The main reason as to why Costco has been top of its game in the retailing business is their method of cutting costs by eradicating steps in the traditional supply chain. In a traditional supply chain, the goods will transferred from the manufacturer to the distributor and then to the warehouse and then to the store for selling. At each of these places, several workers are involved in stocking, loading and unloading and transportation of goods, which are all extra costs to Costco. Costco’s system eradicates all these needless steps and costs by evading the need for intermediates. They transport the goods directly to their stores and with the help of forklifts they arrange the goods in the shelves. They do this because they identify that every work required to stock, load, unload and transport goods, is an additional cost. …show more content…
The manufacturer the delivers the goods to cross-dock depots where it is allotted to be transported to the distinct warehouses. A well-organized effort has allowed Costco to regulate fast-moving cross-docking in all its distribution centers. 75% of Costco's goods are cross-docked whereas the distributors distribute the remaining 25 % of goods directly to individual stores. All the goods moved and stored in Costco are being placed in large wooden pallets. The reason that this is being done is because, the goods can be transported into one large unit rather than multiple individual units. And because of this, the customer is the one who touches the product the first and the Costco employee touches this product only at the cash register. This unique method saves times, money and labor which makes Costco to succeed as a business. Inventory