Analyzing TFT's Supply Chain and Inventory Management Strategies

This report analyzes the supply chain and inventory management of Tools for Trade (TFT), a Canadian company facing challenges such as increasing back orders. The report recommends the adoption of a perpetual inventory system to improve accuracy and provide updated inventory data, which will assist in forecasting and decision-making. Furthermore, the report suggests a revised e-commerce strategy for TFT, advocating for direct control over the supply chain by eliminating intermediaries to reduce costs and enhance product quality control. The report discusses the impact of these recommendations on the company's brand image, financial standing, individual sellers, and external stakeholders, ultimately concluding that these changes are essential for TFT's continued success and business growth. The report also includes a decision on defective goods and its impact on various aspects of the business.

Running head: SUPPLY CHAIN 1
Supply Chain
Student’s Name
Institution
Date

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Executive summary
TFT is an organization that is going through different problems and it needs to work on
two different aspects to make sure that it does not continue suffering. The way an organization
manages its inventory is essential because it dictates if efficiency will be promoted or not. At the
same time, the way an organization deals with its supply chain has an effect on the prices of
goods as well as the process of reaching the end user of the product. The current inventory
system that is employed by TFT has proven that it is not effective and this is because of the
increasing back orders. In this respect, the company should adopt a perpetual inventory system.
When it comes to the aspect of the supply chain, there is a need for TFT to adopt a different
strategy that will take its e-commerce business to a higher level and at the same time reduce the
costs of doing business. TFT needs to eliminate all parties that are involved in the process of
reaching the products to the customers if it is interested in promoting an efficient supply chain
and also reducing the costs of doing business.
The perpetual inventory system is one of the systems that have been adopted by
organizations that are interested in promoting accuracy and efficiency. One of the problems that
are facing TFT is the lack of updated information on the inventory. When an organization fails to
have updated information, it cannot make accurate decisions. The reason behind it is associated
with the fact that accuracy is only promoted when there are facts in place. Forecasting at TFT has
become a challenge and this is because the current inventory system is not as effective as it ought
to be. The adoption of a perpetual inventory system helps an organization to collect updated data
that helps an organization to make some of the critical decisions.

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The e-commerce strategy that TFT is working with should be changed with the aim of
increasing business and also cutting the cost of business. The company is utilizing a lot of
channels that affect it negatively and that means that it should adopt a strategy that reduces the
number of channels. The inclusion of numerous channels affects business because of the
cumbersome processes. The company should choose to have one supply chain that should be
powered by online selling. When the company is the only party that is involved in the supply
chain, the company is exposed to opportunities for controlling and monitoring the quality of its
products. At the same time, the company is able to manage the prices of the products thus
protecting the customers from the exploitation of the suppliers.
The current issues that TFT is going through can be resolved but is it essential for the
company to consider making some significant changes. The first change will be the replacement
of the current inventory system with a perpetual inventory system. The perpetual inventory
system has proven to work effectively and that means that it would be the best choice for TFT.
At the same time, the e-commerce strategy ought to be changed and this is because the current
one can limit the company to possible growth. The company needs to be the only party that
manages the supply chain.

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Table of Contents
Introduction……………………………………………………………………………………4
Formal inventory system that TFT should consider to mitigate back orders………………….4
Alternatives that TFT has to increase e-commerce…………………………………………….7
Addendum……………………………………………………………………………………..9
A decision on what to do with the defective goods……………………………………………9
The impact of the decision on………………………………….………………………………9
• The company’s brand image…………………………..………………………………9
• From a financial standpoint…………………………………………………...………9
• From the individual seller’s perspective……………………..………………………..10
• At least one external stakeholder of your choice………..…………………………….10
Conclusion……………………………………………………...……………………..………10
References……………………………………………………………………………………..12

