe your role in the department.
QA.2
1. What is your current project in the company?
2. Do you have a supervisor and co-workers working on it or the whole project is carried
only by you?
3. What are the properties of your department?
QA.3
How many projects have you carried out similar to the current one?
PART B
QB.1
1. What is your inventory strategy? How do you organize the whole process?
2. Do you have warehouses to store products or do you do outsourcing? In which cases do
you prefer drop-shipping? Why do you prefer it?
3. In how many days after product arrival, the product is transported to the customer?
4. How many products are not delivered next day? Why? How do you consider it?
5. When do you buy your products? (before or after a customer’s order)
6. How many are the company suppliers?
7. What is the satisfaction level? (the percentage orders are fulfilled in time) Why do you do
that?
8. How many days of demand do you keep in inventory?
9. What is the annual inventory and transportation cost? (Do you believe that it can be
reduced? How?) Do you have partnerships with suppliers and other wholesalers to
reduce it?
QB.2
1. Which factors do you use for selecting suppliers?
1.1. Are delivery times a significant factor influencing supplier selection?
1.2. Are your suppliers ready to provide their products immediately in case of an
emergency (stockout)?
1.3. Is the taxation different if you purchase a large amount of products?
1.4. Why do you think your strategy is the most appropriate? Have you considered of
others equally efficient?
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1.5. Is good communication an important factor for selection? Do you believe that the
company should focus on improving communication? Why?
2. How do you improve your relation with suppliers?
2.1. What would be the ideal relationship with a supplier?
2.2. How do you get there?
2.3. Do you sign contracts with suppliers or just buy? If you sign contracts is it difficult to
come to an agreement (Yes or No)? Why is that?
3. If the suppliers are industries, what is their role in the supply chain? (as industries control
the product availability it is crucial to know what are the alternative choices when they
stop selling a specific product. Do you search for similar products?)
4. Do you follow up on your promises? (opportunism)
QB.3
1. Which are the reasons and considerations for determining the inventory decisions?
2. Do you consider any cooperation with other stakeholders to share inventory and
reduce costs?
3. Why do you follow that strategy on buying products?
Appendix II: Coding Tree
Link to inventory ownership and relationship with suppliers
data reduction (first order codes) Descriptive code (second-order categories)
Link to inventory management (Third Order Theme)
inventory management
"Most of the products must be available to the customer, the products should be delivered to the customer within 24 hours"
inventory info inventory management
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"We keep large assortment kept on stock to satisfy customers and we usually deliver in 24 hours. We would change our strategy only if our warehouse gets full. Factors influencing strategy are the number of products, the fill rate, days in inventory, and customers"
"We keep no inventory and we face problems with delivery times "
"Usually, we buy from the suppliers, stock the products in our warehouses and then sell them to the consumers. We also sell products from third parties. The webshop is available for other sellers to sell their products and also our warehouses are available to stock their products. However, we want to have more and more items on stocks for shorter delivery times. In the Long Tail policy is difficult to say how many days of demand we stock but the stock levels are quite low."
"We buy when we find a bargain, after customer's order we store the product to test it and then in 24 hours we send it"
"We do outsourcing, it is more cost-effective. There are pluses and minuses, for example, we do not care about the distribution to stores, because the other company will deliver,but of course we pay rent each year."
inventory placement
"We keep inventory only in this building. However, we do in some cases drop-shipping with trusted suppliers to save time and money.For example, we collaborate with a supplier for house products such as washing machines, because he is more experienced in this domain considering demand through the year, and we want to do it like this to see how this new investment goes."
" we only do drop-shipping as we cannot invest money to keep inventory at the momentor take a loan as we are new in business and we have not decided yet if it is the right time to take a loan and develop, so there is only one way to do it. The satisfaction level of the customer is not influenced as the customers sacrifice delivery time for quality.”
"We have our warehouses because we
32
want to control our stock and deliveries.The other sellers have their inventory policies(drop-shipping)"
"We have our warehouse and we store all of our products there. However, when a customer is in a hurry we do drop-shipping after informing him, without testing the products, which is really important as it is our policy to gather and test them before reselling them because most of them are used and refurbished. Except for those situations, we cannot risk selling untested products, because of the strong possibility to be broken. Then we have to search for new ones, spend more money and dissatisfy the customer"
"For products, we have demand we make sure we have stock in our warehouse. Depending on delivery time and the frequency of which we want to have a supplier delivery at the warehouse that takes care of the forecast period. So, it is usually one week because that is the time needed for a supplier to deliver an order (from Netherlands or Germany) so if the forecasted demand is 10 pieces per week with a deviation of 3 pieces then 13 pieces will be ordered"
demand forecast
"35 days. We plan our strategy and put our money cautiously to keep the satisfaction level high."
