believed that improvements in costs were possible. It scrutinized the entire supply chain to determine where performance could be improved. The outcome was a program called continuous replenishment which reduced the inventories of retailers from an average of 4 weeks supply to 2 weeks supply. This reduction amounts to saving of the order of 1 percent of retail sales. As the average retailer's profits are only 2 percent of the sales, the result was a 50 percent increase in the average retailer's profits Because of that increase in profitability, retailers purchased a border line of Campbell products, thereby increasing Campbell saels. The program works in the following way. Each morning Campbell uses EDI link with the retailers.Retailers inform the Campbell of demands for Campbell products and the current inventory levels on their distribution centres determine which products need replenishment based on the upper and lower inventory limits established with each retailer. Campbell makes daily deliveries of the needed products. Campbell's environment has a low level of uncertainty, so the company pursued and efficient supply chain design. The implication, however, that it must avoid actions that would disrupt the supply chain. For example retailers on the continuous replenishment program had to forgo forward buying whereby retailers in the industry often buy excess stock at discounted prices so that they can offer price promotions. Forward buying causes ripples in the supply chain, increasing everybody costs. That was the case with chicken soup. Campbell would offer deep discounts once a year and retailers would take advantage of them, sometimes buying an entire's year supply. Because of the change in demand, the chicken bonning plant would have to go on overtime. When that happened, costs in the entire supply chain increased-Campbell 's production costs increased and retailers had to pay for warehousing large stocks of chicken soup. With the continuous replenishment system, those extra costs are eliminated and everyone wins. Question: On the basis of the information given in the case study, comment on the supply chain management initiatives taken by Campbell Soup Company, anticipate some of the supply chain challenges that the company can face in future and provide relevant recommendations to the company. • Please write the answer in your own words ⚫ You should add authentic references from academic or professional sources. • Your answer should be between 450 and 480 words
believed that improvements in costs were possible. It scrutinized the entire supply chain to determine where performance could be improved. The outcome was a program called continuous replenishment which reduced the inventories of retailers from an average of 4 weeks supply to 2 weeks supply. This reduction amounts to saving of the order of 1 percent of retail sales. As the average retailer's profits are only 2 percent of the sales, the result was a 50 percent increase in the average retailer's profits Because of that increase in profitability, retailers purchased a border line of Campbell products, thereby increasing Campbell saels. The program works in the following way. Each morning Campbell uses EDI link with the retailers.Retailers inform the Campbell of demands for Campbell products and the current inventory levels on their distribution centres determine which products need replenishment based on the upper and lower inventory limits established with each retailer. Campbell makes daily deliveries of the needed products. Campbell's environment has a low level of uncertainty, so the company pursued and efficient supply chain design. The implication, however, that it must avoid actions that would disrupt the supply chain. For example retailers on the continuous replenishment program had to forgo forward buying whereby retailers in the industry often buy excess stock at discounted prices so that they can offer price promotions. Forward buying causes ripples in the supply chain, increasing everybody costs. That was the case with chicken soup. Campbell would offer deep discounts once a year and retailers would take advantage of them, sometimes buying an entire's year supply. Because of the change in demand, the chicken bonning plant would have to go on overtime. When that happened, costs in the entire supply chain increased-Campbell 's production costs increased and retailers had to pay for warehousing large stocks of chicken soup. With the continuous replenishment system, those extra costs are eliminated and everyone wins. Question: On the basis of the information given in the case study, comment on the supply chain management initiatives taken by Campbell Soup Company, anticipate some of the supply chain challenges that the company can face in future and provide relevant recommendations to the company. • Please write the answer in your own words ⚫ You should add authentic references from academic or professional sources. • Your answer should be between 450 and 480 words
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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