GOH vs Flat packed. michelle Klinkhamer

Transcription

1 GOH vs Flat packed michelle Klinkhamer Amsterdam fashion institute

2 final thesis What will be the effects when transporting garments, flat packed or hanging and what are the implications through the supply chain for the bundling platform? michelle klinkhamer *** Amsterdam fashion institute 5 June 2013 Hong Kong *** Henny JOrdaan Marco mossinkoff

3 Preface This final thesis, which is lying before you, is written as a last part of my International Fashion and Management education at the Amsterdam Fashion Institute. This subject came together with the cooperation of AMFI, Modint and Euretco. Modint and Euretco have been working on the Bundling at the Source project and discovered unfamiliar grounds that should be researched. The reason behind my choice for this subject is that I wanted to learn more about the transportation of the goods after production. During my three and a half years studying at AMFI, I have been able to learn about concepts, collections, and the product, get familiar with the retail and marketing side of fashion, do a production and design internship, and work for the great learning school Individuals. All though this has been a great experience, I had the feeling I wanted to know more about the logistical process in the supply chain. also the difficulty of creating connections and getting the right information that was needed to finish the research. I would like to thank my coach at AMFI, Mr H. Jordaan for the help and advice he provided me with. Mr C. van Veldhuizen for introducing this project to me, and Mr W. Drost for giving me access to the project. Another thank you is preserved for Tigers by helping me with my research by providing me with all the necessary information and a location to execute my final thesis. Other companies I would like to thank are TNT Fashion Group BV and de Nederlandse. This report gave me the opportunity to go to Hong Kong and learn about the possibilities of packing goods for transportation in connection to the Bundling by the Source project. But 3

4 Content Page 1. Executive Summary Introduction The reason for a garment to be shipped GOH or flat packed The Crease Resistance In-Store Presentation Outside influences on the logistical process Fumigation of Containers Lean versus Agile Carbon Footprint The effects of Bundling at the Source Reconditioning Quality Effects Quality Experience The options that are currently available Shipping Methods Shipping Routes How to Ship Containers Conformation of the bundling platform Bundling Platform Role Added Value How to Conform Incoterms Quantities & Prices Scenario Costs Benefits Quantities Instructions Supplier Manuals Timing Conclusion Advice

5 Content Page 12. Sources Appendix I. Interview with Willem-Jan Drost 45 II. Interview with Michael Tung 50 III. interview with Tiffany Tao 54 IV. Calculation for the costs, additional information for chapter V. Calculation for the quantities, additional information for chapter VI. interview with Chris Koeleman 62 VII. interview with Geert Zomer 64 5

6 Executive Summary Whether or not to send a shipment via goods on a hanger (GOH) or flat packed has several factors, when purely looking at the garment there are two main reasons. The first is the crease resistance, how is a garment going to respond to the conditions that it is packed in. The second is the in-store presentation, if goods are going to be presented folded there is no need to ship them hanging. This is not always the case if goods are presented hanging, usually the creasing factor would be consulted, to determine the shipping method. There are several things happening in the current market, within this report there is a focus on three subjects: lean & agile, CO 2 emission and fumigation. The lean approach can be described as only use what is necessary where as agile is being prepared for every possibility; one of the goals of these approaches is improving the bonds between the partnerships within the supply chain. This relates to the BatS project, the same goes for the CO 2 emission. By combining shipments there will be less traffic that creates less emission, and as brands are taking this more serious this is very much an added value. Fumigation is also mentioned, as this is still a common occurrence. Fumigation is often not well communicated which can have damaging effects for the people that work with the containers, and it can also have a damaging effect on clothes. Transportation can have three main effects on the quality of the garments, pressure-, moistureand contamination effects. As mentioned above fumigation can have a damaging effect, referred to as the contamination effects. Pressure effects, creasing, wrinkles, etc., are created/determined by the way of packaging and moisture effects, such as mildew, can also be avoided by packaging. The probability of these effects happening will depend on the duration of the transportation. The quality experience is also mentioned but this is determined during the sales period, then it will be determined by the buyer/supplier how the goods will arrive. Another aspect that is looked at is reconditioning, within the BatS project there is no room for extra stops, and not being reconditioned can affect the garments if they are shipped flat packed. GOH could be a solution yet this will add extra costs. There are three ways to pack a shipment, via GOH, flat packed or semi-hanging. The latter one is not used frequently; GOH has experienced a decline in frequency over the years and flat packed is getting more popular. To determine how the goods are being transported from one place to the other, there are also a few choices. The most frequent used are sea freight, airfreight and sea/air for long distances, for short distance trucks are usually used. The project is about bundling shipments to improve the time to market, lower costs and reduce CO 2 emission. For BatS to be able to implement a pick and pack service for GOH shipment will mean a dust free tent needs to be installed in the warehouse. The best location for a warehouse within the BatS project is within 6

