In the mid-1990s, large consumer goods manufacturers moved its customer-based department and specialty stores to mass merchandising in a variety of retail stores, large and small. The strategic change required to increase significantly the complexity of its operations-the number of products, prices, discounts, patterns, colors, and possibly the sizes. After noticing the firm's expense beginning to rise, the company hired a consultant to study the firm's cost structure. The following information was found:
As many as 10 different vendors provided certain purchased items.
Of the firm's customers after the strategic shift, 98% were responsible for only 7% of total sales volume.
The wide variety of prices and discounts and promotional programs added complexity to the accounts receivable collection process because of increased disputes over pricing and customer balances.
Seventy-five percent of the company sales involved products with five or more color combinations.
Customer demands for fast delivery of new orders had caused a shift in manufacturing to smaller batch costs. Thus, total setup-related costs increased to smaller batch sizes and more frequent equipment setups.
In a paper, describe what you would advise the company to do.