Audio Duplication Services

Document Sample
Audio Duplication Services Powered By Docstoc
					Audio Duplication Services
 Audio duplication and distribution of CDs and
  cassettes

 Customer base consists of large record companies

 Distributes to a wide variety of retail outlets including:
      Music Stores, Wal-Mart, K-Mart, Best Buy, Circuit
       City

 Has about 20% of the $5 billion market
       Two other biggest competitors share 40% of the
       remaining market
Current Environment
 Retailers want record companies to manage and own inventory
  until it is sold
 Record companies are asking for help from ADS with both VMI
  and logistics
 Retailers have proposed that:
    Record companies decide album quantity and timing of
      delivery
          Base decisions on POS data feed from retail outlets

    Record companies own inventory until it is sold


 ADS currently ships to retailers’ distribution centers and retailers
   arrange for distribution to individual stores

 Retailers are providing incentives for ADS to direct ship to stores,
   but this creates several problems:
     Cost, Infrastructure, Expertise
Current Environment
 ADS uses multiple carriers on a shipment-by-
  shipment basis
    Inefficient, costly, and complex


 The future of audio duplication is in jeopardy
      On-line audio distribution (Napster, i-Tunes)
      Technological changes
      Piracy

 Record companies periodically review their contract
  with its audio duplication service
    ADS must react in order to remain competitive
Current Environment
 ADS uses multiple carriers on a shipment-by-shipment basis
       Inefficient and costly
       Complex

 The future of audio duplication is in jeopardy
       On-line audio distribution (Napster, i-Tunes)
       Technological changes
       Piracy

 Record companies periodically review their contract with its
   audio duplication service
     ADS must react to these changes in order to remain
      competitive
Case Discussion Questions
1. Why are ADS’s customers moving toward
   VMI arrangements?
Case Discussion Questions
1. Why are ADS’s customers moving toward
   VMI arrangements?

ADS's customers' customers, i.e., the national
  retailers, want to reduce inventory holding
  costs and expenses related to managing
  inventory by moving towards VMI
  agreements.
Case Discussion Questions
2. How will this impact ADS’s business? How
  can ADS management take advantage of this
  situation?
Case Discussion Questions
2. How will this impact ADS’s business? How can ADS
   management take advantage of this situation?

The most significant impact on ADS's business will be
  on its distribution functions because it will have to
  ship directly to the individual stores instead of
  distribution centers.
Transportation costs will increase due to the increase in
  the number of destinations.
Depending on its agreement with the record companies,
  ADS may incur additional inventory holding costs
  because compact disks and cassettes will spend
  more time in its system.
Case Discussion Questions
2. How will this impact ADS’s business? How can ADS
   management take advantage of this situation?

ADS should take this situation as an opportunity to re-
  design and streamline its operations and prepare
  itself for the general trend towards VMI in the
  industry.
This may help ADS to gain a competitive advantage,
  and potentially increase its market share.
Case Discussion Questions
3. How should ADS manage logistics?
Case Discussion Questions
3. How should ADS manage logistics?

Logistics is not a core competency of ADS.
The management team of ADS must address
  more crucial issues such as the emerging
  media distribution business over the Internet.
Therefore, ADS should outsource its distribution
  functions to a third-party logistics provider in
  order to focus on issues threatening its core
  business.
Case Discussion Questions
4. Why are the large national retailers moving
  toward a direct shipment model?
Case Discussion Questions
4. Why are the large national retailers moving toward a
   direct shipment model?

Under the proposed consignment scheme, inventory
  belongs to the suppliers until the products are sold.
So it would be inefficient and unreasonable if products
  were first delivered to distribution centers that belong
  to the retailers. This would add an unnecessary
  complexity to the system as to how goods in the
  distribution centers would be handled and ultimately
  delivered to the individual stores.
By encouraging direct shipments, retailers can reduce
  the warehouse space they rent or own, and reduce
  costs further.

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:10
posted:5/5/2012
language:English
pages:13