Supply chain management

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Supply chain management

  1. 1. Arezzo&Co’s Investor Day Supply chain management Alexandre Birman CEO
  2. 2. Trends and style Design Technical design Engineering Samples Showroom Logistics and distribution Store Raw material price negotiation Agency services+ Negotiating with the manufacturer 1 2 3 4 5 6 7 Arezzo&Co adds value throughout its production chain, from the creation of its products until the moment it reaches the final consumer Cost sheet Engineering folder  Cost management efficiency  Quality standard guarantee  Efficient lead time  Flexibility Arezzo&Co Chemicals and textiles Raw material Finished product Coordinated management of the supply chain associated to Investment in product engineering: In-house know-how Arezzo&Co’s sourcing process: Components SKU MODEL CONSTRUCTION 10% 35% 70% Reuse between collections: 2 Sourcing Arezzo&Co Total control of the value chain
  3. 3. The Company has an extensive research and information source to ensure a rich fashion content in its collections Sourcing Arezzo&Co Trends and style  Historical analysis (track-record)  Intensive search in collection (more than 30 thousand catalogued models)  Independent style team for each brand  Constant research trips to the world’s main fashion centers  Participation at major trend fairs  Constant street-style monitoring 3
  4. 4.  Qualified team of modelers and technicians  State-of-the-art technological resources  Wide physical infrastructure  Owned factory of samples  Strong integration between areas  Standardization of wear and quality aspects Each brand follows its own style, quickly adjusting the global fashion to the Brazilian consumer Sourcing Arezzo&Co Engineering and Production of Samples 4
  5. 5. Raw material negotiation is a fundamental part of the sourcing process  Pricing determined based on cost  Quick re-engineering of models to achieve market feasibility  Multi-disciplinary decision- making process: Style, Engineering and Sourcing  Strategic pre-negotiation of raw materials  Internal development ensures cost control Sourcing Arezzo&Co Dynamic cost system 5
  6. 6.  Strategic geographic location  Strong industrial cluster  100 accredited manufacturers  Historical culture of female footwear production  Sourcing model allows productive flexibility in other centers  Quality standards  Efficient lead time  Process audit  Legal aspects Supply agents dedicated to maintaining delivery quality and deadlines Sourcing Arezzo&Co Agency services + Negotiating with manufacturers 6
  7. 7. Constant investments in technology serve as benchmarking for our suppliers Sourcing Arezzo&Co Owned factory  Factory qualified for small productions  Fast track to produce reorders  High quality standard used as a reference  Proximity of suppliers of raw materials and machinery, enabling extensive market knowledge  Transfer of know-how to suppliers 7
  8. 8.  High cross docking capacity  Synchronized distribution to all stores in Brazil, so that all store windows open at the same time  Receiving: 100,000 units/day  Storage: 100,000 units/day  Separation: 150,000 units/day  Distribution: 200,000 units/day Sourcing Arezzo&Co Logistics With a distribution center located in the production chain and near the consumption center, Arezzo&Co distributes simultaneously on national scale 8
  9. 9. Brazil and Vale dos Sinos feature strong competitive advantage, gathering productive capacity, skilled labor and production flexibility Source: Abicalçados, 2012 / ASSINTECAL / FAO / AICSUL. Production (million pairs) Work (thousands) 819 338 Production (million pairs) Work (thousands) 270 138 Production (million pairs) Work (thousands) 216 110 BRAZIL SOUTHEAST REGION VALE DOS SINOS Vale dos Sinos: 26% of the Brazilian footwear production  Brazil is the world’s 3rd largest producer of shoes  The world's largest cattle herd: 13% of the market  RS: A third (R$ 1 billion) of the Brazilian leather industry revenue  Vale dos Sinos: one of the largest shoe conglomerates in the world  Abundance of skilled and specialized labor  Productive flexibility: volume X variety X speed  1,700 manufacturers: components, footwear, machinery, leather, and other professional research and teaching associations and institutions Sourcing Arezzo&Co Region’s competitive advantages 9

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