Distribution Management at World Peace Industrial Group

In November 2005, World Peace Industrial Group was at an important milestone as it prepared to join two other major electronics components distributors to form the WPG Holdings and become a dominant player in its industry. As its chief executive officer prepared for the merger, it became apparent that the company’s financial position was threatened by inventory management and forecasting problems. Although sales and market share were increasing, profit margins were dropping as a result of increasing inventory costs. The chief executive officer asked the director of the Business Effective Promotion Group to resolve the worsening problem. How would the director identify the sources of weakness and recommend a plan of action as soon as possible?