Post on 12-May-2018
UNIQLO “Fast supply for Fast Fashion”
HEC Supply Chain Consul0ng Christopher Sharp | Kim Bergeron | Gert Kongehl | Deniz Eras
Agenda Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
1. Context & Problem Statement 2. Execu)ve Summary 3. Environmental Scan 4. Analysis & Key Success Factors 5. Alterna)ves & Op)ons 6. The Solu)on 7. Risks & Mi)ga)ons 8. Financials & Projec)ons 9. Conclusion
Context & Problem Statement Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Context: Uniqlo is fast growing Japanese “lifewear” brand that has built a strong supply and consumer base in Japan; they are looking to expand their reach to the US, Europe and abroad.
Key to their success is a focus on: 1. Delivering consistent value to their customers 2. Working closely with suppliers and partners 3. Merging of innova0on and func0onalism
Problem Statement: How can Uniqlo modify their supply chain model to ensure success in global markets?
ExecuFve Summary Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
1. Develop Hybrid Supply Chain 1. Local: Support development & JIT delivery of in-‐season (specialized)
products 2. Decentralized: Ensure delivery of seasonal (flagship) products
2. E-‐commerce (click & mortar) plaLorm 1. Increase sales reach in new markets and test 2. Sell overstock
3. Crowdsourcing plaLorm to sustain innova0ve local products 1. Integra)on of latest per)nent fashion trends
Analysis – Product & SC Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Strengths • Innova)on • Price/Quality Ra)o • SPA model • “Lifewear” segment
Weakness • Local (Jpn) Trends
Strengths • Takumi & Kaizen • Delayed customiza)on
• Inventory pooling • IT connected SC/POS
Weakness • Local and focused on JPN
• Reverse Logis)cs (e-‐comm.)
Product:
Supply Chain:
Analysis -‐ Environment Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
• Big brands with global reach
• Different market segments
Compe))ve Rivalry (HIGH)
• Market diluted • Med barriers to entry on scale
New Entrants Threat (LOW) • Mi)gate
suppliers influence
• Maintain power
Supplier Power (HIGH)
Analysis – Supplier Power Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Buyer Investment
Supplier Investment
High
High Low
Cap)ve Buyer
Cap)ve Supplier
Partnership
Transac)onal
Key Success Factors Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Alignment with Key Success factors
Low Medium High
• Reduce lead )mes • Produc)on capacity : Minimize specula)ve produc)on capacity and maximize the reac)ve produc)on capacity
Agility
• Offer more volume – for flagship items in Asia • Manage risk with the local suppliers in US and EU
Supplier power
• R&D Centers and designers
Innova)on
Products: high quality, func)onalism and affordable prices
AlternaFves Analysis Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Alterna0ve 1 Maintain supply chain in Asia
Agility Supplier Power Innova0on Products
Alignment with KSF
Evalua)on Does not best enable adaptability in capacity produc)on for interna)onaliza)on. No innova)on in distribu)on interna)onally not
Good rela)onships with exis)ng suppliers in Asia – does not support the development of efficient supply chain system outside Asia
Use of exi)ng R&D center Develop Web sales
Maintain quality, Kaisen produc)on, func)onal design
AlternaFves Analysis Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Alterna0ve 2 Localized Supply
Chain
Agility Supplier Power Innova0on Products
Alignment with KSF
Evalua)on Can help reduce lead )me for product Responsive supply
More flexibility to adapt to par)cular local demand Do not have advantage of volume produc)on
Does not bring new edge adapt to various market and use of advantage in supply chain’s different models
Good control of quality. Might be difficult to maintain affordable prices.
AlternaFves Analysis Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Alterna0ve 3 Hybrid Supply chain
(Centralized-‐localized)
Agility Supplier Power Innova0on Products
Alignment with KSF
Evalua)on Enable to op)mize the produc)on capacity. Core products centralized produc)on in Asia. Specialized products local produc)on.
Create interes)ng partnerships – big volumes ordered for flagship products Local suppliers – shorten design-‐to retail-‐cycle
Open to adaptability in designs – integrate newest local designs
Maintain produc)on in Asia – reduced costs U)lize R&D center interna)onally – maintain high quality
SoluFon Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Alterna0ves
1. Maintain Supply Chain in Asia X
2. Localized Supply Chain X
3. Hybrid Supply Chain ü .
SOLUTION • Create Hybrid and Responsive supply chain model • Crea)ng center of excellence through specializing suppliers (core product suppliers and technical or design
products) • Capitalize on growing web sales in the EU and US market – in line with digital consump)on trend • Crowdsourcing : Involve local designers to adapt to demand in new markets « Created by you » Crowdsourcing Program
MarkeFng Plan Focus US and EU Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Price
• Affordable for basic • Allow varia)ons to sell overproduc)on
Product
• Basics and special edi)ons (local designs)
Place
• Brick-‐and-‐mortar and web
Promo)on
• Web adver)sing, boost e-‐commerce (reverse logis)cs –returns)
• Magazines • Bloggers (try products)
• Partner with museums and ar)sts – special edi)on clothings
• Differen)a)on – customer feedback on website
ImplementaFon Plan Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Year 1 Year 2 Year 3 • Test suppliers for US (North
Mexico) and EU (Eastern EU and Turkey) to determine reac)ve capacity.
