When a company relocates production to a lower-wage country, fluctuations in currency exchange rates can significantly impact profitability without affecting the product's landed costs. Exchange rate volatility can lead to unexpected increases in costs when converting foreign earnings back to the home currency or when paying for imported materials and services in a foreign currency. This can erode the cost advantages gained from lower wages. In contrast, changes in labor costs, commodity prices, and product quality typically affect the direct costs and product landed costs.
References:
* Christopher, M. (2016). Logistics & Supply Chain Management. Pearson.
* Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation.
Pearson.

An effective company strategy for innovative products involves combining them with a responsive supply chain. Innovative products often have unpredictable demand and short life cycles, requiring a supply chain that can quickly respond to changes in demand, accommodate customization, and manage shorter product cycles efficiently.
* An efficient supply chain (A) is more suited for functional products with stable demand.
* Accurate forecasts (C) are important but difficult to achieve consistently for innovative products.
* High inventory levels (D) are generally avoided in innovative product strategies due to the risk of obsolescence.
References
* Fisher, M. L. (1997). What is the right supply chain for your product? Harvard Business Review.
* Lee, H. L. (2002). Aligning Supply Chain Strategies with Product Uncertainties. California Management Review.

Section: Implementation and Operations