7 a Bonded Logistic Park, this park creates the possibility to pick and pack multiple factories/ brands within the same shipment. The brand s responsibility will be buying the goods with the incoterm Free Carrier, this gives the forwarder the ability to handle the goods before shipping. When transporting goods GOH, the costs will be higher than shipping flat-packed. First a GOH shipment takes up more space than flat packed and a GOH container will need to be modified before it is able to be shipped GOH, and these modifications will add extra costs. To be able to exclude some communication issues it is important for a brand to make a clear overview on what they want, focussing on packaging. Therefor a supplier manual needs to be created; yet brands have different ways of formulating their instructions, which can cause vagueness. So what will be the effects when transporting garments, flat packed or hanging and what are the implications through the supply chain for the bundling platform? The effects are related to quality effects, costs, quantity and the shipping routes and the implications for the platform will be connected to the current market situation, the demands that the platform needs to meet to offer the services, the transportation routes and the communication of instructions. 7

8 Introduction When talking about methods of transportation, you might think of shipping by air, sea or overland. In this case methods of transportation will mean how are the goods being transported, flat packed or hanging or maybe a combination of the two. In this report questions will be asked about quality, costs and efficiency. These subjects play a large part in deciding on how to ship the goods, but in todays market the focus is mainly on efficiency and costs. This research is designed for the project Bundling at the Source (BatS), which is an initiative of Modint and Euretco. Bundling at the Source aims at improving the transportation from Chinese factories to Dutch clothing retailers. In this project, multiple suppliers of fashion retail products collaborate horizontally to bundle volumes in Asia and prepare shipments of multiple suppliers but sorted for individual stores. This means that shipments containing goods of multiple suppliers are delivered to shops in one go, as opposed to many different shipment deliveries (Modint, 2011). To create an easy understanding of this concept, normally you have a distribution centre in the Netherlands; this platform will be re-located to China to make the handling costs lower and have larger shipments less frequently to the retailers. There are several things that need to be taken into account, time management is of the essence as everything will need to arrive on time, and you can only bundle within a certain time frame. When delivering goods directly to the stores, the question arises what is the state they will arrive in. In the Netherlands the goods often go to a reconditioning company to get the garments store ready, so how are the goods going to be made store ready if they are shipped directly from China. This is why the question has arrived on the method of transportation within the BatS project; What will be the effects when transporting garments, flat packed or hanging and what are the implications through the supply chain for the bundling platform? After having decided on the main research question, other questions needed to be formulated to be able to answer this question. There are seven chapters, which represent seven subsidiary questions. The reason for a garment to be shipped GOH or flat packed What type of garments do you hang or fold when transporting, and which indicators are kept in mind? This question lets you ease into this final thesis, as the product is part of the core on deciding whether or not it is shipped GOH. To determine the answer of this question research needed to be done into the characteristics of fabrics and in-store presentation. The material to answer this question was mainly gathered by online research, previously gained knowledge from lectures at AMFI and visits to stores. Outside influences on the logistical process What is the current market situation 8

9 and do the current developments have an influence on the bundling platform? A small insight is shown within this chapter on what is of influence when talking about the logistical process. Subjects as the crisis, that has influenced many economies, carbon footprint, improving this has been a trend that is very persistent, and fumigation of containers, is still of influence, are the outside influences that will be discussed. To gather knowledge about these subjects secondary information has been gathered on- and offline. The effects of Bundling at the Source When making use of Bundling at the Source is there still a role for reconditioning? And what effects will the method of transportation have on the quality and quality experience? When looking at the initiative of the Bundling at the Source project, the time to market should become faster, so making extra stops in between stages will delay the time to market. But whether or not the service of reconditioning should be executed will depend on what the garments will look like when they arrive. So to determine the effects of transportation, questions were send to Mr C. Koeleman about quality effects and questions about quality experience were send to Mr G. Zomer, from TNT fashion, both via contact. The options that are currently available What are the methods of transportation options that are available for companies and which option is frequently used (in which segment)? Before possibly making a relation between the packaging of goods and BatS, the methods of transportation should be explained. To determine the possibilities that are available, questions have been asked to the employees of Tigers, the answers that were given are based on the possibilities Tigers offers. To become aware in what segment the most commonly used method was, was difficult to answer as every company has its own philosophy and acts with this in mind. So for this part of the question a general answer has been given. Conformation of the bundling platform What will be the role of the bundling platform and what does the platform need to conform to? This chapter will give a small overview on what the platform should conform to, to function if Bundling at the Source would like to provide the service of GOH. A small part on incoterms has also been added, although this would be a conformation for the client. To get the right information on the subject which is mentioned within this chapter, the manual of BatS and an interview with Mr W. Drost was used to analyse what exactly is offered. Besides these information sources, a visit to the warehouses of Tigers in Shenzhen and Shanghai was done. To gather information on the incoterms, online research was conducted and old study material on logistics was used. Quantities & Prices What will be the costs of the options that the bundling platform offers and will these affect the choice of the buyer? When trying to determine if a switch to GOH will be a possibility, costs will have a large influence on whether or not brands decide to make this switch. Therefor this chapter will show a scenario that shows the costs of different travelling routes. Although it is commonly known that GOH shipments take up more space than flat packed, a calculation has been made to show how much square meter one garment actually takes up. To calculate the space used for one piece, the Suppliers Manual of Nordstrom was used for flat packed and the GOH manual of Tigers was used for GOH. To determine the costs help 9

