TRL3707
OCT/NOV 2022
1.1 The important reasons for carrying inventory by
Takealot are:
Meeting customer demand: Inventory allows Takealot to maintain
a ready stock of products to fulfil customer orders promptly. This
helps them to avoid stockouts and maintain high levels of
customer service.
Managing lead times: Takealot carries inventory to manage lead
times associated with procuring products from suppliers. They can
use inventory to buffer against lead time variability, ensuring that
they have sufficient stock to meet demand.
Taking advantage of economies of scale: By carrying inventory,
Takealot can place larger orders with suppliers, which allows
them to take advantage of economies of scale and obtain better
pricing.
Balancing supply and demand: Inventory enables Takealot to
balance supply and demand. They can use inventory to
accommodate fluctuations in demand and ensure that they have
the right amount of stock on hand.
Supporting production processes: Inventory can also support
Takealot's production processes, such as kitting or bundling
products together for sale.
In the case study, Takealot carries a large inventory of almost
four million items to meet customer demand, manage lead times
and take advantage of economies of scale. They also use
inventory to balance supply and demand, ensuring that they have
sufficient stock to meet customer orders during peak periods.
1.2 The importance of implementing the forecasting
process in organisations are:
Meeting customer demand: Forecasting helps organisations
to predict customer demand and plan their inventory levels
accordingly. This ensures that they have sufficient stock to
meet customer orders promptly and avoid stockouts.
, Managing lead times: Forecasting can also help
organisations to manage lead times associated with
procuring products from suppliers. By predicting demand,
they can place orders with suppliers in advance and ensure
that they have sufficient stock to meet future demand.
Optimising production processes: Forecasting can also help
organisations to optimise their production processes. By
predicting demand, they can adjust their production
schedules and ensure that they have the right amount of
stock on hand to support their production processes.
Improving decision-making: Forecasting provides
organisations with valuable information that they can use to
make informed decisions about their inventory levels,
production schedules, and supply chain processes.
The suitable sketch to supplement this answer is a graph
showing a forecasted demand curve for Takealot's products
over a specific period, along with the actual demand curve.
This graph will demonstrate the importance of forecasting in
helping Takealot to predict customer demand accurately and
plan their inventory levels accordingly.
In the case study, Takealot has strengthened its DC visibility
and tracking technologies to enable it to ship one order every
second. They have also increased their Johannesburg DC staff
and up-scaled their contact centre agents to support the
predicted traffic and shopper volumes on Black Friday and
beyond. By implementing the forecasting process, Takealot can
predict customer demand accurately and plan their inventory
levels accordingly, ensuring that they have sufficient stock to
meet customer orders promptly.
1.3 The risk of holding inventory by Takealot are:
Obsolescence: Holding inventory for an extended period can
lead to obsolescence, where products become outdated or
out of fashion. This can result in a loss of revenue for
Takealot.
Storage costs: Carrying inventory incurs storage costs, such
as rent, utilities, and insurance. These costs can add up over
time, impacting Takealot's profitability.
OCT/NOV 2022
1.1 The important reasons for carrying inventory by
Takealot are:
Meeting customer demand: Inventory allows Takealot to maintain
a ready stock of products to fulfil customer orders promptly. This
helps them to avoid stockouts and maintain high levels of
customer service.
Managing lead times: Takealot carries inventory to manage lead
times associated with procuring products from suppliers. They can
use inventory to buffer against lead time variability, ensuring that
they have sufficient stock to meet demand.
Taking advantage of economies of scale: By carrying inventory,
Takealot can place larger orders with suppliers, which allows
them to take advantage of economies of scale and obtain better
pricing.
Balancing supply and demand: Inventory enables Takealot to
balance supply and demand. They can use inventory to
accommodate fluctuations in demand and ensure that they have
the right amount of stock on hand.
Supporting production processes: Inventory can also support
Takealot's production processes, such as kitting or bundling
products together for sale.
In the case study, Takealot carries a large inventory of almost
four million items to meet customer demand, manage lead times
and take advantage of economies of scale. They also use
inventory to balance supply and demand, ensuring that they have
sufficient stock to meet customer orders during peak periods.
1.2 The importance of implementing the forecasting
process in organisations are:
Meeting customer demand: Forecasting helps organisations
to predict customer demand and plan their inventory levels
accordingly. This ensures that they have sufficient stock to
meet customer orders promptly and avoid stockouts.
, Managing lead times: Forecasting can also help
organisations to manage lead times associated with
procuring products from suppliers. By predicting demand,
they can place orders with suppliers in advance and ensure
that they have sufficient stock to meet future demand.
Optimising production processes: Forecasting can also help
organisations to optimise their production processes. By
predicting demand, they can adjust their production
schedules and ensure that they have the right amount of
stock on hand to support their production processes.
Improving decision-making: Forecasting provides
organisations with valuable information that they can use to
make informed decisions about their inventory levels,
production schedules, and supply chain processes.
The suitable sketch to supplement this answer is a graph
showing a forecasted demand curve for Takealot's products
over a specific period, along with the actual demand curve.
This graph will demonstrate the importance of forecasting in
helping Takealot to predict customer demand accurately and
plan their inventory levels accordingly.
In the case study, Takealot has strengthened its DC visibility
and tracking technologies to enable it to ship one order every
second. They have also increased their Johannesburg DC staff
and up-scaled their contact centre agents to support the
predicted traffic and shopper volumes on Black Friday and
beyond. By implementing the forecasting process, Takealot can
predict customer demand accurately and plan their inventory
levels accordingly, ensuring that they have sufficient stock to
meet customer orders promptly.
1.3 The risk of holding inventory by Takealot are:
Obsolescence: Holding inventory for an extended period can
lead to obsolescence, where products become outdated or
out of fashion. This can result in a loss of revenue for
Takealot.
Storage costs: Carrying inventory incurs storage costs, such
as rent, utilities, and insurance. These costs can add up over
time, impacting Takealot's profitability.
