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

25 6.3 How to ship? When talking about shipping goods from one place to another, there are several ways to do this: sea freight, airfreight, multimodal transportation and overland. When producing in the Far East, sea freight is often used to transport goods, due to the lower costs and long distance. In the table below pros and cons are described of the transportation options. Sea Freight Definitions Pros Cons Goods are - Large volumes can be shipped - Time consuming transported via at once - Large container vessels can only vessel, using sea - Weather will not be of port at deep sea ports containers influence - Tied to the water network - Environmentally friendly Airfreight Goods are transported via airplane, using - Low risk of damaged goods - High speed and frequency - High costs for bulk goods - Limited amount of goods can be shipped at once containers especially made for airplanes - Amount of time that is spend on the ground is higher than in the air - Prices are determined on kilograms instead of cubical metres Overland: Truck Goods are being transported via truck, using sea containers - Relatively quick when transporting goods over short/ medium distances - High frequency - Flexible, due to high frequency - Limited amount of goods can be transported at once - Delays in traffic Weather can have a large influence Using trucks has a large CO 2 emission Overland: Rail Goods are being transported via train, using sea containers - High speed. - No driving bans. - Environmentally friendly. - Inflexibility of the trains networks and schedules. - Weather can have a large influence. - Delays on the railway Multimodal transportation Goods are being transported via a combination of the above mentioned possibilities, i.e. a - The ability to make up for delays within production - Depent of each other combination between air and sea. (Choi, et al., 2013) 25

26 6.4 Containers There are different containers that can be used for sea shipments; the Dry Storage Container 20ft or 40ft are used for shipping garments. When wanting to ship GOH, these containers will also be used, but they need to be modified with a hanging system. There are two hanging systems, string system and bar system. When making use of the bar system it is possible to add flat packed items to the load, depending on the space between the ground and the garments. The string system will be used for sea and airfreight. Besides the hanging system that needs to be installed, the container will also have nylon-canvas sewn along the inside to protect the garments against damaging. There is also the possibility to transport the goods by air; these containers are different from the containers that are being used for sea transportation. Tigers uses two types of containers for GOH, LD-7 and LD-3. For flat packed goods, a LD-7 pallet can be used. 26

27 7. Conformation of the bundling platform What will be the role of the bundling platform and what doe the platform need to conform to? To be able to understand the BatS project, the role of the platform needs to be described. What is it exactly that BatS does? And besides discovering what they do, what is the added value for companies that join this project? These questions will be answered within this chapter. Another part of the chapter is what the platform should conform to, what is the platform still lacking and how can they improve this? But the platform is not the only one that needs to conform, for a brand to participate in the project it will need to make a possible change as well. The change they will need to make is the way they buy there goods, the incoterms. 7.1 Bundling platforms role The bundling platform, also called the warehouse, will be located in the country of origin, preferably close to the harbour. After the factory has completed their order, the order will be transported to the warehouse. This transportation can be done in two ways: 1. The factory will transport the goods via a third party to the warehouse. This means that the goods will be packed by the factory, this can be different from the shipping method depending on the instructions that are given and the capability of the third party. 2. The logistic partner will pick up the goods from the factory. The logistic partner and the factory can communicate about the manner of packing, which may or may not be instructed by the buyer. When the order has arrived at the warehouse it will be there an average of 7-14 days, within this period there will be a possibility to bundle. The order will be picked and packed by final destination, on retail level. When orders of different factories arrive within the same time frame and have the same final destinations, these orders will be bundled into one shipment. This means the order of factory A will be in a separate box then the order of factory B, but shipped at once to the same location. Each box will have an own packing list. Within one shipment it is possible that there are different suppliers, but also different brands as long as each box has it s own packing list and all orders can be separated, so no multiple orders in one box, it is possible to create one shipment. 27

28 7.2 Added Value This project has been created with a certain extra value for the brands that will possibly join this project, why else would a brand join if there was nothing to gain? The following results of the BatS will create added value: - There will be fewer shipments to one store, due to the fact that previously multiple shipments have been consolidated into one shipment. - Using consolidated shipments will reduce the CO 2 emission. - Reduction of the handling of goods in the supply chain towards the retailer, and therefor also reducing all associating expenses. - Increasing grip on the incoming goods through visibility. - Being able to ship directly from the country of origin towards international retailers, instead of using a stopover in the Netherlands, this can reduce custom costs. - Possibly using container space more effectively, it could increase the occupancy level in a container. (Dinalog, 2011) 7.3 How to conform? To start at the beginning the logistic partner needs to be able to provide all shipping methods, flat packed, GOH and semi-hanging. So that the buyer/brand can choose what the best way is to send the garments to make them store ready. The platform itself also needs to have some basic requirements, and possibly some extra requirements to be able to add VAS. The bundling platform could easily be described as a DC, this means that all the requirements necessary for a standard DC should also be on the platform, i.e. pick and pack system. The platform must also be able to store garments as GOH and flat packed. At this moment the Shenzhen warehouse of Tigers does not have the option to pick and pack GOH, as they do not have the space and right equipment, e.g. a dust free tent. The location of the warehouse is also a point of interest. Depending on the location there are certain advantages that can be made use of. The ideal location for the warehouse in China would be in a Free Trade Zone (FTZ) and Bonded Logistics Park (BLP). Within a FTZ goods can be landed, handled, manufactured or reconfigured, and re-exported without any intervention of customs (Pfaar and Wang, 2011). The goods will only become subject to custom duties when the goods are being moved within the same country as the FTZ. Often the FTZ s are located close to the harbours, yet they are not a part of the harbours, by creating a BLP a link can be created between the FTZ and the port, the so-called zone-port interaction. A BLP will be located within the planning areas of the FTZ or ports that are neighbouring of the FTZ, but will have their separate enclosed zones. The zoneport communication will allow the BLP to 28

29 combine the function of bonded warehousing with cargo handling and transport functions of the nearby port. But although a link has been created between the FTZ and port, there are still different authorities involved, which could be considered a down side (Pfaar and Wang, 2011). There is also the possibility to have a general warehouse; this warehouse would not be located in a FTZ or BLP. There is a great disadvantage for BatS if this type of warehouse would be used, as it is only allowed to pick and pack one supplier within a shipment, instead of multiple suppliers. When a general warehouse would be used, and multiple suppliers need to be combined the only option is to use a customs booking agency, they will then ship these multiple suppliers, the down side is that there is no longer the possibility to get a return on the VAT. The advantages for a BatS warehouse in a BLP/FTZ would be: - Foreign purchasers can buy their goods in China using their own (brand) name and use the BLP as a DC for pick and pack services. - The BLP U-turn, with will save time and costs, can now replace the traditional Hong Kong U-turn. - The international transport and logistics costs will be significantly reduced, and the export VAT refund cycle will also be shortened. - Within a BLP imported goods can be taken in for assembling and simple processing. This would make VAS possible, although a special permit for the warehouse will be necessary. (Pfaar and Wang, 2011) The disadvantages for a BatS warehouse in a BLP/FTZ would be: - It will be difficult to return goods to the factory, when it is already in the FTZ/ BLP, as the goods have officially been exported out of China. So for a VAS such as quality control, the FTZ/BLP location would not work easily. - You need to have a special permit to be able to pick and pack within a FTZ/BLP zone. (Fung, 2013) If the supplier would use a third party to transport the goods to the warehouse, it is possible that the goods arrive at the warehouse flat packed. This would not be practical, but the reason for this is, that not all transportation companies have the possibility to transport GOH. If this would happen, the goods would need to be reconditioned back into the intended shape. This reconditioning process would need to be done at the warehouse, or another party needs to get involved. Sometimes a logistic partner is not the owner of a (part of the) DC and is only a tenant. The reason why this is the case, is that when it is low season they can rent the space back to the landlord. This could make it difficult to have the right equipment for reconditioning within the facility. So this could create the option of bringing in a reconditioning company, that already has an up and running facility. 29

30 FACTORY TRANSPORT TERMINAL CUSTOMS QUAY SHIPPING QUAY CUSTOMS TERMINAL TRANSPORT BUYER EXW FCA FAS FOB CFR CIF CPT CIP Ex Works Free Carriar Free Alongside Ship Free On Board Cost and Freight Cost, Insurance and Freight Carriage paid to... Carriage and Insurance paid to... DAF Delivered at Frontier DES Delivered Ex Ship DEQ Delivered Ex Quay DDU Delivery Duty Unpaid DDP Delivery Duty Paid Costs Supplier Risk Supplier Costs Buyer Risk Buyer 7.4 Incoterms The incoterms are of influence when looking at the BatS project, when wanting to join the BatS project the incoterm that must be used is free carrier, FCA. Other incoterms that are frequently used are FOB, free on board, and CFR, cost and freight. A short explanation of the three is given below. FOB When buying FOB the supplier is responsible for arranging the transport and insurance of the goods until the port, here the goods will be loaded in to the container, and loaded on to the vessel. At the same time the ownership of the goods will be transferred to the next party. After the goods are on the vessel all costs and responsibilities rest on the buyer. goods will be transferred to the next party. This creates the possibility to consolidate shipments, such as for the BatS project. CFR In this case the supplier arranges the transportation of the goods until the final destination port, after the goods have arrived all cost will be for the buyer. The risks for the buyer will start at an earlier stage; the risk will be on behalf of the buyer from the moment the goods are on the vessel. In the table above a clear image is shown on who is responsible for the costs and who carriers the risks. So for BatS, you need to buy FCA otherwise you cannot handle and combine the goods. FCA When buying FCA the supplier is responsible for delivering the goods until the warehouse, at this point the ownership of the Final Thesis June