10 was received from Mrs T. Tao from Tigers. Instructions Should companies give specific instructions on how to transport their garments and how will these be implemented? To research what brands actually use and what their instructions are, supplier manuals were looked at. As it is difficult to gain access to these manuals, there was a limited amount available but those which were avialable showed different ways of instructions, which showed variety. Besides determining what the instructions are, the timing of these instructions was also researched. To determine the right timing an interview was done with Mr G. Zomer, and brands were asked when they would implement these instructions. To gain all the information of the above used methods, interviews, having conversations and visits to warehouses were done. All of these methods have been very influential on gaining the right information, this has than also been the difficulty as not everyone was willing to provide the right or any information. The last few months have shown an insight on how protective people are with their information, even if it will benefit them in the end. Other sources that have been used have been previously written final thesis s that have been clarifying to how the logistical process works and how goods can be packaged. Little literature was used, due to the fact that most of the information needed to be gathered through talking to people with the right knowledge. Abbreviations Within this report there are several abbreviations used, many have been written in full but below you will find a list with a complete overview. BatS Bundling at the Source BLP Bonded Logistics Park CFR Cost and Freight DC Distribution Centre FCA Free Carrier FCL Full Container Load FOB Free On Board FTZ Free Trade Zone GOH Garments On a Hanger LCL Less than Container Load REACH Registration, Evaluation, Authorisation and Restriction of Chemical substances VAS Value Added Services 10

11 3. The reason for a garment to be shipped GOH or flat pac ked What type of garments do you hang or fold when transporting, and which indicators are kept in mind? To determine whether or not a garment should be shipped as GOH or flat packed there are two main indicators that need to be taken into account the first indicator is the fibre type. With the main focus on the creasing resistance as this has an effect on the garment. The second indicator will be the instore presentation; this will eventually be the decisive indicator, as the bundling platform wants to make all garments store ready. GARMENT TYPE FULL LENGTH WOVEN LADIES DRESSES STRUCTURED GARMENTS Suits/Coats/ Jackets/Pants HIGH CREASING HANGING WOVEN FIBRE TYPE 100% LINEN 100% COTTON NATURAL FIBRE RICH BLENDS 50% or greater Linen/ Cotton/ Viscose 100% VISCOSE RAYON 3.1 The Crease Resistance The first indicator will give you an overview in what the crease resistance of a fibre type is. This is of influence for the shipping methods as the garment still needs to be presentable in any state, hung or fold. MENS & LADIES THREE DIMENSIONAL STRUCTURED ITEMS Blouses/ Skirts / Casual Shirts 100% SILK MODAL LYOCELL On the left you will find an overview of several types of fabric and garments with the creasing level. This is an overview of fibres and/or garments which have not received any finishes and/or coatings to increase the crease resistance. In this overview you might miss the animal fibres, such as wool. Wool fibres have a more elastic nature, because of the elastic filaments and viscoelastic 1 properties. This helps the fibre stretch and return to its original state when the force, which contorts, twists/ bends, the fabric into a wrinkle, is removed. When talking about blended fabrics, there is usually a higher crease resistance as they often get mixed with either elastane, to create a more wrinkle free garment due to the elastic quality of the elastane threads, or with more wrinkle UNDERWEAR, SLEEPWEAR, CORSETRY CASUAL T-SHIRTS Polo Shirts / Sloppy Joes CASUAL PANTS/ SHORTS ie. Cargo Pants/ Jeans/ Trackpants LOW CREASING FLAT PACKED KNITTED SYNTHETIC BLENDS 50% or greater Polyester/ Nylon/ Acrylic 100% POLYESTER Nylon Acrylic 1 The definition of viscoelastic by is, pertaining to a substance having both viscous and elastic properties. 11

