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  

 

Thank  you