This document discusses strategic sourcing practices in the fast fashion industry. It begins with an overview of key fast fashion strategies like shorter lead times and more fashionable clothing. It then outlines an agenda covering strategic sourcing objectives, vendor development, sourcing models, and risks of lean supply chains. The document uses industry examples to explain challenges like responding to a supplier crisis and differentiating products for sourcing. It analyzes Zara's timelines and identifies factors that enable its rapid response model.
The presentation is about procurement and sourcing strategies. The process, types, importance and goals of procurement and sourcing have been discussed briefly.
The presentation is about procurement and sourcing strategies. The process, types, importance and goals of procurement and sourcing have been discussed briefly.
This is an editable presentation of Category Management in procurement. The presentation explains the ways of creating categories and provides several examples of category creation in different businesses. It also gives the main pros and cons of category management.
Feel free to use the presentation for your training and change it as you wish.
Category management and procurement planningMohamed Azzam
10 steps for effective Category Management process; mapped by Mohamed Azzam, inspired by CIPS effective category management course. On occasion of the procurement planning activities for year 2018, I wanted to share this grouped process stages with procurement professionals who are pursing the implementation of “Category Management” approach or wish to do so.
The Future of Procurement Technology with Hugo Evans of A.T. KearneyScout RFP
Successful procurement technology has one job, a north star: to provide a robust yet easy-to- use system
for transforming needed goods and services into value for a company so that it can excel at its own
business. According to Hugo Evans, Vice President at A.T. Kearney, we are at an inflection point, largely
driven by the emergence of more flexible, user-friendly procurement technologies.
• Make Versus Buy
• Benefit of Outsourcing
• Source of Supplier Information
• Strategis Selection
• Supplier Relationship Management (SRM)
• Industry Example
Strategic Sourcing and B2B E Commerce Solutions For ASEAN Purchasing Professi...Bill Kohnen
As ASEAN regional demand grows the skill of Purchasing professionals in the region will need to change from the current focus on export industries and tactical BPO industries. Specifically developing core Strategic Sourcing skills and utilizing B2B E Commerce Solutions in ways optimized ASEAN demand will be important. 2015 PASIA Conference discussion presentation.
Global Sourcing Trends, Challenges, and Solutions For 2015Bill Kohnen
Global Sourcing is viewed as a common business practice but is surprisingly not well defined in practice and can mean different things depending on where one is that. However, western CEOs and CPOs view it as a basic practice to be competitive despite feeling the process is not well measured or managed. Solutions for better performance come down to developing people and evolving process.
E : Electronic
Procurement : the process of obtaining supplies, especially for an government or organization
E- Procurement : the business-to-business purchase and sale of supplies and services over the Internet.
Also Known as: Supplier Exchange
Definition: E-procurement is the business-to-business purchase and sale of supplies and services over the Internet.
Basic Procurement Principle is the module taught at College of Business and Management (CBM-TZ) to all scholars undertaking Basic Technician Certificate in Procurement and Supplies Management
PURCHASING PROCEDURES, E-PROCUREMENT, AND SYSTEM CONTRACTING pter 007 instru...Zamri Yahya
• Purchasing Procedure
• System Contracting
• E-Procurement
• Reverse Auctions
• Electric Data Interchange (EDI) and Purchasing
Radio Frequency Identifications (RFID)
Supply Chain for Management Consultants & Business AnalystsAsen Gyczew
This presentation will help you drastically improve your knowledge and skills in optimizing supply chain of any company through a series of practical cases. It is designed for people who want to become management consultants, business analysts or have to run and optimize supply chai on daily bases. In the course you will learn 3 things:
1. How to understand supply chain activities
2. How to optimize supply chain in order to get more things done, cheaper at higher quality with less resources
3. Where to look for savings and improvements, how to calculate potential savings in Excel and implement them
The course is based on my 14 years of experience as a consultant in top consulting companies and as a Board Member responsible for strategy, improvement and turn-arounds in biggest companies from Retail, FMCG, SMG, B2B sector that I worked for. On many occasions I had to optimize the whole supply chain side of the businesses I was responsible for. On the basis of what you will find in this course I have trained over 100 consultants, business analysts and managers who now are Supply Chain Directors, Operational Directors, COO, Investment Directors, Directors in Consulting Companies, Board Members etc.
This is part of my online course on Supply Chain for Management Consultants. Check the link to get a discount: http://bit.ly/SCMConsulting
This is an editable presentation of Category Management in procurement. The presentation explains the ways of creating categories and provides several examples of category creation in different businesses. It also gives the main pros and cons of category management.
Feel free to use the presentation for your training and change it as you wish.
Category management and procurement planningMohamed Azzam
10 steps for effective Category Management process; mapped by Mohamed Azzam, inspired by CIPS effective category management course. On occasion of the procurement planning activities for year 2018, I wanted to share this grouped process stages with procurement professionals who are pursing the implementation of “Category Management” approach or wish to do so.
