Case 2: Marathoner, a Runners Store That Goes the Distance on Inventory Control


Case 2: Marathoner, a Runners' Store That Goes the Distance on Inventory Control

For runners ”the people you see getting their daily exercise on streets and trails at all hours of the day and night and in all kinds of weather ”running shoes are the most important piece of equipment.[11] Stores that serve the market for serious runners devote most of their work space and inventory to running shoes. Marathoner is one of those stores. In addition to its storefront location, Marathoner buys booth space at expos held in conjunction with major road races, such as the New York or Chicago marathons or the Philadelphia Distance Race.

Running shoes come in many different models to meet a wide variety of running needs, foot types, body weights, and surface conditions. Shoes also come in men's and women's styles. Manufacturers make shoes to provide more motion control and to prevent over-pronation, a condition in which the foot strikes the surface heel first and turns inward excessively. Most runners have feet that pronate or turn inward a little, which provides natural shock absorption , but over-pronation requires more control to prevent a higher risk of injury . Motion-control shoes, because of their reinforced construction, also provide the most durability. Other types of running shoes focus on stability, which is often the best choice for runners not needing pronation control, but still provide durability. Still others feature greater cushioning, the choice of less-demanding or less-efficient runners, and of under-pronators with rigid, immobile feet. Flat feet and high arches require special shoes or inserts .

Running stores often stock shoes for special running conditions, including trail shoes for cross-country running and lightweight shoes for road racing, that are favored by more experienced and faster runners.[12]

Running shoe manufacturers rely on stores such as Marathoner to reach the serious runners who train thousands of kilometers per year and take part in distance races. Serious runners often buy multiple pairs of shoes per year. Specialty stores like Marathoner often hire runners to provide field reports that meet these customers' special and changing needs, and runners respond with loyalty. As a result, Marathoner and stores like it provide a significant and continuing market and research feedback for the shoe manufacturers.

One way superstores keep inventory costs low is by sharing plans and forecasts with manufacturers. Manufacturers find the retailers' forecasts helpful in planning their production and keeping their own stocks under control.


Marathoner started doing business during the fitness craze of the 1970s and 1980s, but as the Baby Boom generation aged and its clientele began running less, the store's sales began to flatten out. Competition from superstores such as Sports Authority that serve the sporting goods market, and giant retailers like Wal-Mart, have put pressure on specialty stores like our imagined Marathoner to keep costs down and prices competitive. Unless Marathoner can keep control of costs, it will have a difficult time growing its business against the superstores' lower margins.

A big part of Marathoner's overhead is tied up in inventory. In addition to models that meet the different kinds of running and foot conditions described above, Marathoner needs to stock a range of sizes. Road Runner Sports, a mail-order dealer , offers shoes in U.S. sizes 5 “16, in half- size increments , as well as widths from extra narrow to extra wide.[13]

To keep inventory under control, Marathoner has started scanning the manufacturers' bar codes on the box labels, which gives the store current readings on its inventories and helps to avoid disruptive periodic physical inventories, which tie up staff time and require the store to close. While the bar codes help, it still isn't enough. Stocking large numbers of all of these varieties has become a difficult burden to bear. The store needs a better process.

A little research from past sales showed which brands, models, and sizes experience the greatest demand, and the use of bar codes helps the store predict precisely which models and sizes it will likely need over the next year. Marathoner discovered that one way superstores keep their inventory costs low is by sharing these plans and forecasts with manufacturers and placing orders based on the most current period's requirements to replenish the inventories. The manufacturers find the retailers' forecasts helpful in planning their production and keeping their stocks under control, and therefore are happy to oblige.[14]

Marathoner also discovered that superstores use EDI transactions to share sales forecast data, but research showed the costs of EDI to be prohibitive for a small retailer. Manufacturers, who are serving an increasing number of distribution channels and outlets requiring EDI (such as superstores), can easily justify the cost of the expensive software and dedicated systems. Small retailers, however, have neither the money nor staff to devote to EDI.Yet the need to control inventory is just as real.

How can Marathoner meet a real need for e-business, but without the resources to put into EDI? The ebXML specifications offer an answer for Marathoner and millions of small stores like it. Just as in the OpenTravel Alliance example, publicly accessible sporting goods industry transaction standards are required. Unlike with EDI, however, where these implementation details are hidden in the large vendors ' back-end systems, with the ebXML approach this data can be fully shared automatically by software via the Internet. Here again, the particular industry will first need to establish a registry to store the business process definitions for inventory control, including the sharing of forecasts, as well as online inventory levels, replenishment orders based on the forecasts, ship notices, activity, and receiving reports that tell the manufacturer that the items shipped are entered into inventory.

The trading partners can exchange ebXML messages with the following sequence:

  1. Marathoner prepares an annual sales forecast showing the models and sizes for each model projected each month for each manufacturer, and sends it to the manufacturer. The store updates the forecast each month. The forecasts take into account planned price promotions and special events such as local distance races that attract large numbers of serious runners.

  2. Marathoner and the manufacturers agree on prices and terms based on the sales forecasts. Any significant changes in the forecasts could affect prices.

  3. The store sends the manufacturers a periodic inventory activity report with the updated plan.When stock levels for each model reach a prearranged point, representing a specified number of days of inventory, the manufacturers ship Marathoner the numbers of units needed to meet the desired stock levels in the plan.

  4. The manufacturers ship the goods needed to replenish Marathoner's inventories and send the store a ship notice listing the items in detail (quantity, model, size).

  5. When each shipment arrives, Marathoner scans the bar codes on the new units to increment its inventory records, and sends the manufacturer a receiving report.

  6. Marathoner authorizes payment to the manufacturer for the goods shipped, based on the agreed-upon prices.The manufacturer doesn't need to send an invoice.

Marked changes in forecasts can affect the transportation companies used by manufacturers, as well as the manufacturers' production processes.


Also part of this process is an affiliation program for direct sales generated from the Marathoner web site, in which out-of-stock items are shipped directly from the manufacturer's facilities.

This case involving inventory control illustrates the need to include transportation and financial services in the supply-chain planning. Best practices such as just-in-time or vendor-managed inventories can result in more frequent inventory turns but also require more frequent deliveries. Transportation companies, of course, deal with a wide range of industries and thus with the vocabularies of each industry served . Transportation companies therefore will likely use core components to relate their vocabularies to the basic terminology of their customers. (See Chapter 8 for a discussion of the ebXML core components concept.)

The manufacturers also develop transportation forecasts based on the customers' sales forecasts. Should Marathoner's forecasts change markedly, the changes could have an effect on the transportation companies used by the manufacturers, as well as on the manufacturers' production processes.

Both Marathoner and the manufacturers want to plan their cash flow and use electronic funds transfers for payments. Therefore, if Marathoner or any of the manufacturers' other regular customers forecast significant changes in sales, they want to alert their banks to adjust credit lines or prepare for a change in the level of transactions through the banks.



ebXML. The New Global Standard for Doing Business Over the Internet
ebXML: The New Global Standard for Doing Business on the Internet
ISBN: 0735711178
EAN: 2147483647
Year: 2000
Pages: 100

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