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Trading Partner Collaboration on Steroids

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One of the compelling reasons for a company to pursue building their private label business is for the margins. In today’s challenging economy, rising labor, raw material, logistics, and compliance costs all continue to gnaw at margin.

In the private label global supply chain arena one of the last bastions for margin protection and cost control is through business process and workflow. An effective and efficient way of managing this is through enhanced trading partner collaboration, leveraging new technologies.

The term “collaboration” is one of the most hackneyed terms in this industry, yet improving collaboration is always ‘top of list’ for retailers and brand owners managing global supply chains. In this session, join Donny Askin, CEO of Arigo, as he discusses how the new tools typically associated with social networking, tightly coupled with business process and workflow within the private label global supply chain, can help reduce costs, improve margins, and strengthen trading partner relationships.

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Trading Partner Collaboration on Steroids

  1. 1. VCF Fall Conference November 7-10, 2010 Trading Partner Collaboration on Steroids How simple technologies are reducing complexity Presented by: Donny Askin, CEO Arigo
  2. 2. VCF Fall Conference November 7-10, 2010 Today’s Takeaways ▶ Global Sourcing is complex ▶ It isn’t getting any easier ▶ Business process and workflow remain ripe for continued optimization ▶ Social Networking Tools leveraged within the context of Enterprise Collaboration = margin protection
  3. 3. VCF Fall Conference November 7-10, 2010 Global Sourcing / Private Label Margin, Margin, Margin Brand, Brand, Brand
  4. 4. VCF Fall Conference November 7-10, 2010 Suppliers/sources Designers Raw Material Ocean Transport Air Transport Global Sourcing Isn’t Easy
  5. 5. VCF Fall Conference November 7-10, 2010 20% - Minimum wage increase in China in 2010 82% - Cost of cotton price increase since 2009 … And consumer demand is flat 200% - Container cost increase since 2009 $15m and prosecution - Multiple CPSIA offenses It Isn’t Getting Any Easier
  6. 6. VCF Fall Conference November 7-10, 2010 Cost of Labor is Rising China: 20%+ in 2010 • Bangladesh: $0.21 • Indonesia: $0.35 - $0.71 • Sri Lanka: $0.46 • Mexico: $0.50 - $0.53 • Vietnam: $0.52 • India: $0.55 - $0.68 • Nicaragua: $0.65 • El Salvador: $0.92 • China: $0.93* • Philippines: $0.94 -$1.00 • Honduras: $1.02 • Guatemala: $1.21 • Costa Rica: $2.19 • U.K.: $7.58 - $9.11 • U.S.: $8.25 - $14.00 Source: INSTITUTE FOR GLOBAL LABOR & HUMAN RIGHTS.
  7. 7. VCF Fall Conference November 7-10, 2010 Logistics Costs – That was then…
  8. 8. VCF Fall Conference November 7-10, 2010 Logistics Costs are Rising Pressures ▶ Container shortage ▶ Seasonal demand ▶ Fuel prices rising ▶ Regulatory Compliance
  9. 9. VCF Fall Conference November 7-10, 2010 Raw Material Costs are Rising 0 20 40 60 80 100 120 Jan Feb Mar Apr May Jun Jul Aug Sep National Cotton Council of America Cotton Price by Month 2009 vs 2010
  10. 10. VCF Fall Conference November 7-10, 2010 Compliance Costs Grow ▶ CPSIA, C-TPAT, 10 + 2 ▶ Factory Compliance Programs ▶ Corporate Social Responsibility Programs(CSR)
  11. 11. VCF Fall Conference November 7-10, 2010 Against All Odds ▶ Increase visibility ▶ Focus on productivity ▶ Adopt Lean manufacturing ▶ Continue to seek cheaper labor markets ▶ Improve Trading Partner Collaboration
  12. 12. VCF Fall Conference November 7-10, 2010 ▶ Email ▶ Real-time ▶ Social ▶ Aggregated Evolution of Collaboration Quickly approaching; needs organizational adoption
  13. 13. VCF Fall Conference November 7-10, 2010 Enterprise Collaboration Basics ▶ Enterprise 1.0 – focus on documents created and shared primarily on a PC ▶ Enterprise 2.0 – focus on people and social sessions in which groups of individuals interact across companies and geographic boundaries. The goal of a social session is to create the effect of presence within the reality of absence.
  14. 14. VCF Fall Conference November 7-10, 2010 Twitter and Friends… Meet Global Sourcing
  15. 15. VCF Fall Conference November 7-10, 2010 Maslow's Hierarchy of Enterprise 2.0
  16. 16. VCF Fall Conference November 7-10, 2010 Keys to Successful Enterprise Collaboration Multi-modal Integrated Archivable Attachable
  17. 17. VCF Fall Conference November 7-10, 2010 Real World Application Leave Failures at the Factory Quality Issue found in China Quality Issue found in US Quality Issue found in US Cashmere Sweater Corrected in China Corrected in China Corrected in US Proposed Landed Cost 40.00$ Labor Cost/Unit in China 0.08$ 0.08$ Labor Cost/Unit in US 0.83$ Logistics cost back to China -$ 1.00$ -$ Logistics cost back to US 1.00$ Additional Cost/Unit -$ 0.08$ 2.08$ 0.83$ Adjusted Landed Cost 40.00$ 40.08$ 42.08$ 40.83$ 4 Retail Price 160.00$ Gross Margin 120.00$ 119.92$ 117.92$ 119.17$ 75.00% 74.95% 73.70% 74.48% Lost Margin / 5000 Units (387.50)$ (10,387.50)$ (4,166.67)$
  18. 18. VCF Fall Conference November 7-10, 2010 Today’s Takeaways ▶ Global Sourcing is complex ▶ It isn’t getting any easier ▶ Business process and workflow remain ripe for continued optimization ▶ Social Networking Tools leveraged within the context of Enterprise Collaboration is a new weapon in the arsenal to protect margin
  19. 19. VCF Fall Conference November 7-10, 2010

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