31 8. Quantities & Prices What will be the costs of the options that the bundling platform offers and will these affect the choice of the buyer? To be able to determine costs, a scenario needs to be created. Then the costs can be calculated and benefits can be determined. Besides the previously mentioned subjects, the subject of quantities has been added within this chapter. The quantities have a large influence on the costs, because the quantity will determine how much space you will need for a shipment. A comparison between GOH and flat packed has been made using the same scenario. 8.1 Scenario The scenario that will be used in the calculations will be the following. The shipment will contain blazer, pants and skirts, these garment will fall under the category of women s suiting. When the goods will be shipped GOH, they will be individually packed, but when they will be shipped flat packed the goods will be packed as sets. This means one blazer will be combined with a skirt or a pair of paints in the same polybag. The scenario will contain the factory as starting point and the Rotterdam port as final destination. The factory that will be used is an existing factory that is located in the Longgang District in Shenzhen, Guangdong, China. A calculation will be made for different types of shipping. The following will be calculated: - Flat packed via ocean freight - Flat packed via air freight - Flat packed via a combination of ocean and air freight - GOH via ocean freight - GOH via air freight (This information has not been able to be retrieved, and is therefor not mentioned in the cost calculations) - GOH via a combination of ocean and air freight (This is a service that Tigers does not offer, and therefor there are no cost calculations) By calculating these options, a clear comparison can be made between shipping GOH and flat packed. Although this is the largest part of the calculations, when shipping the goods flat packed, reconditioning will also be taken into account. The reconditioning costs should be seen as a variable that will change and be different for every client, as the prices will be determined on volume and on the frequency the service will be used. The above-described scenario can be calculated in two ways, the pick and pack process can be either done in a warehouse in China or in the Netherlands. When the warehouse is located in China, it will be assumed that the warehouse is close to the harbour where the pick and pack service will be executed, this will also be the same case if the warehouse is in the Netherlands. So no extra miles will be calculated, only the handling costs. Final Thesis June

32 8.2 Costs When talking about whether or not it would be interesting to transport hanging it is important to look at the financial picture. Especially in the current times, it is important to maintain low costs and keep good margins. Usually the costs that are spent on logistics are a large part of the expenditures while producing goods. This is also a part where costs are often trying to be cut. Although the BatS does not have the possibility to recondition goods, as the idea is to have as less stops possible before arriving in store, it has been put in the cost calculation. This is done to show the expensive nature of this service, but sometimes a necessary one. Costs that have been gathered have been in different currencies, yet the final prices are shown in Euro s. To do this a fixed exchange rate has been used for these calculations, the conversion rates that have been used, can be found in the table below. CN Warehouse Flat packed Goods On Hanger Sea freight Air freight Sea/Air Sea freight conversion Transport cost 1,00 0,12 Handling costs loading truck 108,00 108,00 108,00 108,00 $ 1,00 0,75 Truck costs to collect goods from factory 180,00 180,00 180,00 180,00 Warehouse costs Handling cost unloading truck 108,00 108,00 108,00 Pick & pack service costs 264,00 264,00 264,00 Handling costs loading container 108,00 108,00 108,00 Transport costs Transportation Shenzhen/Shekou - Rotterdam 729, , ,00 Warehouse costs (NL) Handling cost unloading container 175,00 175,00 175,00 Other costs Reconditioning costs ( 0,85 per item) 3.400, , ,00 108,00 528,00 108, ,00 455,00 - Total 5.072, , , ,00 NL Warehouse Flat packed Goods On Hanger Sea freight Air freight Sea/Air Sea freight Transport cost Handling costs loading truck 108,00 108,00 108,00 108,00 Truck costs to collect goods from factory 180,00 180,00 180,00 180,00 Transport costs Transportation Shenzhen/Shekou - Rotterdam 729, , ,00 Warehouse costs Handling cost unloading container 175,00 175,00 175,00 Pick & pack service costs 400,00 400,00 400,00 Other costs Reconditioning costs ( 0,85 per item) 3.400, , ,00 Total 4.992, , , ,00 455,00 800, ,00 32

33 8.3 Benefits In the chapter 8.2 the costs are shown from the scenario that is explained in chapter 8.1, in this chapter a few benefits will be recalled to show pros and cons. When deciding to ship the goods flat packed, it needs to be taken into consideration how the goods will be made presentable for in-store presentation. The option of reconditioning is an option that is used in the fashion industry, yet this is not always a cheap solution. Another possibility is to let store personnel freshen up the clothes by steaming them, although the hourly wage might not compare to the costs of a reconditioning service. Yet it would be possible to say that store personnel is not 100% occupied by customers during the day, so this gives them the possibility to constantly be busy. Whether or not the decision will be made on sea freight, airfreight or sea/air, this will depend on what the extra costs compared to the consequences of not delivering on time will be. This would be the main reason for fashion brands to use airfreight or sea/air. If a fashion brand would decide on GOH, the costs will be higher. There are more handling costs and responsibilities when transporting in this manner. Although the goods will be presentable in any way that is required for the in-store presentation, so there will be no to little reconditioning necessary, which will save costs. To decide on how to transport goods, via sea, air or sea/air, the combination of sea and air is not shown in the costs, as this is something that Tigers does not offer and it is highly improbable for it to be used. As the extra handling costs will be far to great, so it might be easier and safer for the garments to ship completely air, if this would be necessary due to delay. The costs of only air have not been showed in the costs overview as this information could not be retrieved. Mostly sea will be used as this is the cheapest of the three and GOH is already a more expensive manner of shipping. 8.4 Quantities When calculating the quantities within one cubical meter, the same amount of pieces is used as in the scenario of the calculations. So in the shipment there are blazer, skirts and pants. When transporting the goods GOH they will all be packed separately, but when shipping flat packed one set will be in one package (blazer + a pair of pants or skirt). Within this scenario the goods are not related to a season, the goods are part of a basic suit. The season could determine the amount of pieces that will fit into one box and on one string/bar. For each way of transporting goods another container can be used. When transporting GOH, using a string system, via sea freight, there will be made use of a 40ft dry container. When the goods are transported via airfreight there will be made use of a lower deck container: LD-7. For flat packed there will also be made use of a 40ft dry container, when transporting via sea freight. Via airfreight there will be made use of a lower deck pallet w/net: LD-7. All calculations that have been made to come to the following conclusions can be found in appendix 5. GOH, using a string system, via sea freight, using a 40ft container. Within one 40ft container there are 10 bars, which are positioned in the width of the container. In total an amount of 9,8 bars needs to be used to carry the complete shipment. This results in 1 piece using 0,0165 m 3 of the 33

34 container. If the unoccupied space is added into the calculation one piece will occupy 0,0169 m 3. GOH, using a string system, via airfreight, using a lower deck container: LD-7. Within one LD-7 container there are 5 bars, to be able to transport the whole shipment an amount of six containers will be necessary. The first five will be completely full, but the last container will only be occupied for 60%. If the calculation includes the space that has not been used each piece will use 0,015 m 3, when only the used cubical meters are included in the calculation each piece will use 0,013 m 3. Flat packed via sea freight, using a 40ft container. The poly-bag that will be used that will contain one blazer and a pair of pants or a skirt will have the dimension of 10 x 14 x 2,5 (25,40 cm x 35,56 cm x 6,36 cm), for this type of packaging a box is used of 23 x 10 x 12 (58,42 cm x 25,40 cm x 30,48 cm), these measurements have been taken from the Nordstrom Direct Supplier Compliance Manual. Flat packed via airfreight, using a lower deck pallet w/net: LD-7. The size of a lower deck pallet is 125 x 88 x 64 (31,75 cm x 22,35 cm x 16,26 cm), with a maximum volume of 9,79 m 3. As mentioned above the shipment contains 500 boxes, this means 2,33 pallets need to be used for the complete shipment. When calculating the actual used m 3, one piece will make use of 0,0057 m 3. The conclusion can be made that GOH takes in twice as many space as flat packed goods do; the statement of Emma Zheng also verifies this: Generally GOH takes in twice the space compared to flat packed goods. The amount of boxes that are needed to ship all goods is 500 boxes, and each box will contain 4 poly-bags. For the 500 boxes there will be 12 pallets needed, within one container there is room for 21 pallets. If only the used m 3 would be calculated every piece will use 0,0083 m 3. If the unused m 3 would be added to the calculation, every piece would use 0,0086 m 3. This container would be called an LCL, a Less than Container Load, this means that other goods can be added to this container, to create a full container. The shipment will use 57,2% of the containers volume, the volume is too big to switch to a 20ft container. 34

35 9. Instructions Should companies give specific instructions on how to transport their garments and how will these be implemented? Within this chapter, there has been looked at how to give specific instructions, and through what means. The mean that is often used is the supplier manual; this is then also the communication mean that will be discussed. Another point will be when to communicate the instructions. 9.1 Supplier Manuals Looking at several supplier manuals there are definitely differences noticeable. Some companies choose for the elaborate version, they specifically state for every type of garment; the finished dimensions after folding, poly-bag size, shipping carton, notes to remember, folding preparations and folding instructions. Others describe it more general, so not per type of garment, such as a maximum and minimum size box. Although the measurements of the box are stated in the manual, it does not describe the amount of pieces that should be in a box. Instead the maximum amount of kilograms has been stated, and it is specifically stated that the box should keep a square shape, so the boxes should not be over stacked. Some even state the occupancy level of a box. Concerning what goes in the box there seems to be a go to rule; 1 style, 1 color and 1 size, although there are certain exceptions, i.e. when there is a small order one box will contain 1 style, 1 color and multiple sizes, each size will need to be packed in a master poly-bag. A master poly-bag is a poly-bag that is larger and contains multiple smaller poly-bags. Not every manual has clearly stated which products they want to ship GOH or flat packed. When a manual is extensive and has detailed explanations on what they want you could expect that there will also be a guideline on what the method of transportation should be. When a manual is of a general nature, a description will be given on how hanging/flat packed goods should be packed but not which goods should be GOH or flat packed. As mentioned before transportation can have an effect on the quality of the garments. Two of the three common effects, moisture and pressure effects, could be limited by the packaging method. The pressure effect is usually covered in the supplier manuals, by explaining ways of packaging, carton sizes maximum amount of kilograms, etc. Yet the more explanatory manuals will give a better description on the manner of packaging than the more general manuals. In the manuals little is mentioned about the condition of the garments when they are packed, which could cause moisture problems. When the garments are being packed in a high humidity climate, i.e. China, it is possible that the garments 35

