Hugo Boss Case Analysis
The CEO had to walk a fine line between supplying …show more content…
The reduction of inventory also helps to reduce total holding cost, which can be averaged at 10.5% of inventory cost. The SCO initiative achieved a reduction of inventory from 3.5 months of forecasted demand to 2 months. Then, inventory turns increased from 3.43 to 6 turns per year. One driver for reduction of inventory was the reduction of lead times to 4 weeks, which impacted in the reorder Level (R) that is calculated as the average lead time plus safety stock.
Overall, the decision to use NOS items as a pilot was appropriate and successful. However, this pilot was successful due to the fact that it was implemented with NOS items, and the pilot did not deal with the short –run fashion items. It would be incorrect to assume the same pilot program would be applicable to the other short-run fashion division products that operate on a different design, manufacture, and supply chain. However, there are functional improvements that were realized during the pilot program that could be implemented to the other fashion products, in a limited format. 2. Provide your recommendation. Does it make sense to extend the pilot to other product groups? If so, which ones and why? What challenges would she face in attempting to do so? Are these challenges insurmountable?
As shown in the table below, the other product groups are fashion products, which require a different supply chain strategy. It is important to understand that Fashion products are