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Table of Content

• Question 1
• Question 2
• Question 3

1. Cutting down on range, new items and promotions is presumably going to lead to everyday low prices. Discuss the implications to the trade-off between choice and price.

It is an undeniable fact that the companies are spending way more amount on increasing their range, promotions and in launching new items.

Range

Stock Keeping Units (SKUS) are the bar codes which are used in differentiating one product from other. Each product has different SKU. Each store in the market holds 35 percent of the products that have been manufactured by the company and out of this 35 percent only a quarter part of them are brought by the customers on one trip. This is very disturbing situation. The companies increase the capacity of the products that they manufacture which immediately affects the stores (Cooper, 2011). The usage of SKUs has been increased a lot since a year. This is due to the competition in the market and the companies are trying to be available for the customers all the time which is affecting the market. The company can just save the money rather than producing more items and increase the range. It is better to focus on quality rather than quantity.

New Items

Companies are striving hard to bring new products into the market. They are trying to bring new models in order to get more market. But this is costing companies more and the profits are not commendable. Since 1975 the introduction of new SKUs has increased rapidly but the life span of new SKUs has been decreased from 5 years to nine months now (Lambert and Stock, 2013). This shows how badly the new SKUs are affected and the loss has been incurred to the companies. The manufacturing costs and losses are imposed on buyers at the end, so the companies can save the money instead of manufacturing new products and reduce the cost of products.

Promotions

Some items are everyday need for the masses and it is not necessary to promote them in a high range. Companies spend a lot of amount on promotions even for the items that have stable market, besides this promotion there are a lot of other costs that company have to eventually impose on the customers by increasing the prices of the products. Instead of investing so much amount on promotions the companies can reduce the price of the product which eventually brings in a large market with references and words.

2. What are the logistics pros and cons of skuproliferation?

SKU stands for Stock Keeping Units which are maintained by the companies in order to differentiate one product from other. SKU proliferation is nothing but increasing the number of SKUs in other words increasing the number of models of a single product. SKU proliferation is a very controversial subject which has involved many debates and issues. The companies try to provide with new and better products than what they are selling now (Bowersox, 2014). This is the reason for arrival of many products of same range with a slight difference into the market. There are both disadvantages and advantages of this SKU proliferation. If the proliferation is increased without any limits it will surely become a night mare for the supply chain service provider so it is important to be aware of the SKU proliferation and takes necessary steps about it. As the companies try to improve the models of brands the effect can be seen in the back end processing with the increased demand and investment. It is important to control the SKU proliferation in order to save some amount while some others believe that SKU is improving the market. The logistics have faced both pros and cons because of this SKU proliferation.

Pros:

Due to the increase in the manufacturing of products, the use of logistics and inventory management is also increased. The companies need the logistics service in order to transfer the products from one place to another and this surely brought huge profits for the logistics market. The inventory management has also been increased because of the SKU proliferation.

Cons

There are some cons in Logistics because of SKU proliferation. It has become very hard to arrange the vehicles in time to deliver wide range of products. The demand for the products increased the demand for vehicles which is really an irritating issue.

SKU proliferation has both advantages and disadvantages in every field. The customers are interested to buy new products but after using it for once or twice they are switching to other products and this is decreasing the lifespan of each product. No matter how good the product is but if some other one shows up they are interested in it and it is affecting the market for old products.

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