retailers do research on past sales to minimize the need to return merchandise a
ID: 396616 • Letter: R
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retailers do research on past sales to minimize the need to return merchandise at the end of the season How would a "made- to- order" model work in the fashion industry? Is there a way to not have inventory such as Bonobos, but then have no need to make a large buy, only what has been pre- ordered? Some designers will "pre-order" special pieces so they only make was has been already purchased by the consumer, but could that be something companies like Gap could do? Or would cost, time and budget affect the prices of production? Supreme's business is essentially done with limited number of drops- which makes it coveted, trendy and rare. Could this work for all brands?Explanation / Answer
Made to order approach refers to the manufacturing of products, when the order is received. This approach is relatively more successful when product is to be assembled or product demand comes with the high level of customization and demand can change with the change in trend. A fashion industry thrives on the latest trends and people demanding today, will be different to what they demanded few weeks back. So, it is a good approach that fashion industry should adopt made to order approach where people get, what they demand with customization according to their own needs in terms of size, design and other preference. Though, it comes at a cost and higher prices will be charged by the firms in the fashion industry. Besides, it will also provide, a relatively bigger time frame to meet the orders. Just like Bonobos, the firms can maintain no inventory and only work to cater the pre-orders, but it involves JIT so that suppliers can meet the demand as and when it is required by the firms. If not, then lead time to meet the demand, will be longer and it can negatively affect the demand. So, firms has to establish the overall annual demand and order the economic order quantity so that customers can be served diligently with their own specifications. GAP is an online platform offering different types of dresses and fashion accessories. It needs a mix of standard product with a degree of customization available to the consumers. So, it cannot totally rely upon the made to order concept and has to keep a ready inventory to serve the audience as it caters a relatively bigger size of the target market. Further, it causes higher prices, longer time as well as higher prices, causing the customers to drift away to the other competitors. So, this model needs to be adjusted with the available inventory of ready to wear products to maintain the customer loyal to the firm.
It will not work with all the brands as made to order concept needs to work differently with the different brands. A longer stability in demand with one particular brand, can be managed with the inventory and demand with short periods of trend, has to deal with the made to order approach.
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