Optimizing Fashion Supply Chains between Turkey and

the NetherlandsKees Verweij

Senior Logistics Consultant, TNO

Logistics Clustering Conference Istanbul, October 25-26, 2007

Logistics strategies for EU fashion sector

Around 1000 European DC’s located in the Netherlands

Many fashion EDC’s: e.g. Liz Claiborne/Mexx, Donna Karan, C&A, We International

Trend: product life cycle of fashion articles is decreasing: from 6-9 months to 3 weeks-2 months

EU fashion retailers need reliable fashion manfacturers

European Distribution Centers in Netherland

Logistics strategies for each article

1.Design/manufacturing based on demand from shopping outlets

2.Quick design decisions in the head office

3.Short throughput time of production

4.Cross-dock function of Dutch Distribution Centre

5.Quick sale of fashion articles in shopping outlets

Logistics for fast fashion

Focus on lower logistics costs

Critical success factor in fashion:

focus on lower integral logistics cost instead of sub optimizing parts of the chain

Method:

Keep stock of low value upstream in the supply chain at manufacturers

The supply chain

Lay-out Zara European DCZaragoza, 135,000 m2

Sorting of boxes 33%Sorting of hanging garment 67%

1

2

3 111

5

7

6

8 9

12

1314

15

1617

18

410

Lay-out not to scale

Storage/picking of small/special articles

Unloading of boxes (33%)

Storage pallets/boxes Female

Storage pallets/boxes Male/KidsSorting of boxes

Selection/merge area box sorter

Mini load area (23 m high, 5 cranes)

Sorting center complete/ break down boxesManual unpacking of articles article sorter

Sorting ovals of articles

Sorting of loose articles in box to shops Sorter for boxes

to loading area

Unloading of hanging garments (66%)

Aorta sorter hanging garment

Storage of hanging garment (1-2 days of storage)Stock of hanging

garment (at first floor above 1-2 days buffer)

Sorting of hanging garments

Loading of trucks with boxes/hanging garment

INDEX10. Sorting ovals of articles11. Sorting of loose articles in

box to shops12. Sorter for boxes to loading

area13. Unloading of hanging

garments (66%)14. Aorta sorter hanging garment15. Storage of hanging garment

(1-2 days of storage) 16. Stock of hanging garment (at

first floor above 1-2 days buffer)

17. Sorting of hanging garments18. Loading of trucks with

boxes/hanging garment

1. Storage/picking of small/special articles

2. Unloading of boxes (33%)3. Storage pallets/boxes

Female4. Storage pallets/boxes

Male/Kids5. Sorting of boxes6. Selection/merge area box

sorter7. Mini load area (23 m high,

5 cranes)8. Sorting center complete/

break down boxes9. Manual unpacking of

articles article sorter

Late design & ordering implies less ‘sales’

Business case Zara:

• every 2 weeks 50% of shop fashion collection is new

• this leads to less ‘sales’ and more profit

Commitment

Logistics costs% in different European sectors (2003)

Fashion retail supply chain is very cost sensitive

Stock Administration

Three different transport modesNL

TK

Use of rail/shortseaTotal costdoor-to-door

Distance

Economic Trade-Off analysisLower transport costs by rail and short sea should off-set against higher handling and pipe line costs

Pipe line

Times of transport: Road

Times of transport: Short sea

Evaluation of the multimodal system

Main benefits

1. Savings on logistics cost

Transport cost of rail/short sea are lower

2. Potential for bundling flows

Bundling LTL flows through cooperation

3. Extra flexibility

Potential use of 3 transport modes

Main disadvantages

1. Longer pipeline times

Extra activities can lead to longer pipe lines

2. Changing customer demands

How can bundling be achieved with changing customer demands

3. Change in logistics processes

Does the use of multimodal transport result in logistics changes?

Comparison of transport modes

Price

index

Average

transit-time

(days)

Freq. Q

(000 t)

Load Unit

Flexib.

Road 100,00 7 Daily 13 Trailer 85 m3

High

Rail 87,50 5 - 6 1/w - Container 45 ft

low

Short sea

52,08 12 - 21 Many/w 611 Container 20/40 ft

low

Hybrid network for changing fashion demand patterns

Demand Pattern Fashion

Peaks and urgent shipments

Guaranteed demand

Managing the Fashion Chain

1 supply chain orchestrator (4pl)

FCC: Fashion Consolidation CenterFDC: Fashion Distribution Center

FCC

Terminals

Manufacturer fashionManufacturer basicsManufacturer trendysSupplier mixed goodsWarehouse retailerRetailer

Optimal supply chain