High-Tech Answers to Distribution Problems at Rollerblade

HIGH-TECH ANSWERS TO DISTRIBUTION PROBLEMS AT ROLLERBLADE

When a manger finds that demand exceeds inventory, the answer lies in making more goods. When a manager finds that inventory exceeds demand, the answer lies in making fewer goods. But what if a company management finds that they just do not know which situation applies?

This is the situation that recently confronted management at Rollerblade, the popular skate manufacturer based in Minnetonka, Minnesota. Rollerblade has been one of the leading firms in the fast growing high performance roller skate marketplace, it matters a great deal for Rollerblade managers whether demand and inventory are in balance, or not.

Rollerblade was in a bind. The product literally could not be shipped out the door. The managers found that workers were not able to ship products because, as a result of poor storage structures, they could not find the products. Once they were found, overcrowded aisles, in addition to other space constraints, still prevented efficient shipping because the workers could barely manage to get the products out the door. "We were out of control because we didn't know how to use space and didn't have enough of it," said Ian Ellis, director for facilities and safety. "Basically, there was no more useable space left in the warehouse, a severe backlog of customer orders, and picking errors were clearly in the unacceptable range," added Ram Krishnan, Principal of NRM Systems, based in St. Paul, Minnesota.

The answer for Rollerblade was found in technology. High-tech companies have introduced a collection of computer simulations, ranging in cost roughly from $10,000 to $30,000, that assist managers in generating effective facility designs. With the help of layout Master IV simulation software, developed by NRM, Rollerblade Management was able to implement a new distribution design. As a result of the distribution improvement, Rollerblade was able to increase the number of customer orders processed daily from140 to 410 and eliminate order backlog. "Now we have a different business," says Ellis. "The new layout has taken us from being in a crunch, to being able to plan.

Questions:

1. With retailers as their primary customers, what customer competitive imperatives could be affected by Rollerblade's inventory problems?

2. How appropriate might a just - in - time inventory system be for a product such as roller skates?"

3. What opportunities are therefore Rollerblade managers to see FOR themselves as selling services, instead of simply roller skates?