Henkel Iberica
1. What are the implications of SKU proliferations for Henkel Iberica’s functional areas, such as manufacturing, logistics, procurement, and marketing? What are the costs and benefits of manufacturing a large variety of SKU’s?
While the SKU proliferation increases the revenue potential for Henkel, keeping up with activities such as promotion and new product generation associated with it makes the supply chain more complex. Internally, promotional activities are making it harder for the company to accurately forecast sales and plan demand thus making manufacturing of items difficult and lead to increase in production and over-or under stocks. The uncoordinated production forecasting between its plant and customers is straining …show more content…
Promotional sales are usually talked about more and lead to word of mouth advertising as well, once the company employs EDLP it loses this benefit. People will not only get used to the prices and but will also more likely question the quality of the products the company offers. The strategy also makes it hard to involve the company in promotions, since the company will be operating on low margins, further offering of low prices may take a toll on revenues.
However, EDLP strategy will allow Henkel to cut down on promotional costs and complexities associated with it. For instance, the company won’t have to worry about promotional inefficiencies, such as the 20% packaging forecasting issue during normal promotions and new product launch, that lead to obsolete and shortages. Moreover, customers usually prefer buying at stores that consistently offer fair prices, as it helps them spend less time and effort figuring out where and when to go shopping. EDLP offers that luxury, thus can help Henkel acquire more customers and revenue through this …show more content…
CPFR allows trading partners to not only enhance its replenishment strategies but also further integrate planning processes and forecasting with the ultimate focus on customers. It also enables companies to focus on value adding potential areas that are mainly affected by consumer demand. This is done through electronically sharing real time demand data throughout the supply chain, keeping all the members in tune with the end customer demand in terms of product and
1. What are the implications of SKU proliferations for Henkel Iberica’s functional areas, such as manufacturing, logistics, procurement, and marketing? What are the costs and benefits of manufacturing a large variety of SKU’s?
While the SKU proliferation increases the revenue potential for Henkel, keeping up with activities such as promotion and new product generation associated with it makes the supply chain more complex. Internally, promotional activities are making it harder for the company to accurately forecast sales and plan demand thus making manufacturing of items difficult and lead to increase in production and over-or under stocks. The uncoordinated production forecasting between its plant and customers is straining …show more content…
Promotional sales are usually talked about more and lead to word of mouth advertising as well, once the company employs EDLP it loses this benefit. People will not only get used to the prices and but will also more likely question the quality of the products the company offers. The strategy also makes it hard to involve the company in promotions, since the company will be operating on low margins, further offering of low prices may take a toll on revenues.
However, EDLP strategy will allow Henkel to cut down on promotional costs and complexities associated with it. For instance, the company won’t have to worry about promotional inefficiencies, such as the 20% packaging forecasting issue during normal promotions and new product launch, that lead to obsolete and shortages. Moreover, customers usually prefer buying at stores that consistently offer fair prices, as it helps them spend less time and effort figuring out where and when to go shopping. EDLP offers that luxury, thus can help Henkel acquire more customers and revenue through this …show more content…
CPFR allows trading partners to not only enhance its replenishment strategies but also further integrate planning processes and forecasting with the ultimate focus on customers. It also enables companies to focus on value adding potential areas that are mainly affected by consumer demand. This is done through electronically sharing real time demand data throughout the supply chain, keeping all the members in tune with the end customer demand in terms of product and