The Pricing and Lead Time Decisions - Coursework Example

INTRODUCTION With the advent of the internet and its adoption by the manufacturers and suppliers to promote their products as well as sell them online, there has been a renewed focus on the way that the supply chain in the distribution process works with respect to delivery of goods purchased online. The article in question deals with the concept of price and lead time decisions in a dual channel supply chain. The dual channel in this case refers to the decision of the manufacturers to adopt twin channels of sales i.e. the traditional route as well as the direct channel route. The traditional route that is being spoken of here is the selling of products through the normal sales and distribution channels that comprise of retail outlets and the ability of the manufacturers to adopt delivery mechanisms characterizes the extent to which sales and distribution can take place in a profitable manner. The direct channel selling on the other hand provides manufacturers with a different set of challenges as the lead times needed for delivery are typically shorter since the lead time involved in the direct route excludes that of the time taken to reach the retailer which in the case of the traditional route offers more time. This paper analyses the article in terms of how the article has covered the thesis statement namely that of the pricing and lead time decisions and the analytical framework provided is critiqued as well. This paper begins with an overview of the article in terms of the contents and the framework and then goes on to analyze the article from multiple view points to examine the various aspects of the pricing and lead time decisions and how they relate to the profitability of the business entity. OVERVIEW OF THE ARTICLE The article is mainly concerned with providing an analytical framework to analyze the different components of pricing and decision making strategies that goes into the same to determine the optimal distribution strategy. The authors make a case for pricing decisions that reflect the lesser lead times for delivery as required in the direct selling effort and hence the manufacturers ability to adjust and adapt to the same when selling direct is key to the pricing strategies that they have to make vis-à-vis the selling process. The article further makes the case for dual channel supply chains to be based on the optimal pricing as determined by the lead times that can be a factor of transfer ratios as well as demand pull. There are lots of variables that have been used in the analysis and all these variables contribute to making the pricing decisions that determine the nature of the selling strategies. The various propositions presented in the article are neatly summarized and though there is no one way or method where the article makes a particular case for the proposition, nonetheless it is an important addition to the existing literature on the dual channel distribution system. ANALYSIS OF THE ARTICLE The article provides a succinct and lucid account of how pricing and lead time decisions are intertwined with each other and that of the profitability decision as well as the pricing strategies that are accepted by the manufacturers. The analytical framework presented is by a series of models that the authors substantiate with data and analyze the framework from multiple angles to reach a decision regarding how pricing and lead time factors are the variables in profitability analysis. There is lot of quantitative and quantitative analysis done on the basis of the data that is analyzed and presented to the reader. The research methods are rigorous and in my opinion a bit obtuse for many readers considering that the interpretation of the data requires advanced knowledge of statistics. Thankfully, the authors have provided the analysis and the interpretation of the data leading the reader with conclusions regarding the nature of the analysis done in the article. If one were to critique the article based on the content alone, the article is definitely worth the effort required to read through it as the authors have presented their case well. However, if one were to include the research design that has been employed, a dilemma is created as the data analysis has not been presented at par with the formulaic representation of the same. There are several propositions or case studies provided that reflects the nature of the research design and these are explained well. The points of disagreement about the article stem from the fact that the article does not provide a conclusive picture of which proposition has to be accepted among the various options that have been provided in the article. Hence, the article needs to be read and understood from this perspective where the article is a pointer to the various options that have been provided and presents the readers with guidance to arrive at the conclusion. CONCLUSION Ever since online selling has taken off, there have been numerous studies done that have reflected the need to study the supply chains involved in direct selling. Though direct selling is not a new concept, the concept of online selling presents its own set of unique challenges that need to take a host of factors into consideration. In this respect, it is clear that the article is indeed noteworthy for undertaking a detailed study as to the causes and determinants of pricing strategies. Overall, the analysis of the article would throw up the conclusion that the research design of the article is rigorous and the methods and data are sound. In concluding this paper, one would like to point the fact that dual channel distribution is something that is here to stay and manufacturers and sellers should orient their selling strategies towards this method or incorporate it as part of their broader strategy. The article has provided me with unique insights into the pricing decisions that are contingent upon the lead time and other variables and this has enriched my understanding of the sales and distribution cycle. Read More