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Non-Tech : Any info about Iomega (IOM)?
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To: Rocky Reid who wrote (52913)4/17/1998 3:25:00 PM
From: SCOTT  Read Replies (1) of 58324
 
Rocky said: <The demand-pull strategy will do nothing about costs. What it will do is lower margins since this strategy depends on lowering sales prices.>

I have not had the chance to listen to the CC yet, but if the demand pull system that is being referred to is somewhat like the Just-in-Time inventory system, Rocky you are badly mistaken. The demand pull system will greatly reduce costs and improve quality.

Some of the major benefits of this system are 1)reduced warehouse/storage cost 2)lower investment tied up in inventory 3) reduction in risk of obsolescence of inventories 4) reductions in costs of waste and spoilage as a result of improved quality.

In this system a few high quality suppliers are used, and required to deliver frequent, small quanity's of high quality raw material when needed to IOM. This will allow IOM to free up cash for other activities since they no longer must order huge bulk quantities of inventory. As a result, storage and handling cost are greatly reduced. Another advantage of having small order quantities of inventory is that fact that if there are any defects in the materials they will be found quickly and can be taken care of instead of sitting in a warehouse for months before they are found as it is with large quantities.

When this system is run smoothly and efficiently, many benefits may be derived, the greatest I feel is the reduction of lead time. Less defects, reduced inventory cost, and faster lead times = incresed revenues.

Sorry I could not explain in greater details, gotta run.

Any Comments.
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