Tal Apparel Limited: Stepping up the Value Chain

Nowadays it is crucial to step up the value chain for any retailer as the results of this process will promote the profits of any retail company and it is actually vital for its efficient operating. In the following paper I have my goal to discuss the retailer’s advantages and disadvantages of having unique VMI services. The following paper will feature TAL and VMI abbreviations; TAL means Textile Alliance Limited and VMI means Vendor Management Inventory.

VMI is an inventory and supply succession management tool in which the supplier has got the errands for making decisions as to amounts of inventory refill and timing. The paper is to explain that despite having certain minor disadvantages which can be easily solved VMI system is of great use for stepping up of TAL’s value chain.

Benefits of adopting TAL’s VMI system

It is universality accepted that the main objective of starting any business is to maximize the profits. The advantage of using VMI to the downstream affiliate, usually a large retailer, is the reduced costs and increased customer service level to one or all the acting members (Waller, 183). The retailers’ outward delivery costs will be reduced and hence there is an advantage when analyzing one’s profits (Cetinkaya, p. 217).

The benefit of VMI to the retailers is improving customer service and reducing inventory requirement (Fox 5), reducing the risks and uncertainties regarding the decline in demand of goods and services and reducing the qualms of customer decrease. Thus the retailers are left more certain about the expected number of customers and hence know how to stock their shops with textiles. In addition, the goods returned by retail customers will be reduced and the probability of customer retention increased. This is based on the results achieved in chemical industry by Chellener, (p. 11). The retailer will benefit from the system just like the chemical industry retailers did.

TAL will also increase its productivity after using the system. If the system greatly benefits the retailers, this shows that they will go for more textiles from the company (Carson, p. 119). The retailers will be very determined to buy more goods from the company because their work is lessened by the system: it results to reduced stock out, customers’ goodwill and realized increased sales (Cochen, p. 653). In addition, TAL will be able to have a better planning of their inventories. If the suppliers realize excellent profit, this shows that the TAL Company will also benefit.

VMI provides visibility at trading partner level to improve the flow of products. It makes a consumption based demand estimate using urbane methods. The retailer will retain control of his inventory by setting his goals for service or even investment (Black and Decker, p. 13).

In addition, the manufacturers should also build a close relationship with the retailers so that they can bout their workload. The system will guarantee that the products are delivered as required. It simply ensures faultless flow of message between the parties involved in trade. Thus it is evident that TAL’s VMI system is a strategic resource for the company.

Disadvantages of using VMI system

Speaking about the disadvantages of VMI system it should be stated that they are very few actually and the most undesirable is that having a unique supplier of the system can affect the retailers making them experience inconveniences. If the system is not common to everybody only the suppliers can operate in cases of breakdown. This means that the retailer has to wait until the right suppliers of the system fixes it again that is probable to lead to certain losses. In addition, the difficulty in sharing information through other systems that are not like the one in use will arise.

VMI involves the use of electronic transfer of data and information between the distributors and the manufacturers. It manages inventory through the strategic use of computers through internet technology. The retailers might therefore fear to use the system due to hacking and failure of the Internet. If this flow is cut short, this means that the retailer will experience some inconveniences. However, the system tries to eliminate recurring distributors’ activities of purchasing and human caused errors. The retailer can also use code and passwords in the system to reduce the risk of hacking by malicious people. This will guarantee that only the experts and those used to it can operate the system (Shapiro, p. 60).

In conclusion, it is obvious that having a unique supply of VMI services benefits the TAL Company as they will be certain that their goods will always be delivered in the right quantities and time, their costs will be reduced and the customer service level increased and they will have better planning of their inventories. In addition, VMI guarantees providing excellent visibility at trading partner level and ensures faultless flow of message between the parties involved in trade. Thus, VMI system will definitely effectively promote the TAL Company’s interests and step up its value chain.

Works Sited

  1. Carson, Y., and Kumar, S. Simulation optimization: methods and applications, proceeding of the 1997 Winter Simulation conference. Piscataway, 1997: 118-143. Print.
  2. Centikaya, S., and Lee, Y. Stock replenishment and shipment scheduling for vendor managed inventory systems. Management science (46), 2000. 217. Print
  3. Challenger, C. Taking The VMI Step to Collaborative Commerce. Chemical Market Reporter 258(21), 2000: 11-12. Print.
  4. Cochon, K. S. The effect of information precision and information reliability on manufacturer- retailer relationship. The accounting review 77(3). 653-677.
  5. Print.
  6. Fox, M. L. Integrated vendor-managed inventory into supply chain decision- making. International conference proceeding, 1996: 5-10. Print.
  7. Shapiro, I. Micro planning Jeanswear for the Masses, Chain Store Age Executive with Shopping Center Age, 1998: 60-64. Print.
  8. Waller et al. “Door- managed inventory in the retail supply chain.” Journal of business logistics (20), 1999: 183-203. Print.
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