From Data to Decision Enhancing Supply Chain Efficiency in Fast Fashion Retail Bruno Cortes Chief Information Officer December4 th, 2012 CIO Summit Europe
A fashion accessories company with presence in more than 37 countries Europe Portugal, Spain, France, Poland, Croatia, Ukraine, Russia, Latvia, Romania, Kazakhstan, Bulgaria, Czech Rep., Bosnia, Slovakia, Georgia, Cyprus, Serbia, Malta, M. East UAE, Kuwait, Oman, Saudi Arabia, Jordan, Bahrain, Egypt, Qatar, Africa: Americas Asia Angola, Mozambique, Morocco Stores Venezuela, Colombia 370 Philippines, Malaysia Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 2
WhatisBigData In information technology, big data is a collection of data sets so large and complexthat it becomes difficult to process using on-hand database management tools. Big data in general is defined as high volume, velocityand varietyinformation assets that demand cost-effective, innovative forms of information processing for enhanced insight and decision making. Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 3
Look at the data not for the facts themselves but for what you can do with the information in a timely manner Stage 1 Reporting What happened? Stage 2 Comprehensive Whydidit happened? Stage 3 Predictive What will happen? Stage 4 Operational What is happening? Stage 5 Action Driven Whatwewantto happen! Batch AdHoc Analytics Dashboards & BAM Predict and Antecipate Intelligent Systems Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 4
Last decades shown an evolution of the timing, complexity and data involved in each decision The right decision Attherighttime 80s 90s 00s Knowing where and howto act Data Volume Business Complexity Time to act Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 5
Retailers are using information to manage the business in a mix of past, present and future Analytics Operational BI Predictive & Decision Support Reports, analytics, ad hoc querying and KPI analysis, supported on historical data, to evaluate performance and understand behaviours Dashboards, alerting and rule based systems to react in (near) real time decision windows to non-expected behaviours Data mining, forecasting and decision support systems to assist the decision maker, focusing him in handling exception and deviations from a expected baseline Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 6
Supply Chain 101 in Fashion Retail Planning Assortment Allocation In-Season Control Replenishment Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 7
Aligning financial and fashion planning is crucial for variety, price penetration and inventory optimization during regular season Planning Assortment Allocation In-Season Control Replenishment X From corporate budget to SKU plan through time Predict category behaviour, per country, price range and margin per SKU Establish non comparable growth based on similarities Estimate supply chain lead time in point of interaction Drive a detail purchase buying plan and shipment plan to stores Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 8
Retail is no longer product driven: customer segmentation, trends and regional characteristics determine assortment on every store Planning Assortment Allocation In-Season Control Replenishment X Influence store layout and assortment by customer segmentation and retail model characteristics Understand impact of local characteristics on product potential Optimize assortment for cross docking operations Keep identity and innovative image through a consistent multichannel presence Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 9
Defining an on target initial shipment of every product may represent efficiency on the overall inventory of the supply chain Planning Assortment Allocation In-Season Control Replenishment X For short delivery lead time avoid out-of-stock on new arrivals, for long delivery lead time minimize potential slow movers and excess of inventory Typification of allocation units for logistics separation optimization Inventory optimization across multiple locations through time Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 10
Fast fashion means monitoring selling context and react on buying variables, on a timely manner approach to the product lifecycle Planning Assortment Allocation In-Season Control Replenishment Reaction to market & sales (collection success rate) Adjustments in Open to Buy Budget according to market needs Act on orders according with the status of manufacturing (suppliers) and/or logistics Assist on the Overall Understanding of the Supply Chain Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 11
In-Season Control Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 12
Replenishment in a pure centralized VMI retailer is a key factor to find the right level of inventory without loosing sales in the process Planning Assortment Allocation In-Season Control Replenishment Looking at historical sales Understand trends, out-ofstock, best sellers, slow movers & consolidation needs Evaluate product seasonality Consider new arrivals for product replacement & transport lead time Sales forecasting & shipping in advance Automated Decision Support System Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 13
Replenishment A VMI (Vendor Management Inventory) model 370 stores, 10 categories, 2,500 SKU, 3x per week 2 million replenishment orders involving 6 million items (still) 20% of manual intervention Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 14
The impact of good decisions on your P&L Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 15
Inventory related impact 60% 93% 93% 91% 94% 94% 100% 90% +15% EBITDA 50% 71% 72% 76% 76% 76% 80% 40% 70% 60% Purchases Growth 30% 50% Sales Growth 20% 10% 40% 30% 20% 10% Pre-Sales Success Rate End of Season Success Rate Benchmark Pre-Sales Success Benchmark End Of Season Success 0% 25% 22% 28% 24% 27% 25% 18% 22% 37% 41% FW10 SS11 FW11 SS12 FW12 0% Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 16
Sales & margin related impact Stock-out & Lost Sales Gross Margin From Advanced Collection Before Now Before Now 5.0% / 1.2M 2.9% / 700k - +3.3% +15% EBITDA Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 17
Warehouse and logistics related impact Warehouse Costs Impact of Mean of Transportation Now Before Now /m 2 + handling 22.00 Aircargo 47% 36% Savingsin m 2 5,000 TransportCost /Kg (Plane) 3.96 (Boat) 0.93 +11% EBITDA Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 18
www.parfois.com Enhancing Supply Chain Efficiency in Fast Fashion Retail, CIO Summit Europe 19