12 resistant fibres like polyester. (Lackman, 2008) The reason that natural fibres have a higher tendency to wrinkle is because there are many rough little fibres that stick out from the woven thread, also called fibrils. When wrinkling occurs, it means that the fibrils from different threads have attached to each other, which creates these wrinkles. When the threads are man made there are less to no fibrils, which means that when the threads move along each other there are no fibrils to attach to each other, which leads to little to no creases. (Lackman, 2008) Another noticeable aspect of wrinkling is, that when natural fibres are dry they will wrinkle much more than when they are wet, in this case there will be looked at the humidity of the fibres. Another aspect that needs to be taking into account is the thread count. When there is a high thread count the fabric is tightly woven and has a tendency to crease less. When the fabric is tightly woven the threads are kept together which creates little room to move. Besides the above-mentioned points, it is also necessary to look at the construction of a garment. Looking at all the materials that are used within a garment, for example a blazer excists of two layers of fabric, the lining and main fabric, but also has interlining, shoulder pads, etc. this will also effect the decision whether or not a garment should be flat packed of GOH. 3.2 In-store Presentation The second indicator, the in-store presentation, will eventually have higher influence. When the garments will be folded in the store, you will not have to ship it hanging as this defies the purpose. There are many stores that work with a relatively standard formula when it comes to in-store presentation. When looking at a brand such as Uniqlo, you will see that many of their stores have the same look and in-store presentation. Their products are folded and colour coordinated, with a few goods hanging, for consumers to determine their fit. When going into a store such as the Hennes & Maurits, it is possible to determine that most of the clothes are hanging in store, and there are some tables located in the stores that have goods folded. Although these tables are often used for special offers, or items that they want to put a focus on. Each brand will have their own in-store presentation, whether it is a high-end brand or low end brand to identify themselves to their customers. Though, after visiting several stores, one will see that many retailers opt for the choice to hang their garments. So how would you determine the shipping method? Nowadays there are options to regulate the creasing by using special finishes or coating that will minimize the creasing, but this could have an influence on the look and feel. So there are a few things that need to be taken into account when working with fabrics; the type of fibres, the type of weave and construction of the fabric. 12

13 FLOW CHART TO DETERMINE PACKING IN METHODS TO ENSURE MERCHANDISE IS FLOOR READY IN-STORE PRESENTATION GARMENT CRITERIA DELIVERY METHOD... if any/all of the criteria below applies to the garment... the goods are delivered using the followig methods Folded display on shelf or table - Structured or Casual Garment - Knitted or Woven Fabric - Natural or Synthetic Fibre Flat packed in cartons - Floor ready without hangers - Structured Garment and/ or - Delecate Fabric and/ or - Prone to Creasing (Refer to Garment & Fabric creasing inidicator) Garments on Hanger - Hanging in garment bags, groupes or individually bagged as required Hanging display on racks or fixtures - Casual Garment - Knitted or Woven Fabric - 50% > Synthetic Fibre Flat packed in cartons - Floor ready on hangers - Fully Fashioned Knitwear - Natural or Synthetic Fibre Flat packed in cartons - Floor ready with hangers loose seperated from garments by cardboard partition The flow chart that is shown above shows several options that are possible when deciding the shipping method based on the in-store presentation. As shown in the flow chart it is not always necessary to ship goods GOH when they will be presented hanging in store, this is due to the type of fibres that are used or the type of garment. For example a down jacket will be often shipped flat packed in vacuum sealed bags, this will save space and when taking the jacket out of the bag it will recover in its original state. 13

14 4. Outside influences on the logistical process What is the current market situation and do the current developments have an influence on the bundling platform? In this chapter a few general matters will be addressed. First the matter that will be addressed is the fumigation of containers. The reason for addressing this is because it is strongly linked to Asia and garments, therefor it is useful to learn more about this subject. The second matter is about how brands approach the market, lean, agile or a combination of the two. And the last matter is the carbon footprint; this is researched due to the fact that Bundling at the Source is involved in reducing this footprint. 4.1 Fumigation of Containers In some cases containers that are shipped by sea can be fumigated with toxic gasses, to ensure that pests/insects/mildew do not damage the cargo. The ideal scenario is that the gasses will dissolve in the period that the container is at sea, so the container will arrive gasses free. Unfortunately this does not always happen; often there are still gasses that are in the container. These gasses are a risk to the health of the employees that work with these containers. The main problem is that if a container has been fumed with toxic gasses, it is not communicated in the right way and the personnel are not sure if a container is fumed or not. Besides this there could also be a possibility that the chemicals that are used can contaminate the garments, which creates a possible risk that the garments will not comply to the EU regulations, also known as REACH. There is a second possibility and that is that the cargo itself generates fumes. This is caused by the evaporation of the materials that are used to produce the products. The countries that have sea containers that often contain toxic gasses are China, South East Asia and South America. The products that are in these containers are often food products, clothing, shoes, toys and furniture (RFS, n.d.) In 2010 a research has been conducted to determine how many containers have fumes that reach above the permitted level. A total of containers have been checked in 2010, the amount of containers that acceded the limited amount of fumes were 115 containers (11%). A total of 135 containers have been checked where the cargo was clothes, and 6 containers were above the permitted level of fumes. The dangerous fumes that were found in these six containers that were above the permitted level are carbon monoxide, toluene, 1,2-dichloroethane and carbon disulphide. One way of selecting the containers in the research was based on the country of origin; most of the containers that were tested came from China (60%). From the 115 containers that had a high a level of dangerous fumes, seven containers were actively fumed. From the remaining 108 containers the fumes came from the cargo itself. 14

