Fashion houses are used to pushing their designs to the cutting edge, but increasingly they are also pushing their supply chains to stay ahead of the field.
An industry traditionally governed by the seasons, fashion is now pushing supply chains to the cutting edge to meet daily demands. The emergence of high fashion on the high street has cemented the requirement to meet and predict volatile demand. Knowing what lines will the big sellers, and making sure they’re on the shelf at the right time in the right quantity is at the crux of success for “fast fashion”.
The term, which originally meant the fast implementation of manufacturing repeats, has now come to refer to a wider form of responding to trends, getting copies of clothes from the catwalk or awards ceremonies into stores within seemingly infeasible periods, and not least, offering lightening fast deliveries of online orders.
By combining store and online sales data, store managers’ feedback, and social media coverage, some retailers now expect to know which lines to pull or push within the first day of a range going on sale.
And while IT and data collection is the key to reading these trends and responding to the market’s tastes, technology is also the means by which online shoppers are making more demands than ever before.
“Multi-channel retailing has placed a spotlight on logistics providers to the fashion industry,” says Paul Doble of logistics and parcel delivery firm DX. “Ultimately, it is the customer experience that dictates where customers choose to shop.”
For example vente-privee.com is a European online only retailer that holds “event sales” selling overstock items for some 2,000 brands. Items are held by the brands and only sent to the site’s warehouses after the sale closes.
It handles its logistics in house because it considers it “one of the major components of its core business”. Indeed the firm says “control of information flows and physical flows is not only essential, but very specific to the business model. The key aim is to provide a high degree of quality of service to the brands and to consumers.”
Jean-Michel Guarneri, European supply chain director, says: “In our case, home delivery is part of the basic requests of members, that’s why we work to have a deep knowledge of B2C distribution channels in each country to be able to choose between the best logistic and transport options. We also need to understand the behaviour of e-shoppers in each country, which are not necessary similar everywhere.”
Superfast
For more mainstream and high street fashion in the UK, retailing has been at the forefront of the trend for superfast deliveries, with firms such as ASOS and Next pushing next day delivery of orders placed on Thursday, so as to have a fresh look for Friday evening.
“We’re in a period of significant changes, even by fashion standards,” says Jonathan Pilbro, DHL’s vice president of fashion. “Channel changes are affecting fashion perhaps more than any other sector.”
Indeed Craig Rollason of Knapp says that online sales in the UK were up 14 per cent in 2012 compared to 2011 and that the market is forecast to grow by another 12 per cent this year.
But happily for our nation of shopkeepers, we are unlikely to be witnessing the demise of the humble shop.
“As most retailers continue to maintain their bricks-and-mortar presence on the high street… the requirement is for efficient multi-channel logistics,” says Rollason.
And, Pilbro agrees that consumer demand will keep stores open, even if the model changes.
“I think retailers adapt, and they will change their model to make stores a part of their offering, which is why I think multi-channel retailers have an advantage over pure e-commerce players.”
Paul Wilson, of Davies and Robson, is an advocate of the value of multi-faceted retailing for fashion. “Traditional store based businesses need to embrace the online world, use the stores to offer greater choice to the consumer – resist the urge to measure sales and margins on store/online separately – integrate the experience – integrate the business model.”
Indeed Pilbro reckons this integration is the next great challenge facing fashion brands and retailers. But he sees it as a source of opportunity.
The ubiquity of online sales gives ample access to complete collections, but the popularity of click and collect shopping still requires a store for collection.
Quoting the statistic that 17 per cent of all December 2012 online sales were click and collect, Pilbro predicts that there will be a shift to “convenience retailing” with more locally placed, smaller stores housing a limited selection of lines, which increasingly function as a convenient and branded point of call for picking up online orders. In this model, “limited stock doesn’t matter because you can pick up anything from the entire range online,” says Pilbro.
Revolution
The general trend for responsive retailing has already brought changes to established distribution operations.
There are rumours that to meet customer expectations of the online sales channel, one high end mass market retailer is looking at a serious investment into automating its fashion packing operations. This is generally the most expensive part of fashion e-commerce, and successful automation could revolutionise the online channel, and really make the competition sit up and listen.
As for stores, to get the optimum product mix increasingly requires daily deliveries as opposed to the more traditional two or three drop offs per week.
Sadly, as we all know, high street sales have by no means grown to keep up with this frequency of deliveries, and a lot of trucks are making the same journeys more often, but with far less stock. And this opens the door to another trend – supply chain collaboration.
This is of course where larger third party logistics providers are at an advantage, as with a range of larger clients, and wider coverage they can offer access to shared facilities stretching all the way to shared deliveries. Pilbro says that DHL is already combining deliveries for big names such as Boots, TK Maxx and Marks and Spencer, which are keen to reap the benefits of collaboration.
Fashion houses are also looking further back along the supply chain for cost benefits. But as ever there are multiple factors to weigh up. Rising labour rates in urban China are increasingly drawing attention to the manufacturing alternatives.
Moving factories closer to the cotton production areas at the very start of these chains, for example in Mongolia or further inland in China, will bring them closer to a cheaper rural labour market. But this has to be weighed against extending lead times for getting the assembled products out of such remote areas.