36 are moist when they are packed, which creates a perfect environment for mold. Mold is something that is difficult to get rid of, so some instructions about possibly preventing this could improve the quality of the product in-store. 9.2 Timing To determine when it is the best time to tell the supplier on how to pack the garments, you can look at the supplier manuals. When a supplier manual is very elaborate it shows that there are clear instructions on all possible garments, even about garments that might not be in the collection, i.e. heavy jackets in the summer collection. This shows that all information on packaging is given to the supplier before the collection is even in production. When a company uses a more general manual, they will most probably communicate the shipping method together with the purchase order, or it has been communicated in the technical package of a garment. When it is stated in the technical package it will have been communicated in an earlier stage, with the prototype technical package as the earliest stage. Often the technical package will change during the prototype, salesman sample and production stage, therefor the method of shipping can change. Changes should always be clearly stated on technical packages. collection that differs every season and is not very consistent, it will be easier to give notes per garment on the shipping method. This way confusion can be avoided, as sometimes it is not always clear whether a piece is a long blouse or dress and the supplier has no reverence to previous similar pieces. When taking BatS into consideration, the method of shipping also needs to be communicated towards the logistic partner; this would also need to be done without BatS. When trying to make the decision on when the best time is of communicating the method of shipping will depend on the type of brand. If a brand has a large collection, that keeps on returning in similar forms it will become easier to have a standard list of all items with all instructions. This causes less confusion for the supplier, they will know there is one list to follow and that is the list they will work with. With smaller brands, that have a 36

37 Conclusion In this report the following question was researched: 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? This main question has two parts, the first part is about the effects that flat packed and GOH have, but also what determines the choice of using GOH or flat packed. When trying to decide how goods should be packed during the shipment will depend on a few reasons. Starting with the most important reason for this decision, costs. Costs are eventually what are going to decide what is possible and what the shipping method is going to be. If the decision is made to ship GOH the costs for the container are more expensive as this container would need some modification, to function as a GOH container. The amount of space that needs to be used to transport the shipment is important when talking about the costs. Flat packed goods take in less space than goods that are shipped GOH, generally the GOH takes in twice the space compared to flat packed goods (Zheng, 2013). An example of this can be seen in chapter 8.4, one garment takes in 0,0165 m 3 when it s shipped GOH by sea and only 0,0086 m 3 when shipping the goods are flat packed by sea, so in this case the statement of Emma Zheng is correct. Overall the cheapest way of transporting a shipment is flat packed via sea freight. Sea freight is cheaper than air or multimodal and when using flat packed more goods will fit into one container. Unfortunately it is not only about shipping, there are more aspects that need to be taken into account, such as reconditioning. When talking about making the garments store ready, it needs to be decided how the goods are going to be presented in store. This could mean that if goods were shipped flat packed, they would need to be reconditioned to be able to look presentable in-store. There are different ways to solve this, letting store personnel steam everything, only the garments that are presented in-store or getting the shipment reconditioned before it arrives at the retailer. When it is needed to recondition all garments and it is done by a company that specialises in this service, the costs will rise intensively. This might result in the fact that it is cheaper to transport the goods via GOH. GOH has more extensive handling procedures, the goods need to be taken out the container by hand and this takes more time. There are instructions that need to be followed, so employees with the right knowledge need to work on the shipment. Another down side on GOH is, that not all destination countries have the right transport companies to transport the goods from the port to the retailer. As mentioned before GOH takes more space than a flat packed shipment, this is partly because of the hanging system, bar- or string system, this system is what is called a modification to a container. This modification comes with extra costs. Both GOH and flat packed have an effect on the quality of the garments, this is due to the fact that within the period of shipment their is time 37

38 for pressure-, moisture- and contamination (fumigation) effects. The clothes are in the same environment for a longer period, when shipping GOH this can mean, when garments fall down they will crease and nothing can be done, but when hanging they will receive more air ventilation which decreases the chance of any moisture problems. If the shipment is shipped flat packed, the garments can crease as the garments are folded and put in boxes, yet due to a fixed position and packed in cartons they are well protected. When wondering if the creases will have a permanent effect on the goods, the answer will depend on the crease resistance of the garment. The crease resistance of a garment is based on what types of fabric are used within the garment, synthetic fibres are less likely to crease and natural fibres, such as linen and cotton, have a higher tendency. The crease resistance is seen as a factor that will determine whether or not the goods should be send GOH or flat packed. Another part that has been addressed in this report is the quality experience, what effect has GOH and flat packed on quality experience. When a retailer buys goods at a wholesaler they determine the way the goods will be delivered. This is something that will be agreed on when handling the sales; this means that the quality experience when the goods are delivered is not applicable as it was something that was already determined while ordering. The second part of the main question is about the implication through the supply chain for the bundling platform; the answer to this part lies in different subjects. In the current market situation there are several things popping up on what buyers and the market find important, sustainability and lean or agile. Sustainability has been a trend that seems to last, brands want to react to this trend but this is not always an easy task. The BatS project gives brands the possibility to reduce the CO 2 emission by bundling goods and create less shipments. The lean and agile approach is the way a brand approaches their manner of working, this manner is often related to the health of the market. A lean approach is described as in order to compete successfully, working effectively and only using what is necessary is what it takes. The agile approach is an approach that is able to deal with new situations quickly and successfully. Fashion brands usually are a combination of both, leagile; by combining both approaches it will preserve and improve the supply chain partnership (Bruce, Daly and Towers, 2004). The BatS project is there to combine and work together with all supply chain partners to create a better way of transporting goods. Goods can travel different routes, showed in chapter 6.2, when travelling from the factory to the retailer. The idea behind the BatS project; is to optimize this route and possibly make it shorter so the time to market is improved. The goods will always be shipped from the factory to a terminal/warehouse to be uploaded on to the container; after the container is loaded the goods will ship to a terminal in the country of destination. At this point multiple things could happen, but within the BatS project the goods will immediately be shipped to the retailer as the pick and pack process was already done in the terminal/ warehouse of the country of origin. Talking about shipping products the most commonly used transportation for long distances is sea freight, on a vessel you have the possibility of high volumes and the prices are the cheapest. Airfreight and multimodal is usually used 38

39 when goods are delayed or need to arrive in a short amount of time. Overland transportation is usually used for shorter distances. For a warehouse to be able to offer the services that the BatS project offers the best place for them to be is, within a BLP or FTZ. Within these parks the goods are already officially exported out of the country of origin, this means the forwarder can pick and pack the goods on retail level for multiple factories/brands with the same destination. The warehouse should also be able to offer space to temporarily storage the goods. For flat packed goods there are no special needs necessary, but for GOH there needs to be a place that is dust free this means that an area needs to be modified, usually by tent, to be able to stay in the warehouse. If a brand wants to join the BatS project they will need to buy with the incoterm FCA, with this incoterm the warehouse is allowed to pick and pack the goods, as the responsibility/ risk is no longer with the supplier, the buyer is responsible from the terminal/warehouse. 39

40 Advice Within the conclusion the following subjects are concluded; costs, quantity, quality, quality effects, current market situation, travelling routes and the conversion of the platform. Based on these subjects an advice can be given that will best describe when and how GOH/flat packed should be used. To offer the possibility to transport GOH within the Bundling at the Source project it is highly important to be able to pick and pack and store GOH goods in the warehouse. Currently this is not the case in the Shenzhen warehouse, this is something that would need to be adjusted if this service wants to be offered to clients. In the Shanghai warehouse Tigers has a tent where they can store GOH goods, in Shanghai this service is already offered and being made use of. The fact that it is operational in Shanghai means that it is possible to execute, the only downside is that room needs to be made for this dust free tent, which could possibly be a bump in the road, but it is definitely something feasible if there is a demand for it. The question if there is any demand for GOH shipment is difficult to answer as there is no real directive that shows who does and who doesn t make use of GOH shipments. The knowledge that is available so far is, that the main participators of the BatS project are not the brands that would be very interested in GOH, body wear and sportswear brands. When BatS would gather clients that would have an interest in this service, it could be implemented without any drastic changes. Although the costs of GOH are more expensive than flat packed goods, a clear comparison should be made between what the client wants, the possibilities and the costs. As it was shown in the example, GOH would be cheaper than flat packed with reconditioning, but take the reconditioning out of the equation and flat packed would be cheaper. Even though in the example given the GOH would be an interesting choice, the quantity of the shipment will also be very important, whether or not to ship GOH. A GOH container would not be used as a LCL, which could result not using the maximum capacity of a container. When the assessment is made on costs versus the clients wishes a decision could be made. Yet it will be the clients decision if or when GOH would be used. Looking at the quality aspect, it will depend on what the quality and construction of the garment is. If a batch of suiting would be send, it might be wiser to send GOH although the material could handle being folded and reconditioned, it is the interlining that could be damaged. So there are definitely products on the market where GOH would be the better decision, but eventually this will be the choice of the buyer. Damages that could possibly occur during transportation should be limited by clear communication; instructions must be given on how to pack so pressure- and moisture effects are limited, and chemical effects can be controlled by not fumigating containers and by not using specific materials. As for 40

41 the quality experience the brand or buyer will have complete control about this aspect, it will be the responsibility of the supplier to deliver on this. So for the clients that are a part of the BatS project it would be an interesting aspect if the project could offer the GOH service. Taking the current market situation into account, a main focus will be on the lean or agile approach, the way the industry is working is changing and trying to evolve with its time. BatS is a great idea to play a role in possible changes, as it offers something new in the Dutch market. Although it is not a new idea, as Dean s Logistics has already implemented GOH shipments to be picked and packed on retail level, part of the advice would be to look into how they have implemented this so far. Learn from the experience they have and try to improve it. 41

