Harrington's is a retail store that specializes in consumer electronics. It sells a variety of products to its customers. Its primary items are LED/Smart televisions, Apple products and accessories, laptop and desktop computers and computer accessories. It also has a line of smart phones and digital cameras. Harrington's has an excellent supply chain management system that allows it to incur minimal expenses in acquiring products, logistics and keeping inventory holding costs very low. This has always enabled the company to offer its products at very competitive prices and compete effectively using an overall cost leadership strategy.

In spite of its excellent supply chain management system and attractively priced product offerings, Harrington's has recently been experiencing steadily decreasing sales. As a result of this, it has seen a decrease in inventory turnover and has been experiencing steadily increasing inventory holding costs. Additionally, inventory items that have become or are about to become obsolete have had to be sold at or below cost.

The rise in the overhead expenses for maintaining larger than usual amounts of inventory has created a problem in Harrington's pricing policies. Harrington is no longer able to offer its products at the competitive prices it was able to in the past since it is not operating as efficiently as it was before. This has further compounded the problem with decreasing sales. After analyzing the situation, Harrington's management has pinpointed its warehouse as the key problem area that is responsible for its new pricing policies and the resulting decrease in sales and loss of revenue. The methods used to store and manage inventory were adequate when inventory levels were low but with the increase in inventory the methods are very inefficient.

Management has therefore decided to deploy a strategic initiative to redesign its warehouse. It plans to expand the size of the warehouse, use more efficient storage methods and use more advanced computers and software technologies to manage its inventory. Before work is started on the project, management decides to get feedback from an independent consultant on its strategic initiative. You have been called in as a consultant to review the situation at Harrington's and comment on the strategic initiative that Harrington plans to deploy.

Prepare the report that you will submit to Harrington's.