• Test local designers and crowdsourcing market for fashionable designs.
• Upscale e-‐commerce capability to increase sales.
• New stores: 30 in US and 20 EU • Asia: Maintain aggressive
growth strategy in China 80-‐100 stores per year
• 3PL distributor : establish partnership in US and EU that will minimize design-‐to-‐store lead )me.
• Select suppliers under guidance Takumi team, 5 suppliers per region.
• Get each supplier to invest to reduce lead )me and minimum order quan)ty.
• Establish a network of highly talented US and EU designers
• New stores: 30 in US and 20 EU • Asia: Maintain aggressive
growth strategy in China 80-‐100 stores per year
• Focus on further global integra)on of R&D centers and TORAY materials to maximize collabora)on with designers in US and EU markets
• New stores: 30 in US and 20 EU • Asia: Maintain aggressive
growth strategy in China 80-‐100 stores per year
Risks and MiFgaFon Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
High Probability
High Impact
Low
3
2
1
4
Risks
1. Fierce compe))on from large players in US and EU
2. Suppliers inefficiencies delaying design-‐to-‐store lead )me
3. Currency fluctua)ons in foreign markets
4. Cost of quality inspec)ons on all products
Mi0ga0on 1. Maintain R&D to ensure product differen)a)on a life wear brand
2. Takumi team and Kaisen methods to maximize efficiency
3. Hedge currency in futures markets to stabilize cash flows
4. Implement sta)s)cal process control to test batches
Financials -‐ AssumpFons Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
SALES COSTS PRODUCTION COSTSSTORE SALES PER 533,333
Online Migration Y1 Y2 Y3 US 20%EU 10% 15% 20% EU 15%US 20% 30% 50%
SUPPLIER TEAMFTE (10) 100,000 10000 per
Online sales costs 25% SHIPMENT AND WEBSITE VP 300,000returns 10% OH 144,000Stores Sales Costs 30% STAFF AND RENT TOTAL 544,000
Crowdsourcing Cost 3%Store opening CostDesign on New Stores 40,000 ASIA GROWTH 5%
Financials Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
Y0 Y1 Y2 Y3EUEXISTING 24NEW STORES 20 20 20TOTAL STORES 44 64 84
STORE SALES 23,466,667 34,133,333 44,800,000ONLINE SALES 2,346,667 5,120,000 8,960,000TOTAL EU SALES 25,813,333 39,253,333 53,760,000
USEXISTING 39Stores 30 30 30TOTAL STORES 69 99 129
STORE SALES 36,800,000 52,800,000 68,800,000ONLINE SALES 7,360,000 15,840,000 34,400,000TOTAL US SALES 44,160,000 68,640,000 103,200,000
REST OF WORLD 1,680,000,000 1,764,000,000 1,852,200,000
TOTAL SALES 1,600,000,000 1,724,160,000 1,832,640,000 1,955,400,000 22.2%7.8% 6.3% 6.7%
Financials Graph Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
OPERATING MARGIN GROWING FROM 47% TO 52%
Financials Scenario Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
P&LY1 Y2 Y3
SALES 69,973,333 107,893,333 156,960,000
PRODUCTION COSTS 12,704,000 13,728,000 20,640,000SALES COSTS 21,477,333 33,416,000 49,256,000SUPPLIER TEA 1,088,000 1,088,000 1,088,000CROWDSOURCING 2,099,200 3,236,800 4,708,800
TOTAL OPEX 37,368,533 51,468,800 75,692,800
OPERATING MARGIN 32,604,800 56,424,533 81,267,200OPERATING MARGIN 47% 52% 52%
CAPEX 2,000,000 2,000,000 2,000,000NEW STORES 50 50 50
Conclusion & Summary Introduc)on Analysis Alterna)ves Implementa)on Financials Conclusion
1. Develop Hybrid Supply Chain 2. E-‐commerce (click & mortar) platorm 3. Crowdsourcing platorm to sustain innova)ve local products