Have you ever wondered how a store keeps enough goods on its shelves for people to buy? What happens in a toy store when people buy all the Nintendo Gameboys? Does the store have to wait for a new shipment all the way from the factory, if the factory is in Japan, before it can sell more?

The answer, as you have probably guessed, is no. A store would go out of business very quickly if it could not sell people what they wanted to buy when they wanted to buy it. So how do stores ensure there is enough product to sell without having huge, expensive inventories?

The answer is something called inventory management and distribution. Companies that import their products from Asia and sell them in stores throughout the United States usually have a few options of storing and distributing their goods on an as-needed basis. One way is through warehousing. Warehouses are used by companies to store a product as inventory, then distribute it to the different stores as needed. A warehouse may be located close enough to the store to get the goods there quickly, but are generally not physically at the store because of space constraints.

Distribution centers are another method used by companies to control inventory. As opposed to warehouses, distribution centers generally allow the product to be changed or handled in some manner. The product may be picked and packed, re-cartoned, labeled, tagged, repacked or quality inspected. There are many different value added services that can be performed on a product before it moves to the store. In both cases, either warehouses or distribution centers, inventory is closely monitored, generally by computer, so that a store manager can quickly order inventory and restock as soon as the shelves start to empty.

Distribution Centers and warehouses are generally built based on the proximity to the customer, to airports, to rail facilities; or other considerations such as labor costs or tax breaks. As one might imagine, a companies’ decision will be based on a combination of factors.

Each firm must also decide how to transport their products. Many companies use a combination of transportation modes to meet their distribution demands. This is called intermodalism. For example, a company may move product from Taiwan to Seattle by ship, from Seattle to Chicago by rail, and from Chicago to a store in Tennessee by air. Often, a company that needs to move cargo quickly from the West Coast to the East Coast will move it via air or with dual-team truck drivers. A company may use someone like UPS to move small packages quickly. Using the rail to move cargo from the West Coast to the East Coast can take up to one week where as by air it can move in a day. Of course flying the cargo is a lot more expensive than moving on the rail.

Virtually every company selling products such as clothing, footwear, toys, or electronics use inventory management, warehouses or distribution centers and a combination of transportation modes to speed delivery of their goods around the world.

And now that the holidays are approaching, you can imagine that maintaining a very tight distribution plan is critical . So next time you are at Toys R’ Us or your favorite holiday shopping spot, take some time to think about the methods a store may use to keep its shelves full so that the products people want to buy are in the stores when people want to buy them!

Can you draw a map or chart of how just-in-time distribution might work?