The Future of Procurement Technology with Hugo Evans of A.T. KearneyScout RFP
Successful procurement technology has one job, a north star: to provide a robust yet easy-to- use system
for transforming needed goods and services into value for a company so that it can excel at its own
business. According to Hugo Evans, Vice President at A.T. Kearney, we are at an inflection point, largely
driven by the emergence of more flexible, user-friendly procurement technologies.
• Make Versus Buy
• Benefit of Outsourcing
• Source of Supplier Information
• Strategis Selection
• Supplier Relationship Management (SRM)
• Industry Example
Strategic Sourcing and B2B E Commerce Solutions For ASEAN Purchasing Professi...Bill Kohnen
As ASEAN regional demand grows the skill of Purchasing professionals in the region will need to change from the current focus on export industries and tactical BPO industries. Specifically developing core Strategic Sourcing skills and utilizing B2B E Commerce Solutions in ways optimized ASEAN demand will be important. 2015 PASIA Conference discussion presentation.
Global Sourcing Trends, Challenges, and Solutions For 2015Bill Kohnen
Global Sourcing is viewed as a common business practice but is surprisingly not well defined in practice and can mean different things depending on where one is that. However, western CEOs and CPOs view it as a basic practice to be competitive despite feeling the process is not well measured or managed. Solutions for better performance come down to developing people and evolving process.
E : Electronic
Procurement : the process of obtaining supplies, especially for an government or organization
E- Procurement : the business-to-business purchase and sale of supplies and services over the Internet.
Also Known as: Supplier Exchange
Definition: E-procurement is the business-to-business purchase and sale of supplies and services over the Internet.
Basic Procurement Principle is the module taught at College of Business and Management (CBM-TZ) to all scholars undertaking Basic Technician Certificate in Procurement and Supplies Management
PURCHASING PROCEDURES, E-PROCUREMENT, AND SYSTEM CONTRACTING pter 007 instru...Zamri Yahya
• Purchasing Procedure
• System Contracting
• E-Procurement
• Reverse Auctions
• Electric Data Interchange (EDI) and Purchasing
Radio Frequency Identifications (RFID)
Supply Chain for Management Consultants & Business AnalystsAsen Gyczew
This presentation will help you drastically improve your knowledge and skills in optimizing supply chain of any company through a series of practical cases. It is designed for people who want to become management consultants, business analysts or have to run and optimize supply chai on daily bases. In the course you will learn 3 things:
1. How to understand supply chain activities
2. How to optimize supply chain in order to get more things done, cheaper at higher quality with less resources
3. Where to look for savings and improvements, how to calculate potential savings in Excel and implement them
The course is based on my 14 years of experience as a consultant in top consulting companies and as a Board Member responsible for strategy, improvement and turn-arounds in biggest companies from Retail, FMCG, SMG, B2B sector that I worked for. On many occasions I had to optimize the whole supply chain side of the businesses I was responsible for. On the basis of what you will find in this course I have trained over 100 consultants, business analysts and managers who now are Supply Chain Directors, Operational Directors, COO, Investment Directors, Directors in Consulting Companies, Board Members etc.
This is part of my online course on Supply Chain for Management Consultants. Check the link to get a discount: http://bit.ly/SCMConsulting
Buckle up. Here's how to bring speed & accuracy to retail decision-making. Celect
The days of private runway shows with top-secret designs leading to months of waiting for the next biggest trend are all but over. Instead, retailers are under immense pressure to move faster across all areas of the merchandise, planning, and allocation process - with speed ultimately driving success.
It’s time to tap into your data to uncover methods for introducing a whole new level of speed to your MP&A process.
Celect and AlixPartners dive into a discussion covering:
- Importance of a data-driven plan and open to buy to drive speed
- Why product attribute information can inform and give confidence
- Examples of how retailers accelerated their processes
- How to optimize your inventory with advanced analytics
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PRINTED BY: [email protected] Printing is for personal, private use only. No part of this book may
be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
KEY ELEMENTS OF SUPPLY CHAIN STRATEGY
A supply chain strategy involves many interlocking activities and decisions, large and small. According
to Michael Porter, strategy guru and author of Competitive Advantage, successful business strategy relies
on the concept of “fit”—that is, a group of activities that support a chosen competitive strategy.
Although any single activity can be copied, the activities taken together form a system that is virtually
impossible to duplicate.9
Porter’s concept of fitness holds equally true for supply chain strategy. Five elements of your
business—and the choices you make regarding these elements—are fundamental:
Customer service. What are your objectives in terms of delivery speed, accuracy, and
flexibility?
Sales channels. How will your customers order and receive your goods and services?
Value system. Which supply chain activities will be performed by your organization and which
by your partners?
