Goodyear sells tires through two distinct
distribution and marketing channels: replacement or renewal (REN) dealers and original equipment manufacturers (OEM). The REN channel serves dealers and is substantially larger than the OEM channel in both sales and number of customers. Standard orders in the REN channel are shipped to each customer location on a scheduled weekly pick cycle. The OEM channel serves manufacturers, with the tires often feeding directly into production lines. Since most of these manufacturers are using JIT techniques, the service standards, such as on-time windows and fill rates, are much higher than in the REN channel. The major differences between the channels are that OEM customers (1) have higher expectations, (2) require more stringent service standards, and (3) demand additional value added services.