15 4.2 Lean versus Agile Lean is often mentioned together with the word mean, i.e. he is a lean and mean fighting machine. The business English definition of lean and mean by the Cambridge Dictionaries Online (2013) is: agile. The business English definition of agile by the Cambridge Dictionaries Online (2013) is: Able to deal with new situations or changes quickly and successfully. Using only what is necessary, and determined to work effectively in order to compete successfully. In the rest of the text this definition will be referred to as lean. The following points can characterize the lean approach: - Elimination of waste in terms of both material and human recourses - Low/No inventories - Zero defects prevention rather than rectification of faults - Integrated production chains - Team working - Involvement of all employees and suppliers in a continuous process to improve products and job design (Lysons and Farrington, 2012) You can conclude that having a lean approach means that the production flows from beginning to end, eliminating all waste, this is not only of raw materials it also includes time, and promoting innovative thinking by personnel. The lean approach works with a just in time method, only creating what you need, nothing more and nothing less (CIPS, n.d.). The attraction for companies to become lean has become larger in the last decade; it is possible to say that the crisis has had some influence on this. As by optimizing the process you are able to reduce costs but still get the best result, which sounds very tempting in times of difficulty. When talking about an agile approach, you will be talking about velocity and time. (CIPS, n.d.) When working with an agile approach you are able to adjust quickly if necessary. It is about making use of the market knowledge and responsive supply network to utilize opportunities that are profitable in the market place. As previously stated lean works with a just in time method, it is possible to say that agile works with a just in case method so they are always prepared for possible changes (CIPS, n.d.). An organization does not have to choose between a lean or agile approach, as both approaches can be incorporated side by side. As an organisation you need to decide in what extend you are lean or agile. A continuum can be created with Very Lean and Extremely Agile on either end (CIPS, n.d.). For the textiles and clothing industry there is not an either or, these industries do not meet the requirements of being lean or agile. The companies within these industries would be described as a combination of both, also referred to as leagile, driven by low margins and the constant changing demand (Bruce, Daly and Towers, 2004). This combination will ensure fast product replenishment, the preservation and improvement of supply chain partnerships and the ability to respond to the constant changing demand of the retailers. On the other end of the line you will find the term 15

16 4.3 Carbon Footprint The carbon footprint is becoming more and more important and with bundling there is a possibility to reduce the carbon footprint. A scenario is created to give an example on how the route of a shipment will be and what the CO 2 emission will be. In order to calculate the amount of carbon dioxide and CO 2 emission the calculator on the website was used. Within the calculations a standard of 2 TEU containers (40ft dry) was used, as this is a size that is frequently used. There is also a 90% level of occupancy, as bundling aims for a high density in every container. Shenzhen Zevenaar Amsterdam Comments: This overview shows the following route: 1. Factory (in this case located in Shenzhen) 2. Yantian harbor 3. Shipment harbor Yantian to Rotterdam 4. Rotterdam harbor 5. DC of the buyers choice (in this case located in Zevenaar) 6. Retailer (in this case located in Amsterdam) Shenzhen [DC] [nl] Zevenaar [DC] [nl] Zevenaar Retailer Amsterdam Scenario 1 This shipment would not be part of the BatS project. A factory has finished their order, this order will be shipped to the Yantian harbour where the shipment will be transported via sea freight to the harbour of Rotterdam. When the shipment has gone through all customs, it will be transported by truck to a distribution centre, in this case in Zevenaar 2. After the shipment is picked and packed, reconditioned, etc. all orders can be send out towards the retailers by truck. Shenzhen Yantian [DC] Amsterdam Comments: This overview shows the following route: 1. Factory (in this case located in Shenzhen) 2. DC in country of Origin (in this case located near Yantian harbor) 3. Shipment harbor Yantian to Rotterdam 4. Rotterdam harbor 5. Retailer (in this case located in Amsterdam) Shenzhen [DC] [cn] Yantian [DC] [cn] Yantian Retailer Amsterdam Scenario 2 This shipment would be part of the BatS project, but unfortunately it was not possible to bundle anything. This means the only difference between scenario 1 and 2, is the location of the distribution centre (DC). The DC in Shenzhen is located by the Yantian harbour, this means that no detours have to be made. The DC in the Netherlands is located in Zevenaar. So the difference in CO 2 emission will be linked to the location of the warehouses. 2 In this case de Nederlandse was used as DC and a reconditioning company. Fashion Wheels is located in Helmond, Paul Klarenbeek is located in Nijmegen and TNT Fashion is located in several cities. 16