Operating model. How will you organize the planning, ordering, production, and delivery
processes to provide customer service while still meeting your working capital and cost
objectives?
Asset footprint. Where will you locate your supply chain resources, and what is their scope of
action?
Companies often make decisions about each of these elements in isolation, without considering the
others. It’s possible, for example, to develop a manufacturing footprint that reduces costs, only to fall
short of required customer-service levels. To get the full strategic benefit a supply chain can offer,
however, it’s critical to treat each element as part of an integrated whole (Figure 1.2).
Figure 1.2 Elements of Supply Chain Strategy
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CUSTOMER SERVICE
The first step in developing a supply chain strategy is to define customer service objectives. Offering
various levels of delivery speed, accuracy, and flexibility for different types of customers can help
distinguish the overall customer experience. Should, for example, deliveries reach all customers in the
same amount of time, or should customers who are more valuable receive deliveries faster? Should the
ordering process be the same for all customers? Answers to questions like these will be dictated by your
company’s business strategy and target audience—that is, whether you are addressing B2C or B2B
segments.
Business to Consumer
In the B2C world, off-the-shelf product availability is often the key service criterion. Customers are
willing to wait for hot products from a leading brand—but only up to a point. Retailer Nordstrom
introd.
Companies are relocating manufacturing and sourcing to regions with lower labour costs to stay competitive. This affects the efficiency of warehousing and distribution. But which elements, in particular, will be strategically important in the next two years?
Markets are changing – as are customer and service requirements. You may have implemented a new manufacturing and supply chain setup, but customers are asking for more frequent and faster deliveries.
The key to staying competitive is how quickly you can get your products from the warehouse to your customers. This can challenge your operations and calls for a review of your warehouse and distribution setup.
We asked our international clients which themes, within warehousing and distribution, they believe will have the most strategic relevance within the next two years. Here are the top five.
A business model is a configuration (activity systems) of what the business does (activities) and what it invests in (resources) based on the logic that drives the profits for a specific business. This presentation lays out a systematic process for (re)designing a business model by identifying core objectives that lead to improved profitability. There are two broad steps in this process. The first step is to determine the generic category of business model that a firm wants to adopt from the following descriptive taxonomy. The next step is to develop business-specific profit logic or the core objective(s) starting from the generic profit logic for each category.
2. In past decade, Fast fashion has become the most recognized business model in the fashion industry due to its
impressive performance in the global market during recent years. Numerous inventions and innovations have shaped
and developed fashion industry within a complex system and scope. Fast fashion brands such as ZARA and H&M are
among those at the very peak of this development through their supply chain management, merchandising
techniques, and retail technology, which encompass almost every aspect of the fashion business.
For example, Inditex (the mother company of the famous ZARA), which opened its first store in a small town
in Spain in 1975, is now present in 77 countries, with 5,044 stores that boasted annual sales of 12,527 million
euros in 2010 (Inditex Group, 2011).
Why strategic sourcing?
Fast Fashion
Through this presentation we are try to explain that how
the change has impacted the sourcing function and what
is the current practices and sourcing strategies which are
fueling fast fashion growth.
3. Key strategies of Fast Fashion
Shorter lead-times
More Fashionable
clothes
Fast supply chain.
Limit the suppliers
Lower Quantity Scarce supply High cost
More styles
More choice to
consumer
Complex supply
chain
STRATEGY RETAIL ADVANTAGE
IMPACT ON SOURCING
FUNCTION
4. Agenda
• What is strategic sourcing
• Objectives of strategic sourcing in fast fashion
• Vendor Development
• Vendor Management
• Characteristics of strategic vendors.
• Know your product – A Frame work for product
differentiation
• Understanding of sourcing regions- world map
• Different sourcing models
• Lean supply chain
• Risk of lean supply chain
5. What is strategic sourcing?
A plan of action
designed to achieve
a long-term or
overall aim.
find out where
(something) can be
obtained/sourced
STRATEGY SOURCING STRATEGIC SOURCING
Ensuring to source right product from right
supplier at right price. Helps organization
in building long-term supplier relationship.
By focusing on core capabilities of
respective suppliers.
STRATEGIC SOURCING HELPS IN BUILDING SYNERGY IN BETWEEN ORGANIZATION AND ITS SUPPLIERS
6. Objectives of Strategic sourcing
Vendor
Development
• Building long
term
relationship
•Right Vendor
for Right
Product
• Performance
management
•(governance)
Crisis
management
Right Timeline
• TNA
•planning
• TNA
management
•Reduction in
Timeline
Right cost
•Costing a
product
Cost
Regulation
• Cost
negotiation &
mitigation
Right Quality
•TQM
•AQL/Inspection
• Vendor
Empowerment
7. Vendor
Development
Q. Your organization has given you a project to
expand vendor base considering fast fashion goals
of organization? What are the important factors
one should keep in mind?
