Audio Duplication Services Inc.

California State University Northridge

Executive Summary
In today's economy, the majority of companies are aiming toward building Retailer-Supplier Partnerships (RSP). An example of such concept is the utilization of vendor-managed inventory (VMI). In this relationship, the supplier decides on the retailer’s appropriate inventory levels of each product and establishes the inventory policy. Moreover, the retailer does not own the merchandise until it is purchased by a consumer, while the supplier owns the inventory until the transaction is completed. The obvious benefit to the retailer is lower inventory costs, whereas the benefits to the supplier are less clear.
The following example will look at how big national retailers are putting pressure on its supply base to engage in such RSP relationships. Audio Duplication Services (ADS) is a compact disc and cassette duplication and distribution company. Their main customers are the big record companies. ADS manages the master tapes and duplicates them upon customer requests. In turn, they distribute them to their customer’s music stores, distribution centers, and department stores. Some of the big national retailers include Wal-Mart, K Mart, Circuit City and Best Buy.
These national retailers are currently pushing the record companies to implement VMI agreements. The record companies will be provided point-of-sale data from each of their store. The record companies would then decide how many CD’s and cassettes will be delivered to each store. Since ADS already provides duplication and distribution services, the record companies have asked them to help with logistics of the VMI implementation.
ADS will have to decide how to provide the logistics necessary to meet its customer’s deliveries. However, ADS is facing an even bigger issue, such as the future of audio duplication and the