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Supply chain management is the flow of the services and goods that are being moved and transported from the point of origin to the point of consumption. This is an extremely important part of any company or organization as a part of the company’s distribution strategies. “The merchandising restructuring is being done to add depth to REI's ability to deliver varied product assortments by market. The division's management team is being consolidated to enable payroll resources to be redirected to staff positions focused on ensuring product availability and proper inventory levels. Madsen said that the expectation is a significant improvement in REI's ability to respond to customer needs by individual store location, varying demographic segments in some markets, and even doing fine tuning of product, colors, patterns and styles at the local level. In the past 18 months, REI has eliminated approximately 200 company positions. Reasons for these reductions include the streamlining of support staffing, divisional restructuring and the Tokyo store and web site closure. In the same period the company added about 400 new positions through growth and the opening of six new retail stores. REI employs over 7,000 people. We have a terrific growing business, and we need to place our resources where they can enhance our ability to serve our customers," Madsen said. "These needed changes position us for a number of exciting customer-centric developments in the future”

REI in their current channel and methods of distribution utilize shipping products to location where demand is much higher for those products. In a recent article, “a new supply chain system that Recreational Equipment Inc. has purchased from Manhattan Associates Inc. will allow REI to fulfill orders to an additional 40 stores as well as to web customers without expanding its 520,000-square-foot distribution center in Sumner, WA, REI says”. REI found that they were spending a lot of extra money shipping heavy items to different distribution centers and then shipping from there to different stores. This was a double shipping method that a director of inventory found could be saved in costs in shipped from suppliers directly to each store with the SPS system.

Issues that arise with REI and their supply chain management include lack of good receiving staff, a form of letting staff know items would be shipped to the stores and sharing tracking numbers along with issues of electronic data interchange systems.

Forms to help create a positive environment for REI would be, new receiving staffs put into place to create a better staffing agency for receiving products implementing supply chain management staff and also implementing a form of letting all stores know they would be receiving stock. This would also help by sharing tracking numbers before the products left the suppliers, while letting REI know that items have been shipped and where they are located.

REI now chose to outsource to a SPS Commerce due to a higher volume of vendors utilizing this system, they utilize a form of shipping directly from the vendor to the store along with the technology to be efficient, while also creating a better cost to the company.

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