Question

Construct a model to manage domestic supply chain for one of the products that has less favor in the market compare with the imported good.

(a) Examine the main problem for your model.

(b) Express the causes of that problem.

(c) Find the way to solve that problem.

Answer 1

To manage a product one nust adopt following practices to achieve higher sales:

1. Manufacturing from same supplier over long term to save cost
2. Achieveing economies of scale to produce lowcost
3. Distribution to unexplored markets and emerging markets
4. Extra spending on shelf life visibility in retail markets
5. Product bundling woth imported product which has higher sales so customers get to purchase both products at discounted prices.

Problem faced:

This model will lead to cannibalisation of imported product and reduce sales of imported product and thereby profit margins.

​​​​​​Causes of Problem:

When other product is given better shelf visibility and is marketed well and if has higher profit margins then the firm has higher willingness to sell that product which cannibalises sales of the imported product.

Solution

The imported product can be also sold across online channels to reduce cost, maintain expansion and distribution as well as increase volumes of sales.