Merits and Limitations of Adidas LIFO, FIFO, EOQ, JIT, and BPR in Business Operations

Business Operations

Table of Contents
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
The merits and limitations of Adidas LIFO, FIFO and EOQ in supply chain management..3
The merits and limitations of Adidas JIT and BPR is improving business operations..........7
The impact of TQM, ISO 9000 and Six Sigma in improving quality in the operations of
Adidas....................................................................................................................................9
RECOMMENDATIONS.........................................................................................................10
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................12
Books and journals...............................................................................................................12

INTRODUCTION
` There is continuous development within the infrastructure and technology which is
used for doing the business in an economy. If it is talk about global level then there is also
changes between the climate geology geographical conditions infrastructure and economy of
different nation which impacted on the business operations directly. Business operations can
be defined as outcome of harvesting of the value from the assets owned by the business.
These assets can be either physical or intangible which are required to perform different
business activity. Adidas is the chosen organisation in this report. It is a multinational
corporation which is founded and headquartered in Germany. Company is known for
designing and manufacturing of shoes, clothing and accessories where it is a largest post wear
manufacturer in Europe and second largest in the world. The company was started by Adolf
DASSLER from his mother's house in 1924. This report is consistent Adidas where different
aspects related to Adidas supply chain management operations and quality of within the
business operations will be discussed.in the beginning of the report there will be discussion
about the merits and limitation of LIFO, FIFO and EOQ in supply chain management. The
middle of the report is consisting of the merits and limitation of the JIT and BPR in
improving the business operations of Adidas. In the end of this report, there will be
discussion about the impact of total quality management, ISO 9000 and six sigma’s for
improving the quality of the operations within company. There are also some
recommendations which can be used by Adidas for improving its operation.
MAIN BODY
The merits and limitations of Adidas LIFO, FIFO and EOQ in supply chain management
Supply chain management can be defined as the management of flow of goods and
services within the organisation which also involved the moment in storage of raw material
work in progress unfinished inventory and finished goods. This are generally originated from
the point of consumption. This is a combination of production services provided by the
business to the end consumer for making the supply chain effective. Contents of Adidas
Company also following structure of supply chain management for providing its product to
the consumers.
Last in first out

Last in first out is the method of accounting for inventory which is used to record the
most recently produced item and sold them first. According to this method the items which
are come last in organisation must be sold first. Under the LIFO, the cost of the most recent
product purchased is the first to be expensed as a cost of goods sold. This means that the
lower cost of older product will be reported as inventory(Von Below and Thoursie, 2010). In
context of Adidas, this company is a large inventory relative compared to other competitors
this helped company in taking the advantage of lower test and high cash flow within the
organisation that's why this method is used for generally accepting the accounting principles
based on international financial reporting standards.
Merits of LIFO
Live match the most recent cost against the current revenue: the living matter
provide a better measurement of the current earning by matching the most recent cost against
the current revenues. Other method than this match the old cost against the current revenue
which doesn't help company in finding the current performance as well as matching the
current revenue in this inflationary environment. The inventory profit or a paper profit is
created where the inventory profit occur when a replacement cost of inventory is more than
the inventory cost matched against the revenue. LIFO helps in reducing the inventory profit
by matching the most recent cost against the current revenue. So, it is helpful for Adidas in
doing so.
Tax benefits and improvement in cash flow: the major reason of popularity of this
method is that inventory valuation in this method will help in tax benefits. When LIFO is
used in the period of inflation the current purchase at higher prices are matched again the
revenue that elevate the over statement of the profit and therefore reduce the tax burden from
the organisation which also help form in reducing its tax liability and improve the cash flow
within the organisation (Couch and Fairlie, 2010).
Physical flow of inventory: in certain situations, important for organisation that the
physical flow of inventory must or respond to the leaf cost flow. This is the benefit which
also make this method popular because a situation where the physical flow of the inventory
correspondent to relief cost flow is very rare to find. This also makes this method popular and
effective in use by companies like Adidas.
Demerits of LIFO