PRODUCTION & SALES

Production & Sales

Production & Sales

Proposal 1

In this preliminary section of SCF`s production team is moving with greater quality and meeting their goals will name, describe, and give general information about the company we have chosen as well as the industry in which it operates. We will describe in detail its history, scope and vision, technology in the supply chain, Tempe distribution center, and financial analysis (Darmon, 2007).

In order to recommend a course of action that may involve changing SCF's strategy, we first must understand Dell's current strategy. Dell pioneered the Direct form in the PC industry. This means that while their competitors sold apparels to distributors, resellers, and retail stores; Dell sold directly to the customer. This is also known as disintermediation or removing the middleman in a transaction. The first, and most notable, benefit of this is that SCF realizes higher gross margins than their competitors. This apparel sells for $1499. Consumers can either buy the apparel from a local reseller or order it directly from peer. Also, both companies spent $1215 to make the apparels. Now the distinction is in the circulation model.

SCF sells directly to the customer so they get paid a full $1499 for apparel that costs $1215 to make. Compaq only gets $1320 for a apparel that cost them $1215 (This example is shown in figure 1). Results of the competitor's distribution model are an 8-12% price markup and after apparel is manufactured it takes 4-5 weeks to make it through the distribution channel to the consumer. In contrast, SCF ships newly manufactured apparel to a customer about 1 and a half days after the order was received. A second benefit from the Direct Model is that it allows SCF to employ a made to order production strategy. Because SCF is receiving orders directly from the customer, they wait until an order is received before they begin production of the apparel. This allows them to more easily customize the apparel and reduces SCF's inventory.

Proposal 2

Among the many concerns that SCF faces, the issue of sustaining their competitive advantage is most important. The concerns stemming from the imitation of SCF's direct to consumer model by its top competitors should be handled and addressed diligently. The apparel industry is constantly changing and demands that each company be aware of their surroundings at all times. SCF has grown into a leader, yet, problems arise ...