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Introduction
Avoiding business issues is a challenge and that is one of the reasons why the best option
is to come up with the best solutions to deal with the issues. TFT is an organization that has
proven beyond reasonable doubt that it can deliver. However, the company is going through
problems that need to be fixed for the company to continue being successful. The company needs
to come up with the most effective inventory system to make sure that it makes accurate
decisions when it comes to forecasts. At the same time, TFT ought to have an alternative that
will help it to expand its business without incurring an additional cost. The report will be
focusing on the most suitable inventory system and the alternative e-commerce strategy that the
company should utilize.
Formal inventory system that TFT should consider to mitigate back orders
The choice that an organization makes when it comes to the inventory system has either
positive or negative effects. In the case of TFT, it is essential to first understand the businesses of
TFT and to also know the problems that the company is going through (Wijaya & Wingdes,
2017). The formal inventory system that should be embraced must come to help the company to
make a positive change. In line with the challenges of TFT, the most suitable inventory system is
a perpetual inventory system (Pokki, Virtanen, & Karvinen, 2018). The reason why the inventory
system is the most suitable is associated with the characteristics of the inventory system and the
problems that the company is going through.
One of the problems that are facing the company as far as the aspect of inventory is
concerned is the increasing number of back orders. The issue of back order cannot be only
viewed from the perspective of supply chain and this is because the supply chain is a recipient of

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the production process (Lury & Wakeford, 2012). Backorders are in most cases associated with
defaults and considering that the supply chain deals with products that are already manufactured,
it is evident that the production process must also take the blame (Formentini & Taticchi, 2016).
Therefore, the inventory system that should be selected must be in line with the needs of making
sure that quality is promoted and this is only possible if the system helps the manufacturing team
with the information that is needed to know the percentage of the goods that are returned by
customers.
When it comes to the aspect of inventory management, accuracy is essential and this is
because of the effects that it has on organizations. One of the issues that TFT is going through is
forecast accuracy and that means that at times the company has no detailed information that
helps it to make future plans (Fredendall & Hill, 2016). The issue of lack of forecast accuracy is
promoted when an organization is not in the best position to provide detailed and updated data
about the inventory. The implementation or adoption of perpetual inventory system will have
several effects on the inventory of the company. The first effect is the collection of updated data
about the inventory of the company.
The perpetual inventory system has one characteristic that is associated with increased
accuracy. The system fosters the continuous updating of inventory. Records that are collected
are; goods that are moved from one location to another, details of the goods that are picked from
the inventory, addition and subtractions of goods, and the scrapped goods (Berlemann &
Wesselhöft, 2014). The inventory system makes sure that all data is updated. In line with the
aspect of accuracy, it is essential to note that keeping records of what is taking place on a daily
basis is one of the ways of making sure that the company can make predictions. With this in

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mind, the perpetual inventory system becomes the most inventory system to deal with the issues
that are facing TFT.
The second characteristic of a perpetual inventory system is that it helps the supply chain
and the manufacturing team. Despite the fact that concentration might be on the supply chain, it
is also essential to note that backorders can be affected by the manufacturing team. In this
respect, there is a dire need to make sure that an organization has an inventory system that goes a
long way in making sure that the manufacturing team is informed (Brindley, 2017). When the
system is implemented, it provides updated information that is essential to the entire company.
When the backorder prove that they are associated with manufacturing flaws, the company gets
to know the best way to deal with the issue.
Alternatives that TFT has to increase e-commerce
TFT has one effective alternative that can help it to increase e-commerce without
affecting the costs negatively. The current strategy that TFT has in place is effective but there is
a choice for a better strategy (Brindley, 2017). Currently, TFT is using other parties to make sure
that the goods get to the customers. The best way for an organization to cut costs is by shortening
the supply chain (Wang, Gunasekaran, Ngai, & Papadopoulos, 2016). By shortening the supply
chain, it means that the company must eliminate some of the parties that are associated with the
process of delivering the products to the customers. In this case, it becomes essential to
understand some of the factors that come along with a long supply chain.
A long supply chain increases the costs of delivering goods to the customers, promotes
defects, and increases the price of the products (Wang & Cullinane, 2015). The reason behind it
is associated with the fact that every party that is involved in the supply chain is in business and