17 Comments: This overview shows the following route: 1. Factory (in this case located in Shenzhen) 2. The shipment is shipped via truck to the Yantian harbor where the DC is located This overview only shows the route within the country of origin (in this case China). Although the route from factory to the harbor will differ per factory, the city district of Shenzhen is used for this example. Scenario 3 This shipment will also be part of the BatS project, but in this case there would be a possibility to bundle. First you will see a chart with the route Yantian to the final destination, and in the second chart you will only see the route from the factory to the DC/harbour at Yantian. Comments: This overview shows the following route: 1. Yantian harbor 2. The shipment is shipped via seafreight from Yantian harbor to Rotterdam harbor 3. Rotterdam harbor 4. The shipment is shipped via truck to the final destination 5. Retailer (in this case located in Amsterdam) Whether their is or isn t a possibility to bundle, this route will stay the same. This means the CO 2 emission of this course will not differ per shipment. When a purchase order of different factories can be bundled in one shipment, this will have a positive effect, as the route Yantian- Retailer will only be used once. So when trying to determine the carbon footprint for a bundled shipment, a calculation of the route Factory-DC will need to be calculated for each factory, that is within one shipment, plus one time the route of Yantian-Retailer. The conclusion of the carbon footprint, in cooperation with the BatS project is, as long as orders can be bundled there will be a positive effect on the CO 2 emission. But when bundling is not an option the difference in CO 2 emission will depend on the location of the DC. 17

18 5. The effects of Bundling at the Source When making use of Bundling at the source, is there still a role for reconditioning? And what effect will the method of transportation have on the quality and quality experience? This chapter will explain what reconditioning is and when it is used, it will also explain the quality effects that transportation has on garments and what the quality experience is of the retailers when they receive there ordered goods. 5.1 Reconditioning To figure out if there is still a role for reconditioning, a description of what reconditioning is must be given. So what is reconditioning? Reconditioning is mostly used with products that are flat packed inbound 3 and need to go hanging outbound 4. This means that the garments need to be made representable, i.e. getting out the creases. There are different processes within reconditioning like tunneling, blowing and ironing/pressing. Tunneling When garments go through this process, the garments will go through a tunnel that has different rooms that have different functions. First the garment will be heated, then steamed and afterwards dried. The garments are heated first because it makes it easier for the steam to get the creases out (Bruijn, 2010). This process is the most used process, as it can handle larger amounts at once, and you can keep adding garments. This process also needs the least handling. Blowing When a garment cannot go through the tunneling machine or the tunnel is not sufficient enough, a garment will go through the blowing process. You have different blowing machines; different ones are used for tops and bottoms. The machine looks like parts of a doll, either the top or the bottom, the garment that will be on this doll will be secured. Then the doll will blow out hot air and steam under high pressure, the blowing machine blows from the inside out. If necessary it is also possible to only do parts of a garment instead of a whole garment. (Bruijn, 2010) Often the blowing machine is used to increase volume, such as for winter jackets. Ironing/pressing When a garment needs high finishing, the garment will go through the ironing and pressing process. This process is done by hand and can therefor be used on multiple fabric groups and product types, i.e. to accentuate pleats in a skirt. Not all processes will be used or are necessary for every product; therefor the client needs to specify what needs to be done with each garment to restore the original look of the garment. The reconditioning company will be able to give advice on what could be done, but eventually the brand will decide on the eventual look of the garment. The complete reconditioning process will also include the garments being hung on hangers and picked and packed for shipment after the restoring processes. Besides the above-mentioned procedures, reconditioning companies often provide extra services. These extra services are there to fix small 3 Inbound means the goods that arrive to the DC in the country of destination. 4 Outbound means the goods that leave the DC and are transported to the retailer. 18

19 production faults that where discovered too late, i.e. replacing a hangtag. (Bruijn, 2010) Reconditioning is often part of the DC in the Netherlands, but when looking at the BatS project there will no longer be made use of a DC in the Netherlands. This would mean that the use of a reconditioning company in the Netherlands would no longer be necessary. But the question still stands, is there still a role for reconditioning somewhere else in the supply chain? BatS talks about making the garments store ready to be able to ship directly to the retailer instead of a DC. Yet if the shipping method does not change, this might not be the case when the order arrives at the retailer. So you could say there are three possibilities to solve this problem. 1. Change the shipping method, into GOH, for those garments that would need reconditioning. 2. After the shipment has arrived at the retailer it could be send to a reconditioning company, although this does defy the whole point of BatS. And the amounts will be smaller, which will affect the price. 3. The store personnel would need to recondition the garments. Although they would not have the same equipment and will need to steam everything by hand. Besides the fact that this would be very time consuming, the cost of making store personnel do this are much higher than the costs per garment at a reconditioning company. Even though the costs might be higher, this is an option that is being used by retailers, such as Abercombie & Fitch and Vero Moda. When shopping in the Netherlands the consumer is used to having all sizes and colors in store. The garment that will be chosen will be the same garment the customer will buy. This would mean that all goods that are in store or in the storage room, need to be presentable for the consumer. This is a concept that is seen in multiple places, yet not everywhere. Take for example Hong Kong, the complete collection is presented in store, sometimes only one size and sometimes the whole size range, but when the consumer would decide on a purchase they would not receive the item they might have tried on. The consumer will get a new item, that hasn t been presented in store and still is in its original packaging, unless it would be the last item remaining. When using this way of selling items, the products would not all have to look as they are presented in-store. This would mean that not all goods need to be reconditioned and store personnel only need to steam the goods that are presented in-store. 5.2 Quality Effects Even though clothes are being made in the Far East, because of the lower cost, the quality effects that transportation has on goods are not always considered. Especially when goods need to travel a long distance. When clothes get transported the main thing to consider is the shipping method, how are the clothes put into boxes or hung in containers. If the clothes are handled with little care this could affect the look of the garments, which will mean more effort will need to put into restoring them for the instore presentation. When comparing sea freight with airfreight, sea freight would give a higher risk in damaging the garments, due to the longer shipping period (Koeleman, 2013). 19

