Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 1

MEGAMART SEASONAL DEMAND PLANNING CASE

Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 2

Table of Contents
Introduction......................................................................................................................................2
Problem statement...........................................................................................................................2
Push inventory to Stores..................................................................................................................3
Push strategies.............................................................................................................................3
Who use push strategy.................................................................................................................4
Issues with push strategy.............................................................................................................5
Effective use of Push Strategy.....................................................................................................6
Third Just-in-time Strategy..............................................................................................................6
Just-in-time..................................................................................................................................7
Failure in Just-in-time..................................................................................................................7
Demand patterns..............................................................................................................................9
References......................................................................................................................................10
Appendices....................................................................................................................................11
Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 3

Introduction

This case discuss the forecasting and planning issues and challenges that retailors face in

managing inventory and demand of consumers i.e. seasonality and products in bulk. Further in

this case we will analyze historical data of demand of SKUs to make proper system and develop

product flow in the company. Megamart is a retailor of big box home in united states. Company

offers products that help them to enhance their experience of home. Megamart offer wide range

of products and services for consumers with physical presence in 2000 retail locations and forty

thousand items in 26 different countries. Competition in the industry is very high and it was a

challenge for Megamart to identify customers demand and manage inventory accordingly.

Problem statement

Previously company was facing forecasting issues, forecasting was done based on

managers and buyers. Inventory was imported from china. Forecasting is done 90% based on six

months planning horizon. Along with that company was facing transportation issues. The

inventory of Megamart is bulky and was very difficult to handle. The unloading process require

additional labor and time. Company was also having storage issues. Top storage needed several

moves and it was directly stored on floor or cross-docked (CSCMP, 2010).

Push inventory to Stores

Company once received shipment direct in stores through bypassing Megamart

distribution this was done to avoid gridlock. But this push strategy failed because not all stores

have enough capacity to for inventory storage and there were few stores that needed additional

inventory. This strategy caused increased costs, service levels decreased and the market cost also

decreased.
Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 4

Second push strategy was to cross-dock all the SKUs to stores irrespective of that is

needed or not and that inventory according to the demand and without hurting sales. This was

also a failure because inventories were ended into wrong places.

The nature of demand in 1st and 2nd strategy the was based on the forecast of merchandise

and buyers stores. The traditional industry MAPE was used for demand forecasting.

Push strategies

There are a few differences between the push strategy and direct consumer demand from

stores. The push strategy is a top-down approach to marketing and sales. The company uses trade

promotion capital and sales force to convince consumers to buy a product. However, the pull

strategy works by getting consumers to come to the company's stores. It refers to consumers who

actively search for a product and fill their inventories through direct consumer demand. The push

strategy requires the manufacturer to get their product into the hands of the customer. This can

include fixing distribution channels, lobbying retailers, implementing a point-of-sale display, and

personal selling (Martin, 2012). This strategy is more effective for products with low or no shelf-

life. It does not create long-term customer relationships. The direct consumer demand strategy is

more expensive but more efficient in the short run.

The push strategy involves a company trying to increase its market share. It tries to reach

as many leads as possible and convert them to customers. An example of a push strategy is a car

salesman. A production company tries to convince a retailer to stock a product. A manufacturer

may "push" a product through a point-of-sale display. In this case, the manufacturing company

will be pushing the product to the consumer. A push strategy is an excellent option if you are

looking to increase your market share or sell more products. The push strategy involves pushing
Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 5

products to the consumer through resellers. This can result in economies of scale, which is

beneficial for both companies. But the push strategy is not the best fit for every business. There

are some major differences between the two, and it will depend on your objectives. The push

strategy is a great choice if your company is looking for a sales channel.

Who use push strategy

Companies using a push strategy typically have a long lead time and a high degree of

consumer loyalty. A company that relies on a push system is most successful when the demand

is predictable. For example, a company selling gourmet chocolate uses a push production system.

This strategy allows it to anticipate the seasonality of the product (Nerur et al., 2008). P. The

system has numerous benefits, but it may require stockpiling because it is not as accurate as a

pull system.

The push system is the most efficient in many cases. It requires fewer resources, but it is

more accurate than a pull system. In the case of a company that produces seasonal goods, a push

system may be more appropriate. A company that uses a pull system may benefit from a more

complex, expensive product. The cost of a bespoke product is often a more desirable option for

the customer.

Despite the differences between the two strategies, they serve similar objectives. The

push model is ideal for industries with seasonal products. It is highly efficient in a company that

sells goods to a large number of consumers at one time. It also benefits a company that produces

a high number of products. The push model is more efficient in industries that have predictable

demand. This strategy is advantageous in industries where demand is unpredictable and can't be

forecast in advance.
Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 6

Issues with push strategy

One issue of using the Push Strategy in marketing is that it is less targeted than the Pull

Strategy. With this strategy, you can only target the right consumers who are interested in your

products and services. This strategy is not good for raising awareness or engagement because

your potential customers will not be interested in reading your advertisements unless they

already have an interest in it. As a result, it will produce lower returns, but it will most likely

result in more sales.

Another issue of using the Push Strategy in marketing is that you can't reach every

potential customer. In fact, the Push Strategy can increase your sales figures, and is not always

effective if your sales staff are inexperienced. If you want to use this type of marketing, you need

to hire someone with experience in the field. After all, a well-trained salesperson can convince

even the most skeptical customers instantly. In order to make a great impression on your

customers, you need to avoid getting disheartened easily.