"We do not keep inventory"
"It is not possible to stock all of our products. So we decide which products we want to stock and which will be sold via our sellers. The demand is different for each product so we forecast for each one differently. However, the satisfaction level is lower when doing drop-shipping as we cannot deliver the next day because the supplier usually delays delivering "
"It is expensive to keep everything in stock. So we stock cheap products and 65% of our products is bought after a customer's order"
33
relationship with suppliers
"Assortment (what do we want to have in our stores), price, quality, customers' will, supplier flexibility, we do not care a lot about delivery times"
supplier selection criteria
Relationship with suppliers
"Cost, quality, compliance with rules and law, service (it is not the most important one)"
"Quality, price, close cooperation"
"Brand, assortment, delivery times (not to the length but the reliability of delivery times), price, quality"
"Quality, price, delivery times"
"No emergencies for us often, but what we do is speak again with suppliers"
info on emergencies
"It depends on the supplier if he can provide products immediately"
"No emergences as the demand is low and is fulfilled after customer's order and the suppliers are consistent"
"We offer products that are available maximum in 3 days. So the consumer can only see what is available on this day or on 2 or 3 days, so we have no emergencies."
"We face rarely emergencies. However, when needed the suppliers respond immediately"
"Communication is not much improved considering logistics, marketing, and sales prices, but the supplier has to think with you, meaning that the supplier thinks what is the best way of delivery, the best way of packaging, so we think as a supply chain. In this business we are not that far yet, we think about the quality of the product, then price and we are that busy with the supplier to do it, so we haven't improved much communication for the other areas of interest."
buyer-supplier relationships
"Communication is definitelyimportant; if it is bad then the cooperation won't work. We plan trips to the Far East to improve relations and on a daily basis we communicate by e-mail and Skype. Opportunism exists but there has to be eliminated as much as possible because the whole supply chain may collapse"
"Communication is really important as drop-shipping needs perfect communication for the company in order
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to define the return policy and track products’ route. So communication serves in satisfying our customers and be prepared to deal and replace undelivered orders."
"Communication with suppliers is important. We offer a lot of market information to the supplier to inform him about future demand and be prepared for future orders. The supplier must be accurate about the content and the delivery time, otherwise we stop cooperating"
Communication is really important in broker business. We have close contact with our suppliers and we build trust through the years. Opportunism exists but we try to avoid it through close communication because it is dangerous for our company"
"The role of industries is really important. If an industry wants to stop selling, first we have to talk about it and then if nothing comes out of it, we will find a second source with a similar product"
relationship with manufacturers
"They pose a major role because they can define the availability of a product"
"They have a major role as it is very difficult to cooperate with a competitor"
"We try to source the product elsewhere. It can be done, it depends on the brand and how special the product is."
"There is a strong possibility to source similar products from other companies. However, this cannot be for every product, so in some cases, unfortunately, we cannot find and sell the product"
"Each order is a different contract"
contract strategy
"We sign long-term contracts"
"No contracts, and it is difficult to cooperate with a competitor so there will be a big loss if I stop cooperating with the current one"
"We have long-term contracts about relations, how to communicate, the automation part,how to deliver content if they are legally ok. The contracts are not about time and volumes. They consider process reliability"
"We sign long-term contracts with most of our suppliers as we want to build
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trust"
reasons determining inventory decisions
"Demand, delivery time to the customer, lead time from the supplier (easier to get it from Europe than from the Far East), price (easier to buy and put to stock cheaper products)"
inventory prerequisites
Reasons determining inventory decisions
"Product life cycle, enrichment of stock"
"Demand, invested capital"
"Availability, reliability, offer specific famous brands but if we want to be specific it depends on many elements how to define what decision do we take, as the brand is important, the supplier,the width of the assortment, if is Long Tail or fast moving item we have to decide if it is profitable to purchase it or not"
"Demand, price"
"We think about cost savings, but it is not easy to form new deals, and drop-shipping for our company cannot be done at the moment"
joint relationship efforts
"We already do drop-shipping to avoid amassing inventory and if we reach our inventory threshold we will do it more. However, it needs to train the suppliers to do transportation"
"No cooperation for the moment"
"In order to offer our customers big assortment, the inventory is not only our inventory but what is available in the country”
"We do not think about it for the moment. We have our warehouse so we do not want to change strategy"
"Brand is one of the most important factors influencing revenues because through the years we are famous for our products and this keeps us on top of the market. We put lots of effort to keep it up. Others are the assortment, flexibility, and cost saving from inventory, transportation to expand the company" revenues'
influencers "Quality, product content, IT platform.Revenues are also increased through inventory as the cost of each product is decreased (not a major part though)"
"Quality,assortment, delivery times"
"Inventory availability, brand, quality, assortment, delivery times"
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"Assortment, quality, brand, IT infrastructure"
