GLOBAL TRENDS IN RETAIL AND FASHION LOGISTICS DEVELOPMENT, CURRENT STATUS, AND POTENTIAL Dr. Herbert Kotzab, Professor, CBS, Kolding, 28-05-2010 Slide 1
Welcome to the session in advanced retail! That means the instructor finds the subject confusing. If s/he didn't, the session would be called elementary retail and fashion logistics. Slide 2 Luis Alvarez Nobel Prize in Physics in 1968
Agenda 1. Current issues modern retail and fashion logistics 2. Megatrends for retail and fashion logistics 3. Some empirical benchmarks 4. Key learnings Slide 3
Retail is not rocket science, isn t it? Slide 4
Let s take a simple shoe store Slide 5
What are the logistical dimensions behind this offering? Three main categories Women, men, kids Within the category women Shoes, bags, accessories, trends, extra sizes, sales Within women shoes More than 80 brands, 27 sizes, 11 colours, 21 styles Prices range between 19 and 299 Slide 6
Retail logistics deals with complexity Slide 7
And retailers have invested a lot into modern logistics Slide 8
. cross docking processes at DClevel. Suppliers deliver full truck loads of products Transitterminal = place of break bulk, sorting and handling Customer specific (=retail outlet specific) deliveries aaaaaaaaabbbbbb bbbbccccccccccccc cccccccccccccccccc A B C Receiving dock Customer ready order preparation CROSS DOCKING Takes not longer than 24 to 48 hours Shipping dock aaaaaaaaaaaaaabb bbbbbbbbbbbbbb bbbbbccccccccccc aaabbbbbbbbbbb bbbbbbbbbccccccc cccccccccccccccccc aaaaaaaaaaaaaaaa aaaaaaccccccccccc cccccccccccccccccc aaaaaaaaaaaaaaaa aaaaaacbbbbbbbb bbbbbbbbbbccccc Slide 9
flow-through technology. Slide 10 http://www.vanderlande.com/sitecollectiondocuments/distribution/publ2119_de_distribution.pdf
pick-by-light- or pick-by-voicetechnology. http://www.vanderlande.com/sitecollectiondocuments/distribution/publ21 19_DE_Distribution.pdf Slide 11 http://www.barcode-shop.com/assets/own/lydia.jpg
. fast sorting technology. Slide 12 http://www.vanderlande.com/sitecollectiondocuments/distribution/publ2119_de_distribution.pdf
Slide 13 http://www.knapp.com/cms/cms.php?picid=6&pagename=694&referer=%2fcms%2fcms.php%3fpagename%3dc S_Cosmetics&sid=rv6mh5udl96288fdo308pk83rfljm4ca#imgdiv
removed chaotic storage Slide 14
. and unergonomic working conditions.. Slide 15
..and still fail to move merchandise to the shelves Slide 16
However, is this the perfect answer never out of stock? Slide 17
Let s have a look at our logistics future Slide 18
10 great forces in societal development will affect logistics by 2020 Ageing Hypercomplexity Globalization Technological development Knowledge Prosperity Individualization Immaterialization Commercialization Health Environment Acceleration Network organizing Polarization Urbanization Slide 19
Some specific Supply Chain Megatrends Alignment between demand and supply Push-to-pull in order to get demand-driven Improved visibility Offshoring/outsourcing through virtualization Centralization Lean supply chains Risk Management Sensory Networks Slide 20
Today s outsourcing searches for economies of flat world Slide 21 Three innovations made the world flat: PC, fibre optics and workflow-software.us-american auditing firms outsource routine work such as preparation of tax declarations to India and concentrate on strategic issues.. Radiologists of small and medium sized US-based hospitals delegate the analysis of CT-scans to doctors in India and Australia. The analysis is completed while the US-based doctors are sleeping.