INDUSTRY CASE:
8. Vendor
Qualifying
Factors
• Infrastructure(External/Internal)
• Market reputation
• Core capabilities(Thru RFI)
• Past business history
• Compliance(Social, Technical/Quality, Certifications etc)
Order
Winning
Factors
• Business requirement
• Product requirement
• Available capacity
• Short leadtime
• Best price
• Rating of past performance(Green/Yellow/Red)
Factors of Vendor Development
9. Vendor
management
Q. A vertically integrated vendor is in crisis in the mid
of the season and unable to supply the goods. You
have WIP of 1 million units of your core product
category. Store will be out of stock if goods will not
delivered on time? Remember the vendor is a reputed
vendor in the key sourcing region with good political
relations? Now what to do?
INDUSTRY CASE:
10. 5 strategies for negotiation
HAVE THE “RIGHT MENTALITY”
As Supply Chain
Professionals, We
are evolving to
here
Principles not Rules:
• Separate the person
from the issue
• Negotiate not
position focused but
interest focused
• Develop a criteria
which must fulfill
solution
• Have multiple options
to choose from.
LOSE / WIN
LOSE / LOSE
WIN / WIN
WIN / LOSE
LOSE
WIN
LOSE WIN
• MY WAY OR HIGHWAY
• Sacrifices Long Term
relationships
•I am a loser - step on me
•I am a peacemaker
•Win/Lose people love!
•Believe in Mutual Benefit
•Long term relationship
•Cooperative - Not combative
• Bad relationships
• War Situation
Supplier
Buyer
COMPROMISE
12. • Respect the Ecosystem
• Provide competitive pricing
• Provide technical and design assistance
• Identify cost saving opportunities
• Engage in ethical business practices
• Provide quality product and services
• Deliver the product ontime
• Continuously focus on improving the efficiency of supply chain
Characteristics of Strategic vendors
13. Right Timeline
Retail stores have received high sales forecast for
a running order. You have received an urgent buy
requirements of 100k units. However, timeline is
too tight? Along with timeline another constraint
is to maintain the average unit cost?
INDUSTRY CASE:
16. Activity
Fabric
weaving/knitting/yar
n making
fabric
printing/dye
ing
fabric transit
fabric
checking
Garment
Stitching
goods
handover
sea transit Air transit
TOTAL DAYS
(SEA)
TOTAL DAYS
(AIR)
Global Average time(no of.
days)
30 30 30 5 30 7 35 10 167 135
no. of weeks required 24 19
Activity analysis with standard timelines…
How Zara maintains 5-6 weeks vs while 4 weeks in required only for
garment stitching and finishing ??
* The numbers may vary at various levels
Turn around time
Key factors for Timeline planning
• Identifying product and its Differentiation
• Identifying sourcing regions
• Identifying vendors from vendor matrix
• Identify the suitable sourcing model
Lets revisit the timelines…
• Transit Time = 30+35+7 = 72 days
• Production time = 30+30+5+30 = 95 days
• Total= 167 days
Is the production timeline actual timeline of production??
17. What are different sourcing models?
Sourcing models are the different ways product can be booked with various Lead Times (LT).
Each sourcing models has a unique set of flexibilities and constraints.
Rapid response Rapid Response (~12 wk LT)
Generally vertically integrated or collocated vendors. can make unit/color/body
shifts
Chase Chase (Lead time varies)
(Open to buy) - OTB , Get into trend or fill a hole in the assortment.
Monthly Buying (~18 wk LT)
core products, long running items
Monthly Buying
VMI
Vendor managed inventory (8-10 wks LT)
Short lead-time. E.g. basic blue denim, white poplin shirt etc. (never
out of stock items)
Seasonal
Seasonal (~24wk LT)
Generally high fashion products. New products
Off-Cycle
Off-Cycle
Product booked in far advance of standard book date to capture
factory down-time and cost savings
Cost saving
Responsive
Supply chain
(modern)
Regular
Supply chain
(Traditional)
18. Lean supply chain
• Shorter lead-times, improved quality and reduced timeline
• Focused on eliminating non-performing suppliers and redundant
suppliers
• Consolidating supplier base. Efficient and reliable suppliers rather
than high number of suppliers
• Vertically integrated supplier base
• Co- locating supplier base- localization
• Capability mapping of suppliers
• Vendor performance management(key parameters- Service, delivery
performance, quality performance, cost efficiency)
19. Risk of lean supply chain
• Lack of alternative vendors
• Mismatch of vendor and buyer goals
• Instability of vendor core team
• Vendor monopoly on your product
• Financial Failure of vendor
• Ineffective management in vendor firm
• Mismatch in Technology
• Supply disruption in second and third tier
• Currency rate fluctuation
• Material price fluctuation
• Training issues with vendor core team