Effective use of Push Strategy

A push strategy can be effective when the company wants to promote its products to the

right customers. This strategy involves using promotional techniques to encourage customers to

purchase your products. The push strategy is effective when you have a limited timeframe for

your product. With the help of this strategy, you can reach your targeted customers within a very

short period of time. If you're trying to generate a large number of sales, push strategy is an

excellent choice.
Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 7

The Push Strategy requires a lot of planning. Using a push strategy should be used when

your product or service is unique or a product that's unique. While a pull strategy is effective

when your product or service is familiar, a push strategy is not always the best choice.

Depending on the goals of your business, a pull strategy can increase your sales volume. But if

you're looking for a more targeted audience, a push strategy may be the way to go.

In contrast to the pull strategy, the push strategy requires a sales force with in-depth

knowledge of your products and services. In this case, your sales team can answer any questions

your customers may have. By providing a fast response, you can improve your conversion rate

and increase your customers' trust in your product. You can also take advantage of trade

promotions to further push your market. Regardless of the kind of strategy you choose to use, it's

important to have a strong online presence.

Third Just-in-time Strategy

The third Just-in-time strategy was opted in which the containers arrived at distribution centers

when it was a peak time and then distribution was done based on the recent demand data. This

strategy was failure and created huge cost and a bottle neck in whole process. Grills inventory

was not on the shelves at right time. The cost of distribution was also increased. Though it was a

good strategy but the timing was not right. And doing this peak season was also a mistake. Just-

in-time

Just-in-time

A Just-in-time strategy is an inventory management system that minimizes the risk of

stocking obsolete or damaged inventory. It allows manufacturers to jump from product to

Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 8

product, reducing the amount of inventory they need to maintain. Additionally, a JIT system can

reduce storage space requirements, which can help companies downsize and cut costs. However,

there are a few trade-offs with JIT (Ohno, 1982).

When used properly, a Just-in-time strategy can create a ripple effect throughout

operations. Just-in-time can also help companies cut costs by lowering inventory costs. But while

implementing this strategy can lead to increased productivity, it can also be difficult to

implement and leave little room for error. Just-in-time is not without its cons. A poorly

implemented JIT strategy can cause supply chain disruptions and leave little room for error.

Failure in Just-in-time

Failure in Just-in-time is an unfortunate outcome of this supply chain management style.

This supply chain management style aims to minimize costs related to processes by moving

materials only when needed. Nevertheless, the cost of the system is not without risks. Several

factors can make it a poor choice. As with any other supply chain management style, just-in-time

is not without costs. But if you follow these guidelines, you should have no problems with your

supply chain.

One of the biggest problems with JIT is that it relies on predicting customer demand and

therefore is not very effective in dealing with unexpected demand. For example, if there is a

sudden spike in demand, a company may not be able to meet the demand, and customers will

have to wait for the product to arrive. This can lead to unhappy customers and the potential
Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 9

forfeiture of orders. While just-in-time can be a great way to optimize your supply chain, it is not

the best option for all companies.

Although JIT is a good choice for many businesses, it has its disadvantages. It lacks flexibility,

and it cannot cope with a sudden increase in demand. With no back inventory, companies will

have to wait for supplies or wait for a company to manufacture the product. These long delays

could lead to dissatisfied customers and even forfeited orders. So, you should carefully consider

your business model and consider how to adjust to it.

In general, JIT isn't the best choice for businesses that have inconsistent demand. It can lead to

unexpected costs, disruptions in production, and other problems. This is why it's important to

understand the risks of JIT and look for other ways to improve the process. This method may not

be suitable for every business, and it is not suited for all businesses. For example, Uber Freight

doesn't have the flexibility it once had.

JIT has many benefits. It saves money by reducing the need for inventory. It also allows

businesses to increase profits. It also reduces the need for backup inventory. In addition, it is the

most flexible method for businesses that experience recurring shortages. Just-in-time models can

result in increased profit. This method also avoids unnecessary hiccups and costs in delivery.

This method is the best option for businesses that have consistent supply and demand.

Demand patterns
The company was using mix of erratic demand patterns and long lead times. Company

have long order cycle. The order cycle is very long and customers’ demands are changing very

quickly so this was not allowing company to respond on time. Company was using mix of

demand patterns further in appendix 1 based on sales we have explained the demand patterns by
Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 10

year 2010. The demand of grills was seasonal and also depend on weather. There were other

additional factors as well that was contributing in increasing demand of consumers. Along with

that the demand forecast was based on qualitative terms. Company allocate products six month

advance that also cause problems in meeting the actual demand.

References
CSCMP. (2010). CSCMP. Retrieved from https://education.cscmp.org/products/case-study-
megamart-seasonal-demand-planning
Martin, B.R., 2012. The evolution of science policy and innovation studies. Research Policy,
doi:10.1016/j.respol.2012.03.012, in press
Nerur, S.P., Rasheed, A.A., Natarajan, V., 2008. The intellectual structure ofthe strategic
management field: an author co-citation analysis. Strategic Management Journal 29 (3), 319–336
Ohno, T. (1982). "How the Toyota Production System Was Created. Japanese Economic Studies,
83-101.
Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 11

Appendices
Appendix 1: Demand Pie chart
Running Head: MEGAMART SEASONAL DEMAND PLANNING CASE 12

Chart Title
3% 3%

4%
15% 5%

6%
14%
8%

9%
13%
10%
11%

1 2 3 4 5 6 7 8 9 10 11 12