Logistics & Supply Chain Management … · Proprietary and Confidential: This presentation may not...

Logistics & Supply Chain Management Footwear & Apparel

April 07, 2015

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of Customer, unless expressly authorized by UPS. © 2013 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

Agenda

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Global Sourcing Map

Trends in New Supply Chains

Supply Chain Management for SMEs

Case study

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Global Sourcing Map


Global sourcing trends

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Countries in the top 3 sourcing destinations of international buyers Source: McKinsey’s Apparel CPO Survey ,2013

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ASEAN countries emerge as major sourcing markets, but need to find their unique selling points to compete with other low-cost alternatives.


Level of involvement in the supply chain defines manufacturers’ market positions

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Design Sourcing materials Production

Distribution and

marketing

CMT Cut-Trim-Make

- Only usage of labor - Compete on prices - High competition especially from nearby countries with major labor force

FOB Free-On-Board

- Making a complete product - Add values to the supply chains - Earn more; opportunities to upscale

OBM Original Brand Manufacturer - Moving from suppliers to coordinators of the value chains


Needed competencies of FOB manufacturers

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Added values beyond the cut-make-trim process

Supply chain knowledge and logistics capabilities as key drivers • Understand import markets

• Plan, procure and manage inventory of materials to support your production • Ensure timely product delivery

Customer service Sourcing Delivery /

Transportation of products


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Trends in New Supply Chains


Today market: Fast Fashion

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• Fast-changing consumer preferences

• More fashion seasons

• Intense competition

• Varied market segments and fast turn-over of styles


The upcoming market: More Customization & Faster Fashion

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Demographic changes and the rise of ecommerce leads to demands for more personalized products and faster delivery of products and services.


Trends in the new supply chains

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Tremendous variety

Unlimited choices from basics to fashion and haute products

Short life cycle

Product life cycles become shorter

Seasonality

Demand is almost non-existent outside of a product’s specific seasonal area

Flexible production

Ability to handle both big and small quantities and more product variants

Short lead time

Productivity improvement to reduce time to market; ensuring seamless delivery of products

Cost management

Inventory management; optimizing solutions for various demands

Collaboration

Actionable visibility of product flows to facilitate collaboration in decision-making

Speed

Invest in delivery services and technologies

Responsiveness

Multi-modal transportation to distribute products to market; just-in-time production to reduce inventory

Market demands Supply chain approach

Manufacturing shifts

The changing market landscape reshapes production methods and requires different supply chain management approach


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Supply Chain Management for SMEs


Unique challenges and opportunities

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Challenges • Distribution and logistics managers rather than broader supply chain experience

• Lack of economies of scale (securing freight capacity)

• Lack of consistent business processes (documentation, IT investment, new hires and knowledge transfer issues)

• Lack of significant capital for investment; lack of financing

• Multiple buyers using different IT systems

• Have to team up with other suppliers

• Financial risks from international trade

Opportunities • Flexibility – ability to make fast, strategic changes

• New services and pricing options can be introduced

• Able third party suppliers that can help manage risk and provide global networks.

SMEs face unique challenges and opportunities when participating in the supply chains


Moving your business in the Right Direction

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How an integrated supply chain strategy and logistics solutions can help

Speed goods to market

Avoid stock-outs Increase productivity Enter new markets

Reduce excess inventory

Use the right forwarding option

Minimize fines and penalties

Ensure shipments arrive on time

Improve customer satisfaction

Leverage technology

Revenue Costs Customer Loyalty Risk

Use one global provider to increase accountability

Avoid shipment delays

Help improve compliance


Factor logistics in your business activities Leveraging logistics solutions to improve speed, responsiveness and collaboration across the supply chains

Logistics Planning Purchasing Planning Purchasing Production Planning Purchasing Customer


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Purchasing

Where to find a specific material you need?

Are your material suppliers reliable? (Product quality, commitment, delivery time)

Do your material suppliers offer the most competitive cost?

How to manage the procurement and buying process to minimize overhead costs and enhance efficiency?

How to manage orders to reduce excessive inventory?

What are optimal transportation modes? (Measured by just-in-time production requirement and cost effectiveness)

What will you do in case suppliers fail to deliver or in case you need urgent supplies?

What are optimal transportation plan for multiple sources?

Value proposition of your suppliers

Advance planning

Think of logistics in your purchasing plan

What you can control


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Planning & Customer services Logistics as a tool to add value and build partnership with your customers

• Enhanced visibility across all shipped orders and returns for better inventory management

• Innovative technology solutions that enable greater integration to eliminate

duplication and improve efficiency • Integrated distribution and transportation network for a more efficient supply chain • Comprehensive portfolio of delivery and return services can help reduce operational

costs and improve customer experience • Flexible deliveries for timely store replenishment and workforce management


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Visibility Saves Time and Money

• Save valuable personnel time with 100% visibility of all outbound shipments

• Reduce “Where Is My Order?” inquiries through proactive ship and/or delivery notification

• Enhance control and planning process by tracking shipments


Solutions

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Technologies improve productivity Maximize outcomes by investing in high-impact areas of the logistics process

Key areas

Invoicing

• Most of delays in customs clearance due to misinformation of commercial invoices and supporting documentation.

Outbound order processing

• Where shipping and accounting errors often happen.

• Manual processing limits ability to scale up.

Integration of logistics process

• Lack of integration creates inefficiency and hinder planning capability

Electronic Invoice

Automated order

processing

IT integration


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Electronic Invoice Can Reduce Customs Holds

Submit your commercial invoice electronically for your international packages or air freight

Automated shipping systems to streamline your international shipment processing, saving staff hours needed to prepare documentation

Eliminates redundant data entry errors and reducing customs delays

Transmit your commercial invoice and, when needed, other documentation electronically when processing shipments


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IT System Enhancements for faster, efficient and cost effective operations

• Get a broader perspective on shipping activity by integrating shipping information into your internal IT systems

– Helps you provide better customer service, plan staffing, speed cash flow, coordinate suppliers and manage production scheduling

• Puts up-to-date information on package, LTL, air and ocean freight at your fingertips

– About shipments you send, are billed for or those you’re expecting


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Efficient supply chain management via outsourcing Leverage on the resources of third-party logistics so you can focus on your core business operations such as sales and marketing

Risk

Benefits

Risk Risk

•Economies of scale – Aggregation of orders from different buyers

•Risk pooling – Transfer demand uncertainty to the contract equipment manufacture (CEM)

•Reduce capital investment – Transfer to the CEM •Focus on core competency – That differentiates the company from its competitors

•Increased flexibility – Better react to changes in customer demand, use the supplier’s technical knowledge to accelerate product development cycle time & to gain access to new technologies

Risk Risk

•Loss of competitive insight – May open up opportunities for competitor, prevent the development of new insights

•Conflicting objectives – Suppliers and buyers typically have different and conflicting objectives, e.g. on flexibility


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The roles of logistics partners The best partners help you grow

Quantifiable benefits

• Optimize speed to market and access new markets

• Reduce overall administrative and customer service costs

• Reduce inventory carrying costs and transportation expenses with a fast and agile supply chain

Quantifying benefits allows you to make better business plans and review

performance

Value analysis

• Go beyond the immediate costs

• Other hidden costs in the business process: labor, time, lost opportunities

• Added value from technology implementation and automation can help productivity improvement and future upscale

Investing in values that can open access to new markets and accelerate growth


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Case study


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Case study: Moving up in the value chains


Q&A

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