Title: Functional Product and Innovative Product Free Essay Example
Headings: Functional Product and Innovative Product
Functional Product and Innovative Product
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Content: For example, most of kitchen utensil can be classified as functional products, because it is relatively easier for a kitchen utensil firm to predict people’ total demand and the demand will not be fluctuated. Turn in your highest-quality paper
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However, because of stable revenue flow that this demand nature provides, market competition is severe, which squeezes the profit margin of functional products. Since revenue is certainly fixed, minimizing physical cost becomes the priority for managers. Physically Efficient Process is a more preferable supply chain type for functional products, because it can supply predictable demand efficiently at the lowest possible cost. Get quality help now
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Moreover, since functional products enjoys low forecasting errors, managers can freeze the production schedule and employ IT system, such as manufacturing-resource-planning software, to orchestrate the entire supply chain to minimize inventory and maximize production efficiency. In contrast, innovative products have more fluctuated and unpredictable demand, and they have much shorter life cycle.