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must make profits (Heizer, Render, Munson, & Sachan, 2017). For example, if a product must
pass through four parties, it means that each party will increase the price of the specific product
(Müller, 2017). However, if the company only dealt with the suppliers, it means that the costs of
reaching the user of the product are low. When the cost is low, it is evident that the price will not
increase by a big margin (Christopher, 2016). Therefore, the alternative that TFT should adopt
must consider the aspect of decreasing the number of parties that are involved in the supply
chain.
The best alternative is for the company to take complete control of the supply chain.
Some organizations have proved that an organization can manage its supply chain without
associating other parties (Genovese, Acquaye, Figueroa, & Koh, 2017). The use of online
platforms puts an organization in the best position to interact with customers without necessarily
engaging the suppliers (Stadtler, 2015). TFT should have stores that are managed by the
company and the stores should act as the delivery point of its products. Customers should then be
provided with two options when it comes to picking their ordered goods (Mangan, Lalwani, &
Lalwani, 2016). The first option is to pick goods from the stores and the second option is for the
products to be delivered at their convenient places. When TFT manages its products from the
company to the end user, it benefits in different ways.
The first way is associated with the costs and this is because there will be no added costs.
The second way is associated with the aspect of having competitive prices (Monczka, Handfield,
Giunipero, & Patterson, 2015). The elimination of other parties means that there are supply chain
costs that have been eliminated as well and that means that the company is in the best position to
sell its products at the lowest price (LUO & FAN, 2017). The third way is associated with the
monitoring and accounting for back orders. One of the factors that affect back orders is

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associated with the flaws of the products (Wijaya & Wingdes, 2017). When the company
establishes its teams on the ground, they are likely to interact with the customers with the aim of
knowing where the problem is. In this case, it means that the flaws that might have been caused
by a longer supply chain are likely to be eliminated and that affects the quality of the products
and trust of the customers positively (Hugos, 2018). In this respect, the adoption of the
alternative will have a lot of positive benefits on the company.
Addendum
A decision on what to do with the defective goods
When it comes to the case of defective goods, allowing the sellers to dispose of the
products but at the expense of the company will be the best decision to make. The company
should have a strategy in place where the goods are recorded so that it can refund the customers
or resupply them with the goods of their choices.
The impact of the decision on
 The company’s brand image
The decision will have a positive impact on the image of the brand when it comes to
replacing the goods but have a negative image when it comes to the aspect of having defective
goods in the market. The brand image might also be not affected because the company has made
a mistake and worked on a way to fix it.
 From a financial standpoint

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The company will incur costs for replacing the goods, the raw materials of the defective
products, and the cost of labor for the manufacture of the defective goods. It, therefore, means
that the company will incur financial damages.
 From the individual seller’s perspective
The company will make a positive impression by replacing the defective products. When the
company makes a strong brand reputation, the seller of the company's products benefits because
more customers start trusting the company and therefore purchasing the goods of the company
becomes a trend. The sellers might also start lacking faith with the company and at the same
time, they might lose some customers who cannot tolerate the company’s errors.
 At least one external stakeholder of your choice
The decision might have a negative impact on competitors. The reason behind it is because
the decision makes a strong and positive impression thus attracting more customers. The decision
might also affect the competitors positively and this is if the competitors do not sell defective
goods. The competitors are also likely to learn from the aspect of the defective goods.
Conclusion
TFT needs to come up with the best inventory system to make sure that it fosters
accuracy in its forecasts. Perpetual inventory system becomes the most suitable system and this
is because it helps to make sure that the collection of detailed and updated information is
promoted. When it comes to the case of e-commerce, it is essential for the company to manage
its stores where people will be collecting their products after placing an order. Having a

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centralized area where customers can ask more about the products of the company will increase
customer satisfaction and at no extra cost.

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References
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Formentini, M., & Taticchi, P. (2016). Corporate sustainability approaches and governance
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Genovese, A., Acquaye, A. A., Figueroa, A., & Koh, S. L. (2017). Sustainable supply chain
management and the transition towards a circular economy: Evidence and some
applications. Omega, 66, 344-357.
Heizer, J., Render, B., Munson, C., & Sachan, A. (2017). Operations management: sustainability
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Fredendall, L. D., & Hill, E. (2016). Basics of supply chain management. New York: CRC Press.
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Lury, C., & Wakeford, N. (2012). Introduction: A perpetual inventory. In Inventive Methods (pp.
15-38). London: Routledge.

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Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain
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