20 There are three frequently occurring effects that are often seen due to transportation circumstances: 1. Pressure effects: creases, wrinkles and flat appearance 2. Moisture effect: mildew (mold), or rust (via packaging materials) 3. Contamination effect: hazardous chemicals Choosing for reconditioning could solve the pressure effects, and it is a possibility that the hazardous chemicals could have a chance to disappear when reconditioning the garments, although this would be a positive side effect it is not the intent of reconditioning (Koeleman, 2013). To get rid of mildew there are possible treatments to conduct on the goods, i.e. ozone treatment, but it will not be easy to get rid of it all. To possibly prevent mold, instructions on storage, packaging and packaging material should be made. Another way to prevent the tendency of mold is via a finish, i.e. water repellent or mold killing finish (Koeleman, 2013). Another thing that can possibly happen due to the humidity or moisture is rust, rust is formed by the reaction between iron and oxygen when it is located in or nearby water or air moisture. And although the clothing might not contain any metals, it is often used as packing material. For example when folding a men s shirt there will be pins used to assure a fixed position. These pins can cause rust stains on the clothing. A small overview has been made to show the pros and cons of the shipping methods concerning the quality. Pros Cons Flat Packed - The cheapest way of transportation. - The garments are well protected. - The garments have a fixed position. - There is a possibility that pleats/ wrinkles/ creases are created - this could lead to having to recondition. - Extra labour of having to put the garments on hanger. - This method has the least air ventilation. GOH (Goods On Hanger) Semi- Hanging (goods hanging in a box) - The garments will need (almost) no reconditioning - This method gives some air ventilation, so the chance of moisture problems is less. (This will depend on the closure of the bag) - Reconditioning will not ne necessary. - This method gives a luxurious impression. - This method is more expensive than flat packed. Packing time is higher and the amount of pieces is lower. - This method also ships hangers; these hangers need to have a certain strength. - There is still the possibility that the garments get squeezed. - This method is the most expensive way of transporting the goods. The amount of pieces is less and therefor more (expensive) material usage. - This method also ships hangers; these hangers need to have certain strength. (Koeleman, 2013) Final Thesis June

21 5.3 Quality Experience When a retailer decides to make a purchase order, the brand and retailer will make a decision on how the goods will arrive; it is possible that this will be negotiated. So under normal circumstances a retailer will have an expectation on how the goods will arrive. When a brand makes a purchase order for their stores a team of visual merchandisers will decide how the goods will be presented instore and this will then effect the instructions the brand will give in an earlier stage to the factory/logistic partner. When focussing on the BatS project, these decisions will also be made at the beginning, and the retailers will know what they can expect when the goods arrive. 21

22 6. the options that are currently available What are the methods of transportation options that are available for companies and which option is frequently used (in which segment)? Within this chapter there are multiple subjects that will be described, first the shipping methods. This will describe what the possibilities are in packing the goods for transportation. Then the shipping routes will be explained, the routes that are explained are with and without including the BatS project. There is also room made to explain how you can ship your goods, via air, sea, etc. This might seem as stating the obvious, but pros and cons will be described which should make the decision making process easier. The last subject that will be described is containers, what containers are being used for the clothing industry. 6.1 Shipping methods There are three shipping methods; these shipping methods can also be described as the way of packing the goods for transportation. The three methods are flat packed, GOH and semi-hanging. Flat packed Flat packed shipping means that the goods will be folded and put into a poly-bags, which will be placed into a box. Often the garments will be packed individually, and sometimes these individually bagged pieces will be put in a larger poly-bag to create a unit. This is used to make the pick and pack process easier. The poly-bags are there to protect the garments from damaging each other when in one box. This method is most frequently used in all segments, as this is the cheapest way of shipping the goods to a destination. Another reason why this option is frequently used is because handling these shipments are easy and don t need the extra care or attention that GOH needs. When deciding on flat packed shipping it is not necessarily about what segment you are in, but about the product that is being shipped. For example you can notice that lingerie brands often use flat pack, but this is decided on because of the product. When you would look at brands that produce clothing, the decision will be made on product, fabric and in-store presentation. Although there are several brands that are 100% flat packed, and e large retailers are also shifting more towards flat packed. (Zomer, 2013) GOH (Garments on hanger) When using this method, all garments will be hanging in the container. This method is not frequently used nowadays as the quantity of garments that fit into one container, is low in comparison to the option of flat packing. When using this method the garments will be ready to directly go to the retailers, without having to go through a reconditioning process. Some large retailers in the Netherlands still use GOH, such as Miss Etam, but GOH is decreasing 5-8% a year. (Zomer, 2013) The possibility of shipping GOH is fairly limited, although the containers exist, it is the before and after shipping process where difficulties arise. Not all DC or shippers have the possibilities to handle GOH shipments. (Bruijn, 2011) And besides the fact that not everyone can handle these shipments, the ones that can need to follow specific instruction and regulations. 22