42 Sourcelist Avelon. (2012). Avelon Suppliers Manual. Amsterdam Bruce, M., Daly, L. and Towers, N. (2004) Lean or agile A solution for supply chain management in the textiles and clothing industry? [pdf] Available at: [Accessed on 2 April 2013] Bruijn de, J. (2010). A study on the most efficient transport combination between flat packed, hanging and semi-hanging transport in the fashion industry. [Thesis] Amsterdam Fashion Institute. Cambridge Dictionaries Online. (2013). Agile [Online] Available at: dictionary.cambridge.org/dictionary/business-english/agile?q=agile [Accessed on 2 April 2013] Cambridge Dictionaries Online. (2013). Lean and Mean [Online] Available at: cambridge.org/dictionary/business-english/lean-and-mean [Accessed on 2 April 2013] Choi, L., Pan, L., Romberg, C. and Tran, M., (2013). Bundling at the Source Best practice report. Hogeschool van Amterdam China Briefing. (2012). Minimum Wage Levels Across China. [Online] Available at: [Accessed on 29 April 2013] CIPS. (n.d.) Lean and Agile Purchasing and Supply Management. [pdf] Available at: [Accessed on 2 April 2013] pdf Dinalog. (2011). Bundelen bij de bron Projectplan. [pdf] Available at: [Accessed on 24 January 2013] Drost, W., Bundling at the Source. Interviewed by Pratt, S. and Klinkhamer, M., Zeist, 18 February 2013, 13:30. Ecotransit world, (2013). Ecotransit World Calculation. [Online] Available at: otransit. org/calculation.en.html [Accessed on 15 March 2013] Emerald, (2004). Lean or Agile, A solution for supply chain management in the textiles and clothing industry? [pdf] Emerald Group Publishing Limited. Available at: [Accessed on 14 March 2013] Huang, P. (2012). Bundelen bij de Bron, kansen en mogelijkheden in China voor Intres. [Final thesis] Hogeschool van Amsterdam. 42

43 Sourcelist Koeleman, C. (n.d.). Vocht, schimmel en nare geuren in textiel. [Online] Available at: [Accessed on 28 March 2013] Koeleman, C. (2013). The effects on garment quality due to transportation. Interviewed by Michelle Klinkhamer. [ ] 28 March 2013, 17:40. HKT Lackman, M. (2008). Why Natural Fibre Clothes Wrinkle [Online] Available at: [Accessed on 5 March 2013] Lysons, K. and Farrington, B Purchasing and Supply Chain Management. 8th Revised edition. Essex, Pearson Education Mohawk Global. (n.d.). Air Container Specifications. [pdf] Available a t : [Accessed on 12 April 2013] Nordstrom. (2013). Nordstrom Direct Supplier Compliance Manual. [pdf] Available at: nordstromsupplier.com/content/sc_manual/ndirect/ndirect_manual.pdf [Accessed on 9 April 2013] Pfaar, M. and Wang, X. (2011) Chinese Bonded Areas: Choosing the Right Location. [pdf] Available at: content/uploads/2011/01/news11_cm2249_g_chinese- Bonded-Areas.pdf [Accessed on 4 April 2013] RFC. (n.d.) Fumigatie Containers. [Online] Available at: Itemid=91 [Accessed on 13 March 2013] Shortsea. (2012). Factsheet Shortsea. [pdf] Available at: [Accessed on 30 April 2013] Target Australia Pty Ltd, (2011). Apparel Packing Manual [Online] Available at: [Accessed on 5 March 2013] Labels/default.aspx The Free Dictionary. (2013). Viscoelastic [Online] Available at: [Accessed on 23 May 2013] Tigers. (2013). GOH (Garments on hanger) Manual. Hong Kong. 43

44 Sourcelist Val-i-pac. (2012). Overzicht van Standaardgewichten van Industriële Verpakkingen [pdf] Available at: [Accessed on 2 May 2013] Viconso. (2013). Container for garment (GOH) [Online] Available at: us/ containersolutions/containerforgarment(goh).aspx [Accessed on 16 April 2013] VROM-Inspectie. (2011). Uitvoering motie Poppe/Boelhouwer containers met gevaarlijke gassen [pdf] Available at: motie%20poppe%20- %20Boelhouwer%20containers%20met%20gevaarlijke%20gassen%202010_ tcm pdf [Accessed on 13 March 2013] Zomer, G. (2013). Methods of transportation that are being used and the quality experience. Interviewed by Michelle Klinkhamer. [ ] 12 April 2013, 15:45 HKT Zomer, G. (2013). Methods of transportation that are being used and the quality experience. Interviewed by Michelle Klinkhamer. [ ] 15 April 2013, 14:58 HKT During this research period, information has been gathered from interviews by , and visits have been made where tours were given. Below a table can be found with the people that were contacted during the research period. Company Contact Person When How AMFI Chris Koeleman 28 March Tigers Given Fung 10 April 2013 Tour at the warehous in Shenzhen TNT Fashion Geert Zomer Multiple times Tigers John Ling 23 April 2013 Tour at the the warehouses in Shnaghai Tigers Hanson Hung 23 April and guide during the visit to the Shanghai warehouses Tigers Tiffany Tao Multiple times Tigers Emma Zheng 23 April 2013 Shanghai office Dean s Logistics Inc. Nick Hales & 23 April 2013 Guide during the visit of the Bruce Haines Shanghai warehouses de Nederlandse Dave Tolhuisen 6 May IOF-Intersport Stella Zhy & 8 May 2013 Visit IOF-Intersport office Jakko 44

45 Appendix 1 Inteerview with Willem-Jan Drost, 18 February 2013 at 13.30, By Shona Pratt and Michelle Klinkhamer Hoe gaat het proces als je onderdeel bent van BBDB, qua planning over het gehele traject? Om bij het begin te beginnen, leverancier verkopen op basis van monsters/samples aan hun klanten. Aan het eind van het verkoop seizoen wanneer alle sales gedaan zijn, kunnen zij een order portefeuille samen stellen. Hierin staan alle orders en weten ze dus ook precies wat ze moeten gaan maken. Met deze informatie gaan ze naar hun producenten om deze inkoop orders onder te brengen. Er zijn twee verschillende orders, de inkoop order van de leverancier naar de producent en de verkoop order van de leverancier naar de retailer. Als er dus een verkoop order is van 1000 blauwe shirts, dan moeten de producent geïnformeerd benadert worden om deze 1000 blauwe shirts te bestellen en in te kopen. Beide deze orders functioneren ook als de logistieke planningsinformatie, want op het moment dat de orders gemaakt zijn is het bekent dat een x aantal blauwe shirts naar winkel A moeten over 4 maanden. Deze order staat dus in het systeem, onder de inkoop order van 1000 blauwe shirts. Alle informatie over de inkoop order staat in het systeem van de leverancier, en als de leverancier samen werkt met een logistiek partner dan stelt de leverancier die informatie ook beschikbaar voor de logistiek partner. De logistiek partner kan deze informatie gebruiken om te pick & packen en alles verzendklaar te maken. Dit proces is hetzelfde in Nederland als in China, het word alleen maar verplaatst. Wanneer de leverancier de inkoop order heeft geplaatst bij de Chinese fabriek doet hij dit op bepaalde inkoop voorwaarde, incoterms, en die noemen we free carrier (FCA). Dit betekent dat zodra de producent klaar is met de order, gaat deze naar de haven naar een bij de leverancier aangewezen warehouse. Daar vind dan de overdracht van de goederen en documenten plaats, nadat dit gedaan is heeft de producent zijn verplichtingen voldaan en is die klaar. De goederen worden overgedragen aan de logistiek dienstverlener die voor de leverancier werkt. In de huidige logistiek proces zouden de goederen eerst naar Nederland zijn gevaren, en vind de overdracht pas plaats in Rotterdam of in de haven van Hong Kong afhankelijk van de importeur. Met BbdB vind deze overdracht du vrij vroeg plaats, er word nog net niet vanaf de fabriek gekocht. Wanneer de goederen in de warehouse staan in China, zal de Chinese logistiek dienstverlener te werk gaan met de inkoop orders. De artikelen zullen worden geteld en op de juiste manier verdeeld worden. Die 1000 blauwe shirt worden bijvoorbeeld verdeeld in 100 dozen van 10 stuks en voor 100 verschillende winkels, op die dozen worden DHL stickers geplakt. Zodat wanneer de container in Nederland is aangekomen, de dozen meteen aan DHL kunnen worden meegegeven. Hoe werkt het als er meerdere merken in een zending zitten? Het is mogelijk om meerdere merken in een zending te stoppen, het is alleen niet mogelijk om meerdere merken in een doos te stoppen. Dit heeft te maken met de pakbon en factuur. Als er twee merken in een zijn dan moeten er ook twee facturen zijn, twee entiteiten, de merken zouden er zelf ook niet mee akkoord gaan als ze op één pakbon en factuur zouden zitten. Iedere leverancier heeft dus zijn eigen dozen. Wat echter wel kan is meerdere producenten in één doos. Dus als een merk goederen krijgt van meerdere producenten dan kunnen die bij elkaar gevoegd 45

46 worden in één doos. Bijvoorbeeld, Pall Mall krijgt spullen van vijf fabrieken en State of the Art krijgt spullen van vier fabrieken, deze spullen komen dan allemaal naar de warehouse en worden dan per merk en per winkel verdeeld. Wanneer de goederen verdeeld zijn kunnen ze gesorteerd worden op retail locatie, het kan dus mogelijk zijn dat er een doos van Pall Mall en een doos van State of the Art naar dezelfde winkel gaat. Deze dozen worden dan gecombineerd in dezelfde zending, je kan dan tegen DHL zeggen dat je één zending hebt, waar zich twee dozen in bevinden, voor één locatie. Elke doos heeft dan zijn eigen pakbon en er is voor iedere doos een factuur. De grens, de afbakening van het combineren ligt dus bij één leverancier. De leverancier kan eigenlijk gezien worden als de juridische entiteit, en binnen de entiteit kan onbeperkt fabrieken gemengd worden. Hoe meer er uiteindelijk gecombineerd kunnen worden hoe beter het is. Hoe gaat de communicatie met de leveranciers in fit proces? Er zijn verschillende manieren, we zitten op dit moment in een project fase waarin ook wij moeten uitzoeken wat het makkelijkste werkt. Er zijn leveranciers die zelf een systeem hebben, een ERPsysteem, met dit systeem kunnen de leveranciers heel mooi hun order portefeuille en inkooporders aanleveren. Het komt ook voor dat de leverancier niet zo n systeem heeft, en dan leveren ze deze informatie op een andere manier aan, bijvoorbeeld via een EXCEL bestand, in dit bestand staat dan welke winkels welke hoeveelheden hebben gekocht. Het is dan aan de logistiek dienstverlener in China om deze te vertalen. In een warehouse werken ze vaak met een warehouse management system en daar zal de informatie van de leverancier uiteindelijk in moeten worden toegevoegd. Hoe beter het uiteindelijk aan elkaar gekoppeld is hoe gemakkelijker het is, maar soms is het gewoon handwerk. Een onderdeel van het BbdB project zal een communicatie systeem zijn, die het communiceren van informatie versimpeld en fouten voorkomt, door de partner Eyefreight. Op dit moment worden dit soort systemen niet echt intensief gebruikt, sommige leveranciers kunnen gebruiken maken van een track & trace, of een order bewakingsmodule, een soort meetpunten/ checkpoints. Vaak vinden deze meetpunten plaats in verschillende systemen, maar op dit moment is er nog niet voorzien van dit soort informatie in de wms-systemen van de Chinese warehouses. Wanneer de producten binnenkomen hoeland duurt het voordat deze gecheckt en verdeeld worden? Er is altijd een levertijd/schema. De producten die bij de haven liggen die moeten op een gegeven moment in de winkel komen te liggen. Vanaf dit punt word er eigenlijk ook terug gerekend, de periode bij de douane, vaartijd, etc. Wanneer er is terug gerekend dan kom je uit op een uiteindelijke verschepingsdatum. Over het algemeen is er een spelingstijd van twee weken tussen het moment dat de goederen worden afgeleverd door de fabriek en de uiteindelijke verschepingsdatum. Binnen deze twee weken word er gekeken of er combinatie gemaakt kunnen worden. Dit betekent dat sommige orders iets langer in de warehouse liggen, maar nooit later dan de uiteindelijke verschepingsdatum, om een combinatie mogelijk te maken. Er word een duidelijke planning gemaakt om te kijken wat de maximale tijd is dat de goederen in de warehouse kunnen verblijven om te combineren. Als je de producten meteen zou verschepen naar Nederland dan heb je minder mogelijkheden om combinaties te maken. Er word dus eigenlijk terug gerekend vanaf de levering aan de winkel, om te kijken hoe veel tijd er is om te spelen met de goederen. Binnen deze tijdperiode is er eventueel ook de mogelijkheid om extra services aan te bieden 46

