Explain how managing an efficient supply chain and information system can improve the company's return on assets.
What will be an ideal response?
Net sales increase because customers are offered more attractive, tailored assortments that are in stock. Net profit margin is improved by increasing gross margin and lowering expenses. An information system that coordinates buyers and vendors allows retailers to take advantage of special buying opportunities and obtain the merchandise at a lower cost, thus improving their gross margins. Retailers also can lower their operating expenses by coordinating deliveries, thus reducing transportation expenses. With more efficient DCs, merchandise can be received, prepared for sale, and shipped to stores with minimum handling, further reducing expenses. By efficiently managing their supply chains, retailers can carry less backup inventory, yet still avoid stockouts. Thus, inventory levels are lower, and with a lower inventory investment, total assets are also lower, so the asset and inventory turnovers are both higher.
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