Hypercomplex sourcing structures the example of the Boeing 787 Slide 22 Christopher (2008)
Global textile supply chains are long and winding roads Slide 23 During a 1999 protest of the World Trade Organization, Rivoli, an economics professor at Georgetown, looked on as an activist seized the microphone and demanded, "Who made your T-shirt?" Rivoli determined to find out. She interviewed cotton farmers in Texas, factory workers in China, labor champions in the American South and usedclothing vendors in Tanzania. http://www.amazon.com/travels-t-shirt-global- Economy- Economist/dp/0470039205/ref=sr_1_1?ie=UTF8&s=books &qid=1215147216&sr=8-1
This is the travel of a T-shirt http://wiki.theplaz.com/file:t-shirt_map.jpg Slide 24
And this is needed for a simple pair of men s cotton slacks Slide 25 https://www.bmi.gob.sv/pls/portal/docs/page/bmi_htmls/bmi_htmls_pulso_textil/slacks.pdf
The dilemma of globale textile supply chains http://www.zoriah.net/.a/6a00e55188bf7a883401156f4748d7970c-pi Slide 26 http://konsumpf.de/wp-content/uploads/2008/11/1069762_torn_blue_jeans.jpg
So, how should tomorrow s logistics look like? Slide 27 http://www.logisticsit.com/absolutenm/templates/article-news.aspx?articleid=4138&zoneid=1
The revival of city logistics for the supply chain of the future Slide 28 GCI/CapGemini (2008)
..which we knew from 1967! Slide 29 Doody/Davidson (1967)
Let s have a look at some benchmarks Slide 30
Today s winner in fashion retailing are vertically integrated sales machines! Slide 31
Manufacturers like Triumph International respond to this trend Slide 32
Whatever Zara is doing, they do it perfectly wrong unbeatably successful! Slide 33 http://mswd.files.wordpress.com/2009/11/zara-graph.jpg
And companies like M&S struggle with their competitive response Slide 34
The missing link for many fashion retailers. Slide 35
Is RFID the answer to solve all issues? Slide 36 http://www.emeraldinsight.com/insight/viewcontentservlet?contenttype=article&file name=published/emeraldfulltextarticle/articles/0291080502.html
Have a look at simple barcoding first.. Time (min) Manual EDI Ongoing recording of items on stock (pro rata) - 45 Recording of total inventory 270 - Determining order quanities 30 5 Generate order 60 10 Gather order 45 - Activities related with receiving products 45 5 Label products and controlling received 60 - quantities Total 510 65 Slide 37 Savings = 7 hours and 30 minutes Example of reduction of activity complexity for a retailer when using EDI based on an order of 120 pieces comparing manual administration and EDI-administration
Let s sum up Slide 38 http://gralinnaea.com/wp-content/uploads/2009/09/stamp.jpg
From a fashion blog: The fact is that buyers are becoming preference savvy and smarter in order to what they shop. Even though they always have their preferred designer, they are also acquainted that a throwaway piece of fast fashion from a retail chain store will complete their outfit choices. At so reasonably priced all of these retail perceptions play on Friday nights when people feels they have nothing to wear. Slide 39
You need to be aware of managing an end-to-end fashion supply chain! Slide 40
.. and bear in mind that. Future sales at SKU-level are difficult to predict; fast changes lead to increased obsolesence; high street front stores increase costs; each unsold piece represents a cost 50 euro cents per piece per day production times get shorter and delivery times more tight; quality needs to be controlled at origin instead at destination; one hub is used for multi-country-consolidation in one hub; a low number of pieces is highly rotating and frequently replenished. Slide 41 http://www.logisfashion.com/default.asp?language=en&s=news&ss=detail&id=62
However, this is going to revolutionize retail! Slide 42
Despite all megatrends the basic tasks of SCM will remain 1. Design, organize and operate networks for the provision of customers and consumption stations with the required goods in due time at lowest costs. 2. This includes the scheduling of the resources and the replenishment of the stocks in the logistic chains. 3. These tasks arise between companies, suppliers and customers. Slide 43
What so what now what? Slide 44