47 Wat zijn de eisen voor een leverancier om mee te doen met het BBDB project? Omdat het een subsidie project is, zijn er eigenlijk geen eisen en geen investeringen die wij verwachten van een leverancier. Via Dynalog word het project gesubsidieerd, met deze subsidie word de begeleiding van deelnemende bedrijven betaald. Er zijn ook mensen van Modint logistiek die worden ingezet om bedrijven bij de hand te nemen. Bedrijven zijn op zich wel bereid om mee te doen met het project, maar hebben begeleiding nodig om goed te kunnen functioneren binnen het project. Verder zijn er dus ook geen investeringen nodig, het enige is dat zij de logistiek moeten uitbesteden, maar dit word meestal toch gedaan. Ook zal er een shift zijn van een Nederlands warehouse naar een Chinees warehouse. Ze betalen dus eigenlijk alleen voor de dienstverlening, en die is goedkoper in China dan in Nederland. En zoals met elk project is de inzet van de leverancier van belang om de overgang zo gemakkelijk en soepel te laten verlopen. Er is eigenlijk wel één vereiste en dat is dat er wel een bepaalde volume in China geproduceerd moeten worden. Er zijn namelijk op dit moment twee locaties voor dit project, Shenzhen en Shanghai. Dus als je 1 miljoen stuks in Turkije produceert en stuks in China, is het misschien niet verstandig om er aan te beginnen. Dan is het slimmer om te wachten totdat er een gelijk soort project in Turkije is, het volume moet namelijk groot genoeg zijn om de besparing interessant te maken. Hoeveel klanten heeft BBDB op dit moment? Op dit moment heeft BbdB ongeveer 8-9 bedrijven die meedoen of mee hebben gedaan, er zijn er in de tussen tijd wat afgevallen en wat bijgekomen. Bijvoorbeeld het bedrijf Boston Brothers, die worden niet meer vervoerd. Op dit moment zijn er 5-6 bedrijven die meewerken aan het project. De bedrijven die meedoen, zijn een mix van monobrand stores and multibrand stores, ook al hebben de bedrijven die meedoen altijd hun eigen winkels, dus geen merken die niet een eigen retail tak hebben. Wat voor type winkels de leverancier heeft, heeft geen effect op het proces. Maar voor Expresso dames mode, die heeft ook meegedaan aan het project, zijn de leveringen voor de eigen winkels juist niet mee gegaan. Zij wilde deze leveringen combineren met goederen die ze vanuit andere bronnen gingen krijgen. Zo heeft iedereen zijn eigen motivatie, maar voor het traject in China heeft het geen invloed, of de goederen nu naar een zelfstandige retailer, een warenhuis of magazijn moet gaan. Wat is de capaciteit van BBDB? (Hoeveel klanten kan het project aan?) Ik zou graag willen zeggen onbeperkt, wat het fysiek ook is aangezien er genoeg mogelijkheden zijn qua warehouses. Maar realistisch gezien is er toch zeker wel een bottleneck en dat is de aandacht van de mensen die er vandaag mee bezig zijn. Er moeten mensen aan de Nederlandse kant zijn die bedrijven actief begeleiden en helpen en aan de Chinese kant moeten deze er ook zijn. En het probleem is nu, met wat begin, begin je eerst nieuwe klanten te werven en daarna mensen op te leiden om deze bedrijven te begeleiden. Of ga je eerst nieuwe mensen begeleiden en daarna nieuwe bedrijven zoeken. (Ook wel het kip, ei verhaal). Uiteindelijk is het streven dat we onbeperkt klanten kunnen toevoegen aan dit initiatief, en tot op heden hebben we geen problemen gehad. Maar als morgen 50 nieuwe bedrijven zich willen toevoegen, zullen we het even moeilijk hebben. 47

48 Hoe gaat de communicatie met de leveranciers in fit proces? Aan hoeveel winkels levert BBDB? Dit zijn er honderden; Expresso heeft er retailers, Livera doet mee met ruim 100 winkels, Intersport heeft ook meer dan 100 winkels. Pall Mall heeft ook mee gedaan, en Sapph lingerie gaat binnenkort beginnen. Het precies aantal winkels durf ik niet te zeggen, want het zijn ook telkens andere winkels. Ook de branches zijn anders, op dit moment zijn er zeker winkels die goederen hebben ontvangen vanuit China. Voor een gedeelte is er wel een overlap in branches zoals Livera en de Body Cover Group met het merk After Eden. En dan is er ook nog Sapph die in de zomer begint, dit is dan een groep van drie body fashion merken. Hierin zullen we dan ook merken dat er een overlap is qua winkels en dan kunnen we ook echt verschillende merken gaan combineren en in dezelfde zending versturen naar één retailer. Dan gaan we het effect krijgen van grotere zendingen. Volume is uiteindelijk de belangrijkste motivatie van het hele project. Het project kost namelijk veel energie, maar als genoeg bedrijven mee gaan doen, dan krijgen we vanzelf kritische massa. Hoe zit het met internationale retailers? Ja dat word inderdaad gedaan, want dit heeft verder geen effect op het proces, de doos gaat gewoon naar de daarvoor bestemde locatie. Voor Boston Brothers hebben we naar Canada verscheept, die zending gaat dan vanuit Hong Kong rechtstreeks naar Canada. Dit is juist ook weer een beetje de flexibiliteit die juist op export interessant kan zijn omdat je dan simpel weg invoerrechten kan ontwijken. Maar dat vraagt wel om andere volumes. Als je het eerst naar Nederland wil laten komen, werkt het als volgt; als je als merk aan een Canadese winkel gaan verkopen dan zal je het eerst naar Nederland laten komen en zal je invoerrechten moeten betalen (voor Nederland), vervolgens word het naar Canada verscheept waar je opnieuw invoerrechten zal moeten betalen. Dit betekent dat je twee keer invoerrechten betaald en de extra tijd die het kost om deze tussen stop te maken. Als je dus direct vanuit de warehouse in China laat versturen, dan sla je één keer invoerrechten over en de lead-time is ook korter, dit is dus met name interessant voor internationale merken. Wat zoy de main goal zijn van het toevoegen van extra services (kwaliteitscontrole)? Het is niet om extra geld te verdienen want in mijn beleving zitten daar niet de grote bedragen. Het is met name om een extra service te verlenen, zodat wij kunnen zorgen dat er minder dingen zijn om zorgen over te maken. Eigenlijk het creëren van een interessante propositie. We willen bepaalde dingen uit handen kunnen nemen van het bedrijf, zoals een kwaliteitscontrole, terwijl ze in hun huidige positie nog een hele boel dingen zelf moeten regelen. Dit is vaak een punt waar bedrijven zich zorgen over maken, gebruik ik me eigen mensen om dat te regelen en achter aan te gaan, of maak gebruik van een inkoopkantoor wat me weer een vast percentage kost van de omzet. Vaak is de timing ook van belang met extra services, wanneer doe je ze en wat effect hebben ze nog op dit tijdstip? Bedrijven steken vaak energie in het controleren van de kwaliteit bij de fabrieken zelf, mensen vliegen er dan naartoe om dit te doen. Het is een moeilijk onderwerp, je werkt met een tijdsverschil waardoor de follow-up soms lastig is, of het is simpel weg te laat. Daarom hebben inkoopkantoren een kwaliteitscontrole dan ook vaak in hun pakket van extra services. Het word dan gezien als 48

