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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