Response to the following problem:
From rags to riches Progress in the search for profit is reported by the accounting information system. If managers find that the reported profits are inadequate, it can be an important driver for change. This change can, in turn, have a profound effect on the working lives of those both inside and outside the business. Many clothes retailers have been concerned with profit levels in recent years. This has led them to make radical changes to the ways in which they operate. Low inflation and increased competition in the high street have forced the retailers to keep costs under strict control in order to meet their profit objectives.
This has been done in various ways, including:
? moving production to cheaper countries and closing inflexible manufacturing offshoots;
? using fewer manufacturers and working more closely with manufacturers in the design of clothes. This has enabled the retailers to add details, such as embroidery or unusual design features, and to command a higher price for relatively little cost;
? improving communication to suppliers of materials and to manufacturers so that design and sourcing decisions can be made faster and more accurately. This has meant that the time to make garments has been reduced from as much as nine months to just a few weeks;
? predicting more accurately what customers want in order to avoid being left with inventories of unwanted items. The effect of implementing these changes has been to reduce costs, and thereby improve profits, and to have more flexibility in the cost structure so that the clothes retailers are more able to weather a downturn.