2nd Copenhagen Supply Chain Summit
2010
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14 October, 2010
One of Northern Europe’s largest fashion companies with
more than 2 200 employees.
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14 October, 2010
Key numbers
(fiscal year 2009/2010)
•Sales companies in 11 countries – Denmark, Sweden,
Norway, Finland, England, Ireland, Germany, Holland,
Belgium, Poland and Canada.
• ~320 own stores worldwide
• 10.800 sales locations
• Turnover 3.495 mio. DKK
• EBIT 283 mio. DKK
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14 October, 2010
IC Companys’ Change challenges
Stabilise structure and organisation = Control
Establish processes and Brand focus = Direction
Standardise and establish platform requirements
Improve performance and Execution = Quick wins
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14 October, 2010
Sales has shown a slight decline the last couple of years…..
2013/14 2012/13 2011/12 2010/11 2009/10 ~3.450 2008/09 ~3.6 ~3.7 2007/08
NET SALES, DKK billion
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14 October, 2010
…but from 2009/10 onwards strong growth is expected
2013/14 2012/13 2011/12 2010/11 2009/10 ~3.450 2008/09 ~3.6 ~3.7 2007/08
NET SALES, DKK billion
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14 October, 2010
IC COMPANYS’ SUPPLY CHAIN CHALLENGE
11 Brands (InWear, Matinique, Part Two, Jackpot, Cottonfield,
Soaked in Luxuary, Designers Remix Collection, Saint Tropez, Tiger
of Sweden, Peak Performance and By Malene Birger)
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14 October, 2010
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14 October, 2010
IC COMPANYS’ SUPPLY CHAIN CHALLENGE
11 Brands (InWear, Matinique, Part Two, Jackpot, Cottonfield, Soaked in
Luxuary, Designers Remix Collection, Saint Tropez, Tiger of Sweden, Peak
Performance and By Malene Birger)
4 Distribution channels – Wholesale, Retail (including outlets), Franchise
and E-commerce
Different customer types – independent retailers, multibrand stores,
department stores, agents/distributers etc.
Different order types – forward, in stock, express, special orders etc.
Different product types – basic, seasonal, campaign, flat, hanging etc
4-10 seasons
23 capsule deliveries
International presence
Global and differentiated sourcing (Europe/Asia; Reaty-To-Wear/CMT)
Multiple warehouses
Resulting
in
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14 October, 2010
COMPLEX PLANNING CUBE
Wholesale
Retail
Franchise
E-commerce
Brands
Co
un
tri
e
So
ur
cin
g
s
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14 October, 2010
Strategic project overview
Work streams 1. Business plan
process Corporate
Strategy
2a. Retail concept Distribution strategy 2b. Franchise concept 2c. Controlled wholesale 3a. Collection development Value chain optimization 3b. Replenishment program 3c. Sourcing 4a. Working capital mgmt. Cost efficiency Order to cash Purchase to Pay Inventory mgmt Reporting/Forecasting Rightsize organisation Retail principles Standardise retail
formats
Standardise & optimise purchasing formats
Standardise
franchising formats & agreements
Establish controlled wholesale manual and train org.
Establish current
internal best practise Integrate internal best practisewith retail principles Process, R & R’s, KPI’s Future best practise v. 2.0
Define products &
programs/brand Define inventory mgmt processes & systems Develop long term
sourcing strategy
Sourcing process, roles
and organisation Improve purchasing skills Consolidate suppliers Samples mgmt
Optmise current logiistics
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14 October, 2010
AIMING ON OUR MARKETS
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Our road to growth will be based on deliberate,
focused choices
PRINCIPLES
COUNTRY FOCUS
COMPLETE EXISTING
MARKETS
CLUSTERING
RETURN ON INVESTMENT
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14 October, 2010
We have and will develop and implement new
business systems
Verticalization
New business model for wholesale
E-commerce
Frequency of selling in
B-2-B Portal
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14 October, 2010
We will continue to implement best practices
COLLECTION
DEVELOPMENT
Alignment with retail requirement
Focus on fewer styles
More commercial styles
SOURCING
Clear roles and responsibilities Consolidation of suppliers
IT strategy
Detailed cost quotations
PRICING
Alignment across brands and countries Focus on opening prices – category leader
SSP CONCEPT
New replenishment system Better products and packages
RETAIL BUYING
Standard formats Merchandise flow to fit consumer behaviour
Retail space management
DISTRIBUTION
MAPPING
Profiling customers
Potential
Customer action plans
Less time in showroom, maximum time on the road
CONTROLLED SPACE
Fixed m2 (and more) Annual budget discussions
Order proposal
From sales to advise
FRANCHISE CONCEPT
Manage buying15
14 October, 2010
New ways of working
CONNECT
SPEED
FOCUS
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14 October, 2010
We need to standardise our common platform and
reduce complexity
The result will be clear demands both ways
enforced by service level agreements (SLA)
EXAMPLE SPACE STATION
PRINCIPLE
Complexity does not
come from having 11
different brands, but
from having 11 different
approaches.
