The Challenges of Implementing the Chase Strategy in Production Planning

What are some of the challenges associated with using the chase strategy and why? The chase strategy is one of three production strategies for aggregate planning in use today. Chase strategy is a form of demand matching. This is done by forecasting the expected demand set by previous sales or projected sales. The purpose of this is to meet or match the demand of their customers. It is also an appropriate strategy with variable demand such as seasonal items. The chase strategy is mostly used in service based industry that concentrate on meeting demand.

Due to the unforeseen forecast, the company must hire and fire their employee to meet the production needs. United parcel service and Wal-Mart are examples of companies that use chase strategy. During the holiday season beginning in November, United Parcel Service and Wal-Mart hire seasonal workers to meet the increase in volume. This means that both of these companies expect to be busy and the opportunity to generate revenue is available if they have the correct number of employees in place.

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A primary advantage is the flexibility to meet demand fluctuations. Another advantage is both of these companies do not have to pay for benefits such as medical, dental, or provide retirement since these employees are not vested.

According to Seeking Alpha, United Parcel Service expects to pick up 32 million packages on December 2, 2013, which is the first Monday after Thanksgiving and known as Cyber Monday, this will be more packages than 10% last year. On Cyber Monday, online retailers provide steep discounts for holiday shoppers.

To handle this increased workload in the holiday season, UPS will hire 55,000 seasonal employees across the U.S.

Reference:

How This Holiday Season Will Be A Blessing For UPS. (2013, November 3).

Retrieved September 26, 2014, from http://seekingalpha.com/article/1800442-how-this-holiday-season-will-be-a-blessing-for-ups