Optimizing Fashion Supply Chains between Turkey and the NetherlandsKees Verweij Senior Logistics Consultant, TNOLogistics Clustering Conference Istanbul, October 25-26, 2007

Logistics strategies for EU fashion sectorAround 1000 European DCs located in the NetherlandsMany fashion EDCs: e.g. Liz Claiborne/Mexx, Donna Karan, C&A, We InternationalTrend: product life cycle of fashion articles is decreasing: from 6-9 months to 3 weeks-2 monthsEU fashion retailers need reliable fashion manfacturers

European Distribution Centers in Netherland

Logistics strategies for each article

Logistics for fast fashion1.Design/manufacturing based on demand from shopping outlets2.Quick design decisions in the head office3.Short throughput time of production4.Cross-dock function of Dutch Distribution Centre5.Quick sale of fashion articles in shopping outlets

Focus on lower logistics costsCritical success factor in fashion: focus on lower integral logistics cost instead of sub optimizing parts of the chainMethod: Keep stock of low value upstream in the supply chain at manufacturers

The supply chain

Lay-out Zara European DCZaragoza, 135,000 m21231115768912131415161718410Lay-out not to scaleStorage/picking of small/special articlesUnloading of boxes (33%)Storage pallets/boxes FemaleStorage pallets/boxes Male/KidsSorting of boxesSelection/merge area box sorterMini load area (23 m high, 5 cranes)Sorting center complete/ break down boxesManual unpacking of articles article sorterSorting ovals of articlesSorting of loose articles in box to shopsSorter for boxes to loading areaUnloading of hanging garments (66%)Aorta sorter hanging garmentStorage of hanging garment (1-2 days of storage)Stock of hanging garment (at first floor above 1-2 days buffer)Sorting of hanging garmentsLoading of trucks with boxes/hanging garment

INDEXSorting ovals of articlesSorting of loose articles in box to shopsSorter for boxes to loading areaUnloading of hanging garments (66%)Aorta sorter hanging garmentStorage of hanging garment (1-2 days of storage) Stock of hanging garment (at first floor above 1-2 days buffer)Sorting of hanging garmentsLoading of trucks with boxes/hanging garment Storage/picking of small/special articlesUnloading of boxes (33%)Storage pallets/boxes FemaleStorage pallets/boxes Male/KidsSorting of boxesSelection/merge area box sorterMini load area (23 m high, 5 cranes)Sorting center complete/ break down boxesManual unpacking of articles article sorter

Late design & ordering implies less salesBusiness case Zara:every 2 weeks 50% of shop fashion collection is newthis leads to less sales and more profit

Commitment

Logistics costs

Three different transport modes

Use of rail/shortseaTotal costdoor-to-doorDistance

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 systemMain benefits1. Savings on logistics costTransport cost of rail/short sea are lower2. Potential for bundling flows Bundling LTL flows through cooperation3. Extra flexibilityPotential use of 3 transport modesMain disadvantages1. Longer pipeline timesExtra activities can lead to longer pipe lines2. Changing customer demandsHow can bundling be achieved with changing customer demands3. Change in logistics processesDoes the use of multimodal transport result in logistics changes?

Comparison of transport modes

Hybrid network for changing fashion demand patternsDemand Pattern FashionPeaks and urgent shipmentsGuaranteed demand

Managing the Fashion Chain

Optimal supply chain

Storage/picking of small/special articlesUnloading of boxes (33%)Storage pallets/boxes FemaleStorage pallets/boxes Male/KidsSorting of boxesSelection/merge area box sorterMini load area (23 m high, 5 cranes)Sorting center complete/ break down boxesManual unpacking of articles article sorterSorting ovals of arcticlesSorting of loose articles in box to shopsSorter for boxes to loading areaUnloading of hanging garments (66%)Aorta sorter hanging garmentStorage of hanging garment (1-2 days of storage) Stock of hanging garment (at first floor above 1-2 days buffer)Sorting of hanging garmentsLoading of trucks with boxes/hanging garmentA 4PL is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions