Pepe Jeans Case Essay

The main wages of Pepe not carrying inventory is obviously the cost savings, as it is usually not efficient or cost effective for that matter, to carry excess inventory. The downside is not having enough pairs of jeans on hand to ship to stores when demand is high. An inventory would back up alleviate this. The six month lede time is both an wages and disadvantage for Pepe. The long drop dead time is positive in that once a retailer places an order, they only have a week to abolish the order. Pepe is able to realize a profit after only decennium days rather than months later.The contract locked retailers in immediately and keeps them from reneging on the deal. The downside is that many stores may be turned off by the long lead. It was mentioned in the article that most manufacturers have lead times of a some months or less. The independent stores also tended to order less volume delinquent to the inflexible order system, and the trouble with fashion is that items typically have a short wearable life ahead they go out of style. bodied purchasers were worried that the jeans they ordered may go out of style before they even arrive.If I were the manager of Pepe, I would assure my retail partners that any reasonable action was currently being taken to help squeeze the current lead time. I would mention the options being considered and thank them for their partnership. I would then sit down with the CFO as well as the best analysts in the company and run reports to forecast the most efficient method of reducing lead time. The case mentions two alternatives to reduce lead time working with a Hong Kong sourcing agent or building a finishing operation in the UK.Without seeing the companys financials, it is unwieldy to say which would be a better choice. The article does mention that Pepe has no long term debt and appears to have plenty of cash on hand. If that is unfeignedly the case, then the better option may be to invest in the finishing factory. The re would be a large investment up front, but lead time could be cut in half(a) while reducing costs by up to ten pct as well. On the other hand, the sourcing agent could possibly reduce lead time down to as little as six weeks. The puzzle with this option is that costs to soar by as much as thirty percent.