49 een dienst, dus wie gaat deze dienst op zich nemen? Is dat de logistiek dienstverlener, ook al is deze hier niet in ge specialiseert, of haal je er een derde partij bij, zoals een inkoopbedrijf? Maar een inkoopkantoor heeft dan ook weer andere commerciële verbindingen, zoals het sourcen, en dit zou ook een reden kunnen zijn voor een bedrijf kunnen zijn om niet met het inkoopkantoor te werken. Het kan eventueel ook een kwaliteitscontrole instantie zijn die een apart contract heeft, dit zou dan een gedeelte kunnen zijn van een modulair dienstpakket. Maar uiteindelijk gaat het erom dat de Nederlandse leverancier geen zorgen hoeft te hebben. Met dit soort projecten is Modint logistiek de partij die het uitprobeert en het idee de markt op brengt, maar uiteindelijk zal de markt partij het verder moeten gaan ontwikkelen. Hetzelfde met Tigers, zij zijn dit project ingegaan wetende dat als ze met ons samenwerken, ze een voorsprong hebben op hun concurrentie. Waarom heeft Modint gekozen voor Tigers? Daar zit een geschiedenis achter, Tigers bestaat pas een jaar, daarvoor heette het Waco logostics group. En Waco was heel land een goede logistiek agent van een bedrijf in Nederland, dat ondertussen ook niet meer bestaat. Maar Waco had dus zijn sporen verdient in die periode, omdat ze de kledingbranche zo goed kende. Leveranciers waren geen nummer, maar er waren persoonlijke relaties. Dit is dan ook de reden geweest om deze partij weer op te zoeken. Maar om eerlijk te zijn zullen er in de toekomst meerdere logistiek dienstverleners met dit project moeten gaan werken, we zijn dan ook in gesprek met twee of drie andere partijen. Het is namelijk niet de bedoeling dat de gehele Nederlandse branche alle logistiek met Tigers moet gaan doen. Maar voor Tigers om mee te doen aan dit project, geeft hun voorsprong op de concurrentie. Tigers moet er uiteindelijk ook geld mee gaan verdienen, dit is dan ook een zorgpunt voor hun. Modint is een branche vereniging, en er is een subsidie dus winst maken is geen prioriteit. Maar voor een bedrijf zoals Tigers is het belangrijk dat zij kunnen verantwoorden waar de verdiensten in zitten en wat het oplevert. En met dit project is dat dus moeilijk, er is in China veel meer een direct oorzaak en gevolg structuur in de bedrijfsvoer. Dus het feit dat dit project niet zo werkt moet gemanaged worden vanuit Nederland. Wat is de rol van Tigers in het BBDB project? Tigers heeft dus een joined venture met Ewals, de Nederlandse logistiek dienstverlener, die werken dus samen. Ewals doet de zeevracht en de afhandeling in Nederland en Tigers is verantwoordelijk voor de warehouse en zorgt dat de producten op de boot komen. We noemen het ook wel een tweeeenheid, want Tigers is niet een officiële partner in het project, dat is Ewals. Maar omdat Ewals, Tigers als partner heeft is het een onderdeel van het project maar worden ze niet vernoemd als partner. Waar zijn de huidige locaties van BBDB warehouses? Op dit moment zijn er drie; Hong Kong, Shenzhen en Shanghai, maar op dit moment word Hong Kong niet gebruikt en is het met name Shenzhen waar alle operaties gedaan worden. Hong Kong word niet gebruikt vanwege de kosten, als de producten uit China zal je ze naar Hong Kong moeten verschepen waar toch weer kosten, papierwerk en extra tijd aan verbonden is. Vroeger was het moeilijker te verschepen uit China, maar tegenwoordig gaat dat dus gemakkelijker. De haven die wij gebruiken, Yantian, is ook groter dan de haven in Hong Kong, wat het ook gemakkelijker maakt. 49

50 Appendix 2 Inteerview with Michael Tung, 13 March 2013 at 10.45, By Shona Pratt and Michelle Klinkhamer Could you explain the process in detail to me ranging from when the products leave the factory until the delivery moment? So we are talking about export from China. In china there is usually a lot of different suppliers based in different parts of China. Some of them are in South China they can be in near Shanghai or central and some in the north. So when we receive our customer booking, so that means a consigned booking with a purchase order information we will contact the manufacturers in the certain location and confirm that they have inventory or cargo ready according to the purchase order. So first thing they have to confirm the booking with us, the shipment ready day. That is most important and then we need to understand if this is a FCL or LCL. So we can plan accordingly using the information. Once we confirm the booking that can still be 1-2 weeks away before we send our people to collect the delivery of the cargo. So depending on the customers requirement there are two most occurring operations. So the first type of shipment is very straightforward. The garments are actually going direct to the DC in NL. So we don t need to do any kind of handling. So it is very straightforward, based on the packing list we load the container and hand it over to the shipping company. The other type of operation requires we bring the goods to our logistic warehouse. Where we will provide our other services. Which can maintain one of the following, that is pick and pack, also some simple quality check for our customers, we also need to prepare the shipping label. If this is pack to store operation then based on the packing list we can generate the shipping label, on each carton. So we sort by order of destination point, that being Rotterdam, Amsterdam or Belgium. Then we consolidate it in the container and send it to Europe. So that is the process we handle in China. What is the organizational structure at the logistic platform concerning the product flow? (Think step by step, goods come in, goods are distributed etc.) For export we send our trucks with empty containers to our customers premises, for FCL, so we actually. As I mentioned there are two types of operations. The first one is very straightforward; the FCL will go to Europe directly so we load the container at the factory. When we confirm the number of cartons they will be loaded in to the container. Then we prepare the packing list and along with the container, the order and shipping documents we pass it to the carriers. The second type contains more actions. We collect the goods from the suppliers and bring it to the logistic warehouse, where we perform all the additional services that are required by the customers. Finally when it is all completed we will try and optimize the container load and ship it to Europe. But if this is not a FCL then we either hand it over to a freight party LCL operator, who have a lot of other customers to be able to fill a container to Europe, or we could build our own box with other customers products. So this is how we handle it. What is the time span of this? Usually the customer allows us one week to perform the additional services. But it also involves 50

51 collecting different garments from different factories. So we have a window of one week to collect the goods and to perform the added services. Hopefully we will have everything ready before we start the pick and pack otherwise it is quite inefficient if we have only 7 out of 10 items available in a cardboard box, meaning we would have to open it later again. Like a meal, you have to have all the ingredients available before you start to cook. So that is why we need a window of one week. Usually we communicate with the suppliers to make sure the goods are ready before we start to collect because we don t want to have a lot of inventory in our warehouse waiting for one more item. So that will otherwise cause an unnecessary storage problem. In what state are the goods usually delivered to the platform, all flat packed, shop ready? Yes, they usually come flat packed, in the second type of operation with an addition of pick and pack usually the packaging material in inferior carton, so we have to change to proper packaging for European transport as there will be multiple handling at the destination. So we will also help the consignee by placing the goods in a distribution cardboard box. Usually the way of packaging is decided by customer. They could have three sizes for sample, or more bulky garments need a bigger box compared to light t-shirts that need a smaller box. This is all predetermined according to the SKU to determine what sizes of boxes we need. That can all be calculated quite accurately. How are the goods bundled and prepared for transport at the platform? For the shop delivery I think the customer will give us instructions when to ship it, because the shipping schedule is quite accurate, so usually they will be able to foresee when the last possible deadline to put the cargo on the ship so that they will be able to receive it 28 days later and distribute locally. For those with a store-shipping label, it is labeled to go directly to the store. When it is labeled to go to the DC they have other process planned with the goods. So do all the goods that go directly to the store, do they first go to a DC? I don t think so; these are already with the store address. There may be a crossdock warehouse where they further distribute the goods on store level and a crossdocking with the trucks that go directly to the store. The idea is to reduce the touch on the box, so as little as possible delay, to reduce transfer time. In the fashion industry you are usually working with a very short time line. What kind of handling services as well as added services does the platform offer? Think placing hangtags on the garments, etc. and is it used often? We have price tagging, some customers even require ironing for the GOH, so in some cases we offer ironing for customers. QC check, pick and pack. How many people work on the logistics platform in Shenzhen and in Shanghai? In our company we work with subcontractors, so that depends on the number of garments that we need to pick and pack that week. To give you an example, a customer requires to do pcs per day so that will probably involve a team of 10 people to work for two shifts. It is very seasonal, because based on my past experience we could have up to 150 laborers in one day in high season. But in the low season you don t need any. So the numbers of workers are changing according to the activity in the warehouse. 51

52 What is the organizational structure at the logistic platform concerning personnel? (think management, workers, etc.) We have one logistics manager that is dedicated to all the Dutch customers. So beneath him there are two supervisors arranging all the work for our customers. These two supervisors will then monitor the work of our subcontractors in China. Actually two in Shenzhen and two in Shanghai and our major operations manager is one in Shenzhen and one in Shanghai. Where is the product flow larger, Shenzhen or Shanghai? Shanghai is by far bigger, I would say 70% of the export goes from Shanghai, because a lot for the garment manufacturers are moving north. The south no longer encourage textile factories, they want more electronics and service industries. It used to be the other way around, 10 years ago 80% of the factories were in south china because of the close proximity to Hong Kong. But the past two decades the skill set was mainly transferred north to the places where land and labor is cheaper. And the Dutch clients are also located in Shanghai. What are the quantities that are being handled on a daily basis in high season? On a daily basis we could be handling pieces in Shanghai. Is there a type of software system that is being used at the moment to monitor the status of the goods? Yes we have a self-developed system called scanpack2. It captures the orders, for example there is an order with pcs for today in 2000 cartons this would mean every carton has 5 pieces. The system will control the incoming of the pieces, and with the scan-pack you scan the garments and the system will tell you if it is correctly located to the final store. We scan with a handheld scanner to reconcile the total, so when all is correct, it is ready to release. But if someone has put the wrong garment in the wrong box, the scanner will show a warning that the item is incorrect. They will have to double check to put it in the right box, this creates a 100% accuracy. Otherwise it will be a massive rework at destination. How many people in the office work on the program BatS? We only have about 10 people in the entire office working on this program, we employ up to people to work in the warehouse for this project. Is there a lot of work required from the Tigers office to run the BatS platform or does that all happen on location? I think our workmen need more training to work a lot with the suppliers on certain criteria. It s more the preparation work with the shippers before pick and pack and then there is a lot of work spent on the monitoring of the pick and pack. However there is a system, we also need to supervise the workers if there is an exception. Or if the system says that it is yellow, when it is blue. Then we need to find out why this is the case. So finally we make the custom declaration, for the shipping export of China. You need to help the shippers to make the declarations correctly so that they can get the VAT back. And this is a part of the concern. Otherwise the shipping and forwarding is quite straightforward. HOW 52

