Chase Strategy In the service industry, demand and production capacity is dependent on the nature of the business. The chase strategy is defined as matching demand and capacity period by period (Inman, 2015). In some businesses that have peaked seasons or low demand periods, like a football stadium or summer camp, this could cause some worry for employees or staffing needs; however, not all businesses treat the chase strategy the same. Certain types of industries have a set protocol in place for these types of slow business periods. All companies that operate in the traditional food industry (excluding Fast Food Industry) can use a chase strategy. Under the chase strategy, an organization produces only enough goods to meet or exactly match the demand for their goods. For a restaurant such as Outback, it only produces a meal if a customer orders that meal. It does not make sense for Outback to create a meal for a customer that did not place an order because the meal is dependent on the customer’s preference. The chase strategy helps Outback maintain lower inventories on finish goods inventory. Organizations that experience major seasonal demand fluctuations are prime candidates for using a chase strategy. UPS and other shipping companies typically hire thousands of temporary employees to meet demand during the Christmas holiday period. For 2014, UPS planned to hire 95,000 seasonal workers based on increased holiday spending projections, primarily driven by strong online sales forecasts (Gustafson, 2014). This represented a 40,000 increase from its original projection in 2013. Brick and mortar stores also typically hire additional seasonal workers, though demand has softened in recent years due to rise of online sales. Ideally, companies will hire just enough extra workers to meet customer demand. There are challenges associated with using the chase strategy. The chase strategy matches demand to production rate by period. This comprises hiring, firing, and laying off employees to meet production needs. This could result in uneven labor and inventory. As the production rate increases more labor is needed. When the production demand decreases less labor is required. The fluctuation of labor can cause insecure and unsatisfied employees, employee loafing, and labor union disputes. The chase strategy is a great way to plan for slow business periods and forecast any special needs for product capacity and staffing. Different industries and companies utilize a specific protocol for the slower times or non-staff able seasons. The chase strategy can assist businesses in planning the capacity of product needs as well as handle business responsibly and fairly for their employees at the same time.

References

Gustafson, K. (2014). Merry Christmas! Hiring may hit dot-com boom level. Retrieved from http://www.cnbc.com/id/102009288#.
Inman, R. (n.d.). Reference for Business. Retrieved February 12, 2015, from http://www.referenceforbusiness.com/management/A-Bud/Aggregate-Planning.html
Jacobs, F. R. & Chase, R. (2011). Operations and Supply Chain Management (13th ed.) Boston, MA: McGraw-Hill Irwin