23 There are two ways of hanging goods in a container, using strings or bars. The amount of pieces in one container will be higher when making use of strings, but this way of hanging is more difficult to unload than the bar system. Looking at possible segments that would use GOH shipping are: bridal, suiting and evening wear, this would also be based on the product, fabric type and in-store presentation. Semi-hanging Semi-hanging is a combination between flat packed and GOH, the goods will be hanging within a box, called the wardrobe box. This will make the distribution as simple as flat packed and you will have the same result as with GOH, garments that are immediately presentable in-store. The simplicity of distributing semi-hanging will depend on the measurements of the box. All segments that (should) use GOH could choose for this option, yet the price of semihanging is higher than flat packed and GOH. If a shipping plan is created, it is not necessary to choose one method for the complete route. A combination can be made between the three methods, by making a difference between inbound and outbound. - Flat packed inbound (Reconditioning) GOH outbound - Flat packed inbound (Reconditioning) Semi-hanging outbound - GOH inbound Semi-hanging outbound 6.2 Shipping routes As it is shown in the image on page 24, the Far East customs are located before the terminal or pick and pack warehouse, in all the routes. The reason behind this is that the terminal/ pick and pack warehouse is located in a bonded logistic park (see 7.3). For route 1 and 2 a possible stop can be made at a reconditioning company. This will depend on several factors, the first being if the buyer wants to let the garments be reconditioned. A second factor would be, if the warehouse would offer reconditioning services, an extra stop will not be necessary, but if this is not a value added service (VAS) offered by the warehouse a third party will need to be hired to execute this required service. Route 1 This route can be explained as the following; the goods are made in a factory overseas, in this case the Far East, then the finished goods will be transported through customs to the terminal where they will be loaded on to the container. From there a truck will take the container to the quay or airport and there the goods will be shipped to the quay or airport of the country of destination. After arrival the goods will go through customs and to a warehouse where the goods will be picked and packed, then a possible stop can be made at a reconditioning company and then transported to the retailer. Route 2 This route is very similar to route 1, the difference is that the goods are not being picked and packed in the warehouse per retailer, but will be shipped to a brands own DC where they will storage and pick and pack 23

24 ROUTE 1 FAR EAST THE NETHERLANDS FACTORY SUPPLIER TRANSPORT CUSTOMS TERMINAL TRANSPORT SHIPPING TRANSPORT CUSTOMS PICK AND PACK WAREHOUSE TRANSPORT RECONDITIONING COMPANY TRANSPORT RETAILER ROUTE 2 FAR EAST THE NETHERLANDS FACTORY SUPPLIER TRANSPORT CUSTOMS TERMINAL TRANSPORT SHIPPING TRANSPORT CUSTOMS PICK AND PACK WAREHOUSE TRANSPORT RECONDITIONING COMPANY TRANSPORT DC OF BRAND TRANSPORT RETAILER ROUTE 3 FAR EAST THE NETHERLANDS FACTORY SUPPLIER PICK AND PACK TRANSPORT CUSTOMS TERMINAL TRANSPORT SHIPPING TRANSPORT CUSTOMS TRANSPORT RETAILER WAREHOUSE ROUTE 4 FAR EAST THE NETHERLANDS FACTORY SUPPLIER PICK AND PACK TRANSPORT CUSTOMS TRANSPORT SHIPPING TRANSPORT CUSTOMS TERMINAL TRANSPORT RETAILER WAREHOUSE the goods for each retailer. These retailers could be locally but also international retailers. Route 3 Route 3 shows more then one factory, this means that goods of multiple factories will be bundled together at the terminal. The goods will then be brought to the quay/airport and shipped of to the country of destination. After the goods arrive they will go through customs and be transported to a pick and pack warehouse where they will be picked and packed on retail level. This route can be described as bundling at container level. also be pick and packed on retail level. This means that after the goods have arrived at the terminal, after arriving at the quay/airport of the country of destination and going through customs, the goods can immediately, after unloading the container, be shipped to the retailers via a local transporting company. Route 4 Route 4 can be described as bundling at retail level. The goods of multiple factories will be bundled at the pick and pack warehouse in the country of origin, but they will not only be put into the same container, they will 24