53 How many clients are now making use of the platforms in shenzhen and shanghai, and how many of them are apart of the bats program? In Shenzhen we have 5 customers at the moment and in Shanghai about 10 customers regularly using this service. And outside of the BatS there are hundreds, thousands customers but they usually use our standard forwarding service. So sea freight or airfreight, they don t need any pick and pack. Is there a lot of communication required with the clients during the handling process? Only when there are exceptions, we will inform the customer. There is an automated confirmation system to inform the customers about updates and milestones. And they also have a way for inquiry to see an order status, so they can do an inquiry by themselves. So there is not a lot of telephone or communication. Is tigers the only company making use of the platform or are there other companies there as well? It is a freight party warehouse. As I have mentioned about the seasons of forwarding the fashion industry you only have 6 months of activities, divided in to the two seasons, so it is not cost effective to own one. We do have a dedicated lease area but we share it with other users. But in the time that we need it, Tigers exclusively uses it. When we don t need it we lease it back to the landlord. 53

54 What have been the downsides of the Bundling at the Source project and/or platform? And how can these be solved? This project and platform includes multiple shippers and consignees, which the warehouse may pack or sort wrong. Tigers could decrease error rate by system controlling How are the goods being transported between the factory and warehouse? The transportation is done by truck What is the frequency that you have been able to bundle? There has been no regular frequency so far. Appendix 3 interview with Tiffany Tao, Multiple times By Michelle Klinkhamer If you transport goods by sea, do you fumigate the containers with pesticides to prevent the cargo from damaging by insects, pests, etc.? Yes, if this would be necessary. Michael Tung has mentioned previously that mainly your Australian clients make use of the GOH service, does this have a specific reason? Currently our Australian clients have been making use of the GOH service, no specific reason has been detected so far. Have you transported goods hanging within the Bundling at the Source project? We often handle bundled GOH packs (ratio packs), however never one pack to different locations. Although it would be possible that different packs go to different locations. If you would compare transport by sea or air, what is used most? Please describe in percentages. (e.g. air: 20% and sea: 80%) And what would be the reason for this? The current situation is 90% by sea, and 10% by sea/air. We rarely use only air. If you would compare flat packed and GOH, what is more frequently used? Would this have a special reason? Flat packed are still more commonly used, GOH is mostly used for higher end items (e.g. down, leather, etc.) or goods that crease easily. What is the average time the goods stay at the warehouse? Normally the goods will stay a maximum of 2 weeks in the warehouse. If reconditioning would be needed at the warehouse good this be arranged and would there be enough time? (e.g. Steaming, pressing, ironing, dry cleaning, spot cleaning, etc.) This could be arranged, but this is subject to sufficient processing time given between the factories delivery and the vessel. 54

55 When transporting GOH, there are two ways of packaging, hanging in a box or hanging in a container. Which of these two options do you use more frequently? What is de reason for this? Using a GOH container is currently used in the majority of the cases, no specific reason has been detected for this. When transporting GOH, there are two ways, via a bar system or string system. Which of these two options do you use more frequently? And what is the reason for this? Mostly the bar system is used, but the form of hanging is dependent of the instructions of the supplier or buyer. The bar system is more suitable for thicker items, and the string system is better for thinner pieces. How long does it take to unload a container that is filled with flat packed apparel goods? It takes around 2-3 hours How long does it take to unload/unload a string system when transporting GOH? To unload/load a string system will approximately take 2,5-3 hours for a 20ft dry container, however this may vary depending on the amount of goods within the container. A tight fitted container will require more time. How long does it take to unload/unload a bar system when transporting GOH? To unload/load a string system will approximately take 1,5-2 hours for a 20ft dry container, however this may vary depending on the amount of goods within the container. A tight fitted container will require more time. How much of the capacity of a container is used when transporting a full load of GOH? No useful space should be available; if it is fully GOH loaded it will be at the max container capability. How many hours does the pick and pack process for pieces take? And how many people will be working on this? 2 pickers and 2 packers will be working for about 10 hours on the pick and pack service for pieces. How much are the handling costs per box? The CFS charges for export cargo is 50 RMB/RT in Shenzhen How much are the costs for a GOH container? The costs for a GOH container are 600 USD What would be the costs when trasnporting goods flat packed via ocean freight? USD950/1700/1750, BY OOCL, ETD SHEKOU: SAT, TT: 22 days USD950/1700/1700, BY PIL, ETD YANTIAN: THU, TT: 22 days What would be the costs when trasnporting goods flat packed via air freight? USD4/KG(+100KGS), BY MU, SZX-PVG-AMS-RTM 55

56 What would be the costs when trasnporting goods flat packed via a combination of ocean- and airfreight? USD3/KG (+500KGS), CLS at Chiwan: TUE, TT: 16DAYS, VIA JEBEL ALI, valid to Apr. 30th What would be the costs when trasnporting goods GOH via ocean freight? USD1400/2650/2700, BY OOCL, ETD SHEKOU: SAT, TT: 22days What would be the costs when trasnporting goods GOH via air freight? I will get back to you on this. What would be the costs when trasnporting goods flat packed via a combination of ocean- and airfreight Sorry, but we have no such service. What would be the costs of picking up the goods at the factory via truck? (The factory address would be 2/f, Sihang, Silk Art Creative Park of China, No.10, Nanxin Road, Nanling Village, Longgang Districs, Shenzhen, Guangdong, China ) RMB to the Yantian port, RMB to the Shekou port. 56

57 Appendix 4 Calculations for the Costs, Additional information for chapter 8.2 Handling costs unloading/loading container costs in a Chinese warehouse flat packed/goh The handling costs for loading/unloading a container is the same for flat packed and GOH, for a 20ft container the price is 550 RMB and for 40ft the price is 900 RMB (Hung, 2013). As the container that is used in the scenario is a 40ft, the price will be 900 RMB ( 108,-). Handling costs unloading container in a Dutch warehouse GOH For loading/unloading a container the costs will be 175,-, but there are extra costs involved when handling hanging items. The price per piece is 0,07, and as there are pieces the price will be 280,-. This creates a total amount of 455,- for this shipment. These prices are based on the prices de Nederlandse offers. Handling costs unloading container in a Dutch warehouse flat packed Unloading a container that contains boxes will take approximately 2,5 hours, which will cost 175,-. When handling flat packed items there are no extra costs involved, as is seen when handling GOH goods. Truck costs to collect goods from factory To determine what the costs for truck costs would be an address of a factory was given in the area of Nanling, Shenzhen. The truck will pick up the goods and deliver them at the warehouse for the price of RMB ( 180,-). A one-way trip to from the factory to the warehouse is around the 18 kilometres. In the Netherlands you would pay around 0,59 per kilometre (de Nederlandse, 2013). Sea freight cost flat packed A full 40ft container would cost 1700 USD, but the full container would not be used for this scenario, only 57,2% of the container is used (see 8.3). So the price for a full container has been multiplied by 57,2%, which has the result of $ 972,40. Reconditioning costs As mentioned before the reconditioning costs are difficult to calculate as these costs differ for every brand, depending on the quantity of the goods they recondition and the frequency of using this service. So for this calculation an assumed price of 0,85 5 per item is used. This creates the following calculation: (2.000*0,85) + (1.000*0,85) + (1.000*0,85) = 3.400,- 5 This price is based on the following handlings; garment hanging, unpacking, tunnel finish for confection and adding a plastic cover. The prices are based on the prices of de Nederlandse. 57

58 Amount of Kilograms for flat Packed Besides the clothing, the boxes that are used also have a certain weight. A box with the dimension of 58,42 cm x 25,40 cm x 30,48 cm, has a weight of approximately 500 grams. For this shipment 250 boxes are needed (see quantities of flat packed via sea freight, using a 40ft container) to transport all goods. 250*500= 125 kg For the blazer an average has been taken of 478 grams, a skirt is 294 grams and for a pair of pants an amount of 334 grams will be used in the calculations *0,478= 956 kg 1.000*0,294= 294 kg 1.000*0,334= 334kg For airfreight the price is USD4/KG (+100KG), and for a combination of air and sea freight the price is USD3/KG (+500KG) 7. As the calculations are in EUR, a conversion rate of 1USD = 0,75EUR will be used Air: (4*0,75)*1584= 4.752,- Sea/Air: (3*0,75)*1584= 3.564,- Pick & Pack service costs in a Chinese Warehouse To pick and pack a shipment of pieces it takes about 10 hours, with two people picking and two people packing. The cost of pick and packing one unit is between 1,- and 1,20 RMB (Hung, 2013), in the case of flat packed one unit will be two pieces, this means there are units to be picked and packed. For GOH one unit is one piece, so units. Flat packed: 2.000*1,10= ( 264,-) GOH: 4.000*1,10= ( 528,-) Pick & Pack service costs in a Dutch Warehouse To determine the pick and pack costs in a Dutch warehouse, the prices of de Nederlandse have been consulted. To pick and pack by order list it costs 0,20 per piece, this would mean that for pieces to be picked and packed you would pay 800,-. With a flat packed shipment one poly-bag will have two pieces in it, it will be seen as one item, this means that only pieces need to be picked and packed and the price that needs to be paid is 400,- 6 The suiting has a fabric composition of 37% Viscose/Rayon, 63% Acetate 7 These prices should not be used as an average or standard price, these prices have been calculated on the base of pieces, and have been taken at a moment in time. 58

59 Below a table can be found with the dimensions of the containers that are being used for this scenario. 40ft container Appendix 5 Calculations for the Quamtities, Additional information for chapter 8.3 Lower Deck Container: LD-7 (external dimensions) Lower Deck Pallet w/ net: LD-7 (external dimensions) Length 1201 cm 317,5 cm 317,5 cm Width 234 cm 223,5 cm 223,5 cm Height 239 cm 162, 6 cm 162, 6 cm Volume 67,7 m 3 9,79 m 3 9,79 m 3 TEU Max. Gross kg/ lb kg/ lb. Weight GOH, using a string system, via sea freight, using a 40ft container Product class Strings per Pieces per Pieces per Strings Bars needed bar string bar needed Blazer ,5 Skirt : 1,4 32: 1,2 Pants Within one 40ft container there are 10 bars, which are positioned in the width of the container. For blazers an amount of 6,5 bars will be needed, for skirt it is 1,2 bars and for pants a quantity of 2 bars is needed. On the first seven bars, there will be 26 strings per bar, this means that on the seventh bar there are 13 strings left to fill. For the three bars remaining an amount of 32 strings a bar will be used. This creates the following calculation: On the first 6 bars, there are 156 strings, on the 7th bar there are 13 strings remaining to hang blazers, all blazers will then hang within the container. There are a total of 26 strings on the seventh bar; so 13 strings are still remaining. On these strings an amount of 364 skirts are located, an amount of 636 skirts is still left. For these skirts an amount of 0,8 bar is still needed (636/28 23, 23/32 0,8). The amount of bars that is still left is 2,2 bars, the pants can easily fit into this container. Overall and amount of 9,8 bars of the 10 bars is used. This means 98% of the 67,7 m 3 the container is used, this results in 1 piece using 0,0165 m 3 ((67,7*0,98)/4.000). If the unoccupied space is also calculated in 1 piece will use 0,0169 m 3. 59

