Optimizing Fashion Supply Chains between Turkey and the Netherlands

1
Optimizing Fashion Supply Chains between Turkey
and the Netherlands

• Kees Verweij
• Senior Logistics Consultant, TNO
• Logistics Clustering Conference Istanbul, October
  25-26, 2007

2
Logistics strategies for EU fashion sector

• Around 1000 European DCs located in the
  Netherlands
• Many fashion EDCs e.g. Liz Claiborne/Mexx,
  Donna Karan, CA, 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

3
European Distribution Centers in Netherland
4
Logistics strategies for each article
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Logistics for fast fashion
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
6
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

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The supply chain
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Lay-out Zara European DC
Zaragoza, 135,000 m2
Mini load area (23 m high, 5 cranes)
Unloading of boxes (33)
7
Storage pallets/boxes Male/Kids
Sorting of boxes
Unloading of hanging garments (66)
13
5
Selection/merge area box sorter
2
6
14
Storage of hanging garment (1-2 days of storage)
Aorta sorter hanging garment
4
15
Sorting ovals of articles
8
9
10
3
1
Stock of hanging garment (at first floor above
1-2 days buffer)
Sorting of loose articles in box to shops
11
Sorting of hanging garments
17
1
Sorter for boxes to loading area
16
12
Storage pallets/boxes Female
Storage/picking of small/special articles
18
Loading of trucks with boxes/hanging garment
Sorting center complete/ break down boxes
Manual unpacking of articles ? article sorter
Lay-out not to scale
9
INDEX

1. Storage/picking of small/special articles
2. Unloading of boxes (33)
3. Storage pallets/boxes Female
4. Storage pallets/boxes Male/Kids
5. Sorting of boxes
6. Selection/merge area box sorter
7. Mini load area (23 m high, 5 cranes)
8. Sorting center complete/ break down boxes
9. Manual unpacking of articles ? article sorter

1. Sorting ovals of articles
2. Sorting of loose articles in box to shops
3. Sorter for boxes to loading area
4. Unloading of hanging garments (66)
5. Aorta sorter hanging garment
6. Storage of hanging garment (1-2 days of storage)
7. Stock of hanging garment (at first floor above
   1-2 days buffer)
8. Sorting of hanging garments
9. Loading of trucks with boxes/hanging garment

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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

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Commitment
12
Logistics costs
13
Three different transport modes
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Use of rail/shortsea
Total cost door-to-door
Distance
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Economic Trade-Off analysis

• Lower transport costs by rail and short sea
  should off-set against higher handling and pipe
  line costs

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Pipe line
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Times of transport Road
18
Times of transport Short sea
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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?

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Comparison of transport modes
Price index Average transit-time (days) Average transit-time (days) Average transit-time (days) Freq. Q (000 t) Q (000 t) Load Unit Flexib. Flexib.
Road 100,00 100,00 7 Daily Daily 13 Trailer 85 m3 Trailer 85 m3 Trailer 85 m3 High
Rail 87,50 87,50 5 - 6 1/w 1/w - Container 45 ft Container 45 ft Container 45 ft low
Short sea 52,08 52,08 12 - 21 Many/w Many/w 611 Container 20/40 ft Container 20/40 ft Container 20/40 ft low
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Hybrid network for changing fashion demand
patterns
Demand Pattern Fashion
Peaks and urgent shipments
Guaranteed demand
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Managing the Fashion Chain
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Optimal supply chain