Essays on Better Inventory Management Approach for the Product Line Assignment

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The paper "Better Inventory Management Approach for the Product Line" is an outstanding example of a management assignment.   Fashion culture has intensified in Australia in the recent as a result of influence from other western countries such as France, the US and UK (Kawamura, 2005, p. 45). Many people now want to be seen in fashionable and trendy wears as opposed to traditional conservative clothing. Small scale retailers have identified and now want to invest in highly populated cities with demand for fashion. Elk Accessories, a small fashion retailer is one such business that opened a clothing shop in Victoria to capitalize on the demand for fashion.

Since its inception in 2012, Elk Accessories has undergone significant growth in terms of sales and profit margins due to its effective logistic and supply chain (Elk Accessories, 2017). Market analysts claim that its effective logistics and supply chain costs have been influenced by its product characteristics. Logistics and Supply chain have become a very vital platform for companies for competitive advantage. In fact, Lambert and Cooper (2000, p. 68) claimed that competition in current markets is not based on independent business ventures, but rather on the effective supply chains.

However, research has shown that for firms to attain, they must match their supply chain with their product characteristics. When Elk Accessories just opened doors, they used to manufacture products with varied characteristics and the process made them incur two types of costs including production costs and market mediation costs. Randall and Ulrich (2001, p. 1590) pointed out that the production costs consist of material, production technology, manufacturing, labour and overhead costs. On the other hand, Randall and Ulrich (2001, p. 1593) posited that the mediation costs take place as a result of the market variability.

According to the two authors, mediation costs comprise of inventory holding costs, opportunity costs and mark-down costs. Mediation and the production costs are impacted by the supply chain approach choice. When deciding on the proper supply chain approach, the firm often takes into consideration the features of the end-products as well as product life-cycle, product variety, demand predictability, and standards set by the market concerning service and lead-times (Qi, Boyer & Zhao, 2009, p. 669). The literature has attained a general agreement that firms which offer functional products require lean or lean chains, while firms providing innovative products need an agile or a responsive supply chain.

Elk Accessories (2017) points out that the company sells Footwear, dresses and jumpsuits, jewelry, cosmetics, pants and jeans and women bags among others. To match Product Characteristics to Logistic and Supply Chain Costs, the company uses approaches such as functional and innovative products (Fisher 1997, p. 109). While some clothing like dresses and jumpsuits are considered functional products, jewelry is innovative products.

Functional products are said to have a comparatively predictable demand whereas innovative products hold a fairly unpredictable demand (Qi, Boyer & Zhao, 2009, p. 669). The functional goods are typified by long life cycles, longer lead times and low product choices. On the other hand, innovative products have features such as shorter life cycles, shorter lead times, high product choices, have low predictability and are highly volatile. Fisher’ s model claimed that functional products need a physically resourceful supply chain, whereas innovative products need a market-responsive form of a supply chain (Selldin & Olhager, 2007, p. 46).

The study of that company has a combination of lean and agile products as it sells functional products which are associated with a lean supply chain while innovative products which are highly equated to an agile supply chain. Reviews of various pieces of literature claim that lean or agile is best for clothing sector or companies (Qi, Boyer& Zhao, 2009, p. 673). Just as the product is flexible and has a high-quality design, supply chain such also match such characteristics and meet customer demands and have great sourcing relations in order to supply materials.

In other words, product characteristics influence how supply chain and logistics are categorized.

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