60 GOH, using a string system, via airfreight, using a lower deck container: LD-7 Product class Strings per bar Pieces per string Pieces per bar Strings needed Bars needed Container needed Blazer ,9 3,2 Skirt : 3,8 0,8 Pants ,9 1,6 Within one LD-7 container there are 5 bars, the amount of bars that are needed to store all goods are shown in the table above, and the volume of one container is 9,79 m 3. The first three containers will be filled with blazers, the forth containers first bar will be used for blazers (21 strings per bar), the remaining four bars will be filled with skirts (27 strings per bar), the fifth and sixth container will contain pants, although the sixth container will not be completely filled, only for 60%. If only the used m 3 would be calculated in the calculation, the following calculation can be made; ((9,79*0,60) + (9,79*5))/4.000= 0,013 m 3 per piece When taking all six containers into the calculation, you would need: (9,79*6)/4.000= 0,015 m 3 per piece Flat packed via sea freight, using a 40ft container The poly-bag that will be used that will contain one blazer and a pair of pants or a skirt will have the dimension of 10 x 14 x 2,5 (25,40 cm x 35,56 cm x 6,36 cm), for this type of packaging a box is used of 23 x 10 x 12 (58,42 cm x 25,40 cm x 30,48 cm), these measurements have been taken from the Nordstrom Direct Supplier Compliance Manual. Within one box, there are 4 poly-bags, which contain 8 items, so for items, poly-bags are needed, which 500 boxes are needed for. The size of a pallet is 100 cm x 120 cm x 17 cm, this means that 6 boxes will fit on the pallet on one layer. The height of a container is 239 cm, so you can stack boxes until 222 cm (239-17). 222/30,48 7 boxes 6*7= 42 boxes on one pallet The amount of pallets that fit into one container is 21 pallets; it is possible to stack up multiple pallets on top of each other, but in this case we use the pallets to their full height. The total amount of boxes that would fit into one container is 882 boxes (42*21), the amount of poly-bags is (882*4) and items (3.528*2). For the shipment that is created in the scenario, an amount of 500 boxes is needed, for these boxes 12 pallets need to be used (500/42). If only the used m 3 would be calculated in, the following calculation can be made; The used height is, (7*30,48 cm)+ 17 cm= 2,3036 m, The m 3 that is used per pallet is, 2,3036*100*120= 2,76432 m 3 For 12 pallets, 2,76432*12= 33,17184 m 3 is used So every piece uses, 33,17184/4.000= 0,0083 m 3 60

61 If the unused m 3 would be calculated in, the total height of the container, 2,39 m. would be used within the calculations. The m 3 that is used per pallet is, 2,39*100*120= 2,868 m 3 For 12 pallets, 2,868*12= 34,416 m 3 is used So every piece uses, 34,416/4.000= 0,0086 m 3 This container would be called an LCL, a Less than Container load, this means that other goods can be added to this container, to create a full container. The shipment will use 57,2% of the containers volume, the volume is too big to switch to a 20ft container. Flat packed via airfreight, using a lower deck pallet w/net: LD-7 The size of a lower deck pallet is 125 x 88 x 64 (31,75 cm x 22,35 cm x 16,26 cm), with a maximum volume of 9,79 m 3. One layer can consist of 43 boxes, and it is possible to stack up 5 boxes, this creates a total of 215 boxes on one pallet. The volume of these boxes is lower than the maximum volume of the pallet. 1 box is, 58,42 cm x 25,40 x 30,48 cm= 0,0452 m boxes is, 0,0452*215= 9,718 m 3 The shipment contains 500 boxes; this means that 2,33 pallets (500/215) need to be used. 2,33 pallets are equal to, 2,33*9,79= 22,767 m 3. So the space that is actually made use of is 22,767 m 3. This means that one piece makes use of, 22,767/4.000= 0,0057 m 3. 61

62 Appendix 6 interview with Chris Koeleman, 28 March 2013 at HKT by Michelle Klinkhamer How do the garments get affected, quality wise, by being transported by sea or air? For the appearance of the garment it mainly depends on the way of loading (hanging or flat, how much stacked and with how much care), but in general I think sea freight gives a higher risk of mildew and hazardous chemicals in the garments. What are the most frequently seen affects on clothing due to transportation circumstances? Pressure effects: creases/ wrinkles/ flat appearance Moisture effect: mildew (mould) Contamination: hazardous chemicals Sometimes containers with garments get purposely gassed with pesticides; does this have any affect on the quality of the garments? Hazardous chemicals can be used, such as formaldehyde and if this contaminates the garment, there is a risk that the garment will not comply to the EU regulations (REACH) Sometimes the containers contain pesticides that come from the products itself; does this have any affect on other fabrics that are used in the products/garments? I did not hear about contamination from one garment to another, but maybe this exists and I can imagine there is a risk when other types of goods are combined in the container, such as plastic articles When the garments are inbound flat packed and outbound GOH, the garments get reconditioned. So what are the effects of reconditioning the garments? a. Tunnelling: b. Blowing: c. Ironing/Pressing: All 3 can improve the appearance in some way and the method (a, b, or c) depends on matters such as style, material (fibre type) and price of the goods (high end / low end). (Also I can imagine a positive side effect can be that hazardous volatile chemicals have a chance to disappear, but this is not the intention of reconditioning) 62

63 There are three methods of packing to transport the garments; Flat packed, GOH, and Semi-hanging (hanging in a box). Could you describe the pros and cons of these methods concerning the quality? Flat Packed GOH (Goods On Hanger) Semi- Hanging (goods hanging in a box) Pros * Cheapest * Well protected, position fixed * No/ less reconditioning * Not necessary * Some air ventilation, so less prone to moisture problems (also depending on closure of the bag) * No reconditioning needed * Luxurious impression Cons * Chance of forming pleats/ wrinkles/ creases so maybe reconditioning necessary * Sometimes also the labour of adding a hanger necessary * The look (e.g. of collars) will be flatter * The least air ventilation * Not the cheapest method (more time to pack and load, less pcs in container) * Hangers will be shipped * Hangers should not be too weak * Garments can still be a bit squeezed * Most expensive (less pcs and more material usage and more expensive materials) * Hangers will be shipped * Hangers should not be too weak What would be your advice on how to pack the garments for transportation? Would this advice be differently if the shipment would be through air or sea? If so, how? At this moment there s no major difference in advice between sea and airfreight that comes to mind, any how to avoid gassing problems and moisture/mildew forming, instruct to dry well after ironing/pressing and ventilate goods (do not cover in plastic before it has dried), at warehouse and container. Most problems probably occur mainly with sea freight, because transport takes longer. 63

64 Appendix 7 interview with Geert Zomer, 12 April 2013 at HKT and 15 April 2013 at HKT by Michelle Klinkhamer Als er een vergelijking gemaakt moet worden tussen flat packed en GOH wat word er dan het meest gebruikt met inbound transport? Flat packed. Als je deze zelfde vergelijking zou maken alleen dan voor outbound, wat zou dan het resultaat zijn? Flat packed. Hierbij zie je een trend dat de goederen steeds meer schapklaar gemaakt worden. Het gebruik van kunststof kratten komt steeds meer voor. Is de manier van verpakken gerelateerd aan het product dat word verscheept? Zo ja, kunt u dit toelichten? Ja, goederen die niet mogen kreuken worden veelal GOH verstuurd. Verder wordt de calculatie gemaakt wat meer kost. a. Flat, beugelen en reconditioneren b. GOH versturen Tegenwoordig wordt merendeel met flat packed verstuurd. Dit komt door de mode en de veel betere kwaliteit van de stoffen m.b.t. kreuken. Hoe reageren retailers op de manier dat ze de kleding aangeleverd krijgen? Eigenlijk een verkeerde vraagstelling. Ze weten hoe ze het krijgen, bij het inkopen worden daar afspraken over gemaakt. Slechts een klein percentage wordt nog gekocht door een winkelier. Dit is haast verwaarloosbaar in het grote geheel. De massa gaat naar de winkels van de retailers zoals esprit, Miss Etam, H&M etc. Hier wordt op centraal niveau een heel bewuste keuze gemaakt op welke wijze de winkels bevoorraad wordt. Hebben (multi-brand) retailers een bepaalde invloed op hoe ze de kleding aangeleverd krijgen? Zo ja, hoe gaat dit dan te werk? Hoe groter de organisatie, hoe groter de invloed op de keten logistiek. Bedrijven als H&M/ Zara bepalen tot in detail de verschijningsvormen in alle delen van de keten. Zij hebben de regie en zijn leidend Hebben TNT Fashion klanten een duidelijke structuur/instructies over hoe ze de producten verpakt willen hebben voor transport? En wat is het meest gebruikte communicatiemiddel om deze instructies door te geven? Ja, er zijn veelal standaard normen voor verpakken. Er zijn klanten, met name in de duurdere segmenten die specifieke eisen hebben. Deze worden vastgelegd in standaard verpakkingsinstructies. Bij fulfilment voor B2C is hier veelal heel alert op. Communicatie: generieke verpakkingsinstructies 64

65 Wat is de verpakkingsmethode per segment en hoe verschilt die met +/- 10 jaar geleden. Wil graag weten of er een shift is gemaakt in de laatste jaren of dat het hetzelfde is gebleven De algehele trend is: meer liggend. Er zijn al diverse brands die 100% liggend hebben. Bij de grote retailers zie je ook een verdere verschuiving naar nog meer liggend. Er zijn echter een paar retailers die nog vast blijven houden aan GOH. Miss Etam is hier een voorbeeld van. Over de hele linie neemt goh per jaar met 5-8% af. 65