There are plenty of countries that are closer and or cheaper for manufacturing than China, such as Burma, Vietnam, Laos, and even Bangladesh. All options worth serious consideration, says Pilbro: “China is not pricing itself out of the market by any means, but we’re always looking for balance.”
For sourcing as with sales channels there is value is variety. There is a general picture of incremental changes, with many companies introducing production facilities across Asia and Eastern Europe. True fast fashion operations are being set up ever closer to market. Repeat facilities across North Africa and in places such as Turkey and Moldova are being upgraded. Morocco and Turkey are now strongholds for the practice of quickly recreating and mass-manufacturing high fashion items such as individual dresses worn to premieres or awards.
Many high fashion lines are now being sourced from India and Eastern Europe as opposed to China, and Pilbro reckons there is even talk of a limited amount of high end, high fashion sourcing from the UK.
Even though these will be costly options, having nearer and faster strands running alongside cheaper options for basic lines, will make the supply chain responsive, reliable and robust.
But for distribution, there is more money to be made by bypassing the UK entirely. With many fashion retailers selling into international markets, there is no purpose served by taking stock into the UK, and if the work of the distribution centre can be done elsewhere, there are substantial savings to be made.
According to a report by GT Nexus, as well as pushing speeds to market by cross-docking at port of entry to the UK and shipping pre-sorted stock to regional warehouses or directly to stores, retailers are seeking to consolidate at origin for final destination, to improve logistics flows and minimise dead time.
In order to meet its various and varying demands, the fashion industry has cultivated supply chains with diverse, cohesive strands as opposed to isolated links, revealing new strengths and opportunities. From sourcing all the way to warehousing and delivery, fashion is coming up with innovative developments that will no doubt be copied elsewhere. Setting trends indeed.
Case study- Next day from Next’s garment automation
Fashion retailer Next recently took on Dürkopp Fördertechnik to extend its automated garment sortation system at its national hanging garment distribution centre near Pontefract in West Yorkshire.
Following growth in its e-commerce business Next needed to expand the capacity at the site, which fulfils online orders as well as supplying some 520 stores in the UK, and international stores.
Dürkopp designed the 538,195 sq ft system to take stock from an adjacent high bay warehouse for feeding into the automated forward pick-face and sortation process.
The latest investment involves the installation of 23 additional Pickbuffers and associated conveyor connections which can store a total of 90,000 extra single items. The Pickbuffers enable automatic storage and single item picking for both e-commerce and store orders.
Every garment is individually tracked throughout the system using Dürkopp’s RFID controlled “Rolladapter System”, which carries unique product information in real time for tracking, picking and sorting. The Rolladapter enables individual hanging items to be transported along an overhead conveyor system from induction to dispatch. The Rolladapter is automatically removed at the end of the process for re-use on incoming stock.
“We have been asked to extend the system we originally installed in 2006. We have also installed a special fast track lane to accommodate late orders and meet Next’s delivery promise of Order by 9 pm and have it delivered next day,” said Annette Sommer, general manager of Dürkopp UK.
Case study- Omni channel offerings for Whistles
Clothes manufacturer Whistles awarded a four year distribution contract to Clipper to handle all its intake, warehousing and distribution operations. The deal covers distribution for stores in the UK and abroad, e-commerce, quality control, value add, pick and pack work as well as its returns.
Clipper had to plan its warehouse layout for the project based on stock and demand data, and with consideration of Whistles’ requirement to handle hanging garments as well as flat packed items. The seasonality of fashion retail requires compliance with varying stock levels, and needs the DC to be flexible to support the demand peaks and troughs throughout the year.
A programme was put in place to predict stock levels and forecast future demand. Once these needs had been established, Clipper was able to design warehouse layout and predict staffing needs.
Clipper has had to respond to the growth Whistles has shown through new store openings and increased e-commerce activity, with a 35 per cent increase in throughput since the contract began.
A reverse logistics operation, which unpacks, re-processes, steams and tickets items for sale at the Whistles e-commerce “outlet” page, are all handled on site by Clipper.
There is also a bespoke, value added service where Clipper operates anLGV specifically for weekend deliveries to store, ensuring that stock received on a Friday can be in the shop for Saturday trading.
Clipper also provides pick, despatch, export and returns services for stock sold on third party websites such as John Lewis and House of Fraser.
Case study- World’s biggest OSR for Boss
Hugo Boss is investing almost 100 million euros in a new distribution centre at Filderstadt, Germany, and has commissioned Knapp to supply warehouse automation including what Knapp reckons to be the largest OSR Shuttle of its kind in the world.
The fashion brand is opening the new 251,875 sq ft distribution centre to deal with its growing multi-channel businesses, and to cope with the fluctuating demands of these new sales channels.
The OSR Shuttle solution will provide 400,000 storage locations, to provide Hugo Boss with the flexibility it required.
The installation will also give Hugo Boss the ability to store full cases directly, and it will make items immediately available after goods-in.
Goods-to-person order picking will be carried out at Knapp’s ergonomic Pick-it-Easy workstations.
The new logistics centre is just south of Stuttgart and close to the city’s airport, and it will go into operation in 2014.