One standardized
common platform
incl. customer facing
operations for
wholesale and retail
reduces complexity
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14 October, 2010
Design/ development
Production/
Purchasing Distribution Market Policies / Strategy
Planning and Control
Footprint
• Supply and service policies • Design policies • Distribution policies
• Productivity
• S&OP
• Demand / supply / inventory planning • Measurements/KPI’s • Market insights / requirements
Breaking
constraints
Optimizing
within
constraints
Market team Footprint team Complexity team Planning and control team
• Innovation • Complexity
USE HOLISTIC AND “OUTSIDE IN” APPROACH
TO MANAGE YOUR SUPPLY CHAIN
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14 October, 2010
CONFIGURE & CONTROL
)
Cost efficient
)
”Simple”
)
Policy driven
)
Resilient
)
Differentiated
)
Integrated/
Cross-functional
• Efficient/Lean
• Sourcing strategy
• Reduce/Manage
complexity
• Explicit and agreed
demand/supply trade-offs
• Robust planning & control
processes
• Different service/supply
models
• Integration in
―
development
―
sourcing
―
logistics
―
markets (S&OP)
Configure
Control
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14 October, 2010
Accelerate exit of poor performing product
Apply more rigorous evaluation criteria to products to rationalize product range Rationalise distribution channels or customers
Standardise / Consolidate Rationalize Modularize Manage
Driver
Examples
Red
uce complexity
Manage com pl exi tySIMPLICITY – HOW TO ADDRESS COMPLEXITY
Prioritize material/supplier standardization
Apply a total cost approach in the design/development cycle (choice of materials, details etc.
Standardize customer (retail) formats Consolidate suppliers
Establish pre-packs where commercially viable Introduce standard start packs for wholesale & retail
Implement late customization at all stages of the supply chain
Use segmented service models to manage the remaining complexity and
accommodate customer requirements at reduced cost
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Inventory
Inventory
• Different production
scenarios
–
CMT vs RTW
–
Low cost vs. most
responsive
• Supply reliability
sensitivity
• Lead time and fill rate
• Differentiation
–
By customer
–
By product
–
By season
• Allocation rules
• Inventory investments
• Inventory storage
points: raw vs.
in-process or finished
goods
• Different demand scenarios
• Demand variation levels
(core vs. Seasonal
products)
• Impact of uncertainty
(forecasting error)
Demand
Balancing customer service and cost to serve
Demand
Supply
Supply
Service
Levels
Service
Levels
SETTING THE CAPACITY STRATEGIES IS AN INHERENT PART OF THE 4
WAY TRADE-OFF AT THE STRATEGIC LEVEL
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14 October, 2010
SUPPLY CHAIN VISIBILITY
Visibility is not a question of IT systems or the amount of available
information, but to assure that the right nodes in the chain has
access to the right information.
It is a question for the complete value chain in the company.
In many value chains today, the knowledge of future demands and
exchange of information – and consequently the visibility – is
limited.
In many instances, there is access to a lot of operational
information, but low visibility. Through an increased exchange of
the right information, there are good opportunities to achieve
increased service levels and reduced cost.
With good insight into demand and supply and the ability to
22 14 October, 2010 China Turkey Romania Shanghai Turkey Romania
Our Production Offices
India Vietnam/ HCMC Bangla desh
Europe
South Asia
China
HongKong23 14 October, 2010
China challenges
Currency
RMB stronger? USD stronger?
Inflation
Workforce availability
Manufacturing capacity
Domestic demand
Raw materials more expensive
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14 October, 2010
A spectrum of design options exist in organizing the procurement function
Source; Prokura Brand ownership Economies of scale Description
Local
Central
Outsourced
• Full spectrum of design as well as strategic and operational sourcing handled by individual brands
• Part of the value chain managed by a central procurement function • Typically only applied for selected categories • Part of the sourcing value chain outsourced to third party player High Low Low High
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14 October, 2010
The current trend is towards increased centralization and outsourcing
Source: Prokura, market research
Local
Central
Outsourced
Example of companies
Trend
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14 October, 2010
Current Distribution Structure - Europe
Production to RDC Linehaul RDC to RDC Returns to RDC RDC to Shops Production RDC Oslo RDC Copenhagen RDC Venlo RDC Strykow N - Peak Export DK-S-N-SF PL-HU-CZ NL-B-FR-D-GB-ES-IR ICC Outlets
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14 October, 2010
The immediate solution – European distribution Structure
Production to RDC Linehaul RDC to RDC Returns to RDC RDC to Shops Production RDC Copenhagen – Hanging RDC Brøndby – Flat-pack RDC Strykow Export DK-S-N-SF-NL-B-D-FR-GB-ES-IR PL-HU-CZ ICC Outlets
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14 October, 2010
The future solution – European distribution Structure
Production to RDC Linehaul RDC to RDC Returns to RDC RDC to Shops Production RDC Copenhagen – Hanging
and Flat Pack Export
DK-S-N-SF-NL-B-D-FR-GB-ES-IR
PL-HU-CZ
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14 October, 2010
All European warehousing activities are consolidated on a single site
The new EDC site is a green field project with the construction of a 22.000 m2 automated warehouse (building
height 14 m) located on a 60.000 m2site
The planned handling capacity is 30 mill. pieces with modular expansion possibilities System support by a new Warehouse Management System interfaced to ERP
The solution is very flexible in regards to changes in order structure and volume and can handle the in-sourcing of e-commerce volume with limited adjustments
All existing sites are closed down
Receiving
Multi shuttle/OSR
Dispatch sorter
Picking station Hanging system
Loading Hanging
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2014
B2B E-commerce Outsourcing New business modelNew sourcing supplier models
Collection Structure
2010
Verticalization
World-class standardized platform
Retail space management
Franchise concept Standardized retail buying
Milestones
Retail formats
Controlled space
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14 October, 2010
Sir John Harvey-Jones
Supply Chain Planning &
Control
Planning is an unnatural
process. It is more fun to do
something. The nice thing
about not planning is that
failure comes as a complete
surprise rather than being
preceded by a period of worry
and depression.
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