Pepe Jeans Case Essay

The primary(prenominal) advantage of Pepe not carrying store is obviously the cost savings, as it is ordinarily not efficient or cost effective for that matter, to carry waste inventory. The downside is not having enough pairs of jeans on hand to ship to stores when demand is high. An inventory would financial aid alleviate this. The sextet month lead time is two an advantage and disadvantage for Pepe. The languish lead time is positive in that once a seller places an order, they tho drive home a hebdomad to cancel the order. Pepe is able to realize a profit after only decade days rather than months later.The contract locked retailers in immediately and keeps them from reneging on the deal. The downside is that many stores may be turned off by the long lead. It was bring uped in the article that around manufacturers have lead times of a few months or less. The independent stores also tended to order less flashiness due to the inflexible order system, and the trouble wit h fashion is that items typically have a short wearable life before they go fall out of port. Corporate purchasers were worried that the jeans they ordered may go out of style before they even arrive.If I were the manager of Pepe, I would assure my retail partners that every reasonable action was currently being taken to help fall the current lead time. I would mention the options being considered and give thanks them for their partnership. I would then sit down with the CFO as sanitary as the best analysts in the company and run reports to forecast the most efficient method of reducing lead time. The case mentions two alternatives to sicken lead time working with a Hong Kong sourcing agent or twist a finishing operation in the UK.Without seeing the companys financials, it is difficult to say which would be a better choice. The article does mention that Pepe has no long term debt and appears to have plenty of cash on hand. If that is truly the case, then the better option may be to indue in the finishing factory. There would be a large investment funds up front, but lead time could be cut in half while reducing costs by up to ten percent as well. On the other hand, the sourcing agent could possibly reduce lead time down to as little as six weeks. The problem with this option is that costs to soar by as frequently as thirty percent.