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Table of Content

• Question 1
• Question 2
• Reference List

Question 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.

Transfer pricing adjustments in the laundry sector are essential for dealing with issues like the large and complex skus offered by the stores and manufacturers. The sku count in laundry should be lowered for making improvements in the business. The consumer should be able to get a clear range of the products by rationalizing the ranges of the company. It is by doing this that the manufacturers and retailers will face less complexity and fewer inventories. The digital technology has greatly transformed the way the consumers buy the products as a great range of options are available for the consumers. The consumers can easily compare the prices between the products and then decides to buy accordingly. According to Polman, 16,000 new skus were reported but 80 % did not last more than a year. This kind of activity brings cost related issues to the company. The tax base of the company is shaped by the transfer price. On the other hand, the issues related to transfer pricing are income allocation, valuation and jurisdiction. As stated by Fernandes et al (2015), the tax bills are reduced by transfer pricing. The promotions are creating issues like inefficient supply chain, lack of in store availability, value reduction and loss of the retailer but one of the major issues among them is the reduction of the customer loyalty which is hampering the business of the company. As stated by Rugman and Eden (2017), transfer pricing is essential for the protection of the tax base and to eliminate the factor of double taxation. In the process of transfer pricing, documentation is needed at every step. The external and the internal constraints should be considered before the setting the method of pricing. Transfer pricing is responsible for the operational difficulties such as determination of Arm’s length principle, database issues such as time gap in databases, non-availability of databases and the lack of comparables. Due to transfer pricing benchmarking, legal, accounting, documentation and tax assessment issues also arise.

Question 2

What are logistics pros and cons of SKU proliferation?

High proliferation of SKU hampers the activities of the supply chain provider. The SKU proliferation has measurable effects on the sales. When the sales of the niche products increase the back end costs also increases which hampers the profit making of the supply chain. Whenever a new niche is produced the supply chain faces the consequences as the load on their chain increases. As stated by Claeys et al (2016), SKU proliferation helps in the creation of segmentation which helps to manage the demand of the new niche products. SKU proliferation increases the cost of delivery of the products to the end customers. Further customer segmentation made by the companies helps to lessen the chaos created by the SKU proliferation. This helps in the profit making of the company. Successful supply chain management and logistics improved the success and the performance of the company. Supply chain management should be strategically improved for improving the activities of logistics. Logistics helps in satisfying the needs of the customers whereas supply chain adds to the competitive advantage of the company. Logistics is regarded as an old concept but the concept of supply chain management is a modern one. Logistics is a part of the supply chain management whereas supply chain management is the new description of logistics. As stated by Christopher (2016), the logistics activities are divided into two categories namely inbound logistics and the outbound logistics. Inbound logistics consists of storage, material, transportation and handling whereas outbound logistics is involved with collection, distribution, maintenance and delivery. The company wants to reduce the inventory levels for the process of cost reduction. Logistics can be defined as one of the activity that makes up the supply chain. The supply chain management consists of the several activities like product development and innovation, sourcing and purchasing, operations and manufacturing, distribution and logistics, customer service and global deployment. Logistics can be defined as the part of the supply chain that is involved in the planning, controlling and implementing of the flow of the goods between the origin point and the end point which meets the requirements of the customers. Logistics and marketing are directly related to one another as handling the demands of the customers is directly related to the improvement of the business.

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