This omni-channel UK fashion retailer saw UK store sales grow by 1.6%, internet sales grow by 30%, and wholesale decline by 42%. 3PL warehousing costs had gone up by 13.3% compared with the previous year. Consequently, the client was looking to find savings and efficiency gains throughout their supply chain to support a fresh strategy for UK stores and further expansion into overseas markets.
High costs in sourcing and inbound logistics, inefficiencies in distribution combined with low UK store sales necessitated a fresh approach to the current operation and WBS were assigned to provide a full independent end-to-end supply chain review and provide recommendations for a new supply chain strategy.
WBS Group Consultants were asked to pay particular attention to four key areas:
- Inbound network: review of Far East, European and UK sourcing and logistics including cost and time scales
- Warehousing: review of current contract with 3PL and their performance against KPIs
- Outbound network: review of UK stores network both owned and concessions, review of wholesale network, review of e-commerce network, and review of international and European stores
- Internal operation: review of purchasing contract decisions, sourcing policy, inventory decisions and their impact, and sales history vs forecast
- A formal performance review of the outsourced warehouse operation. This included a review of the current rates against benchmark 3PLs and a review of the current operational efficiency and effectiveness
- A review of the upstream and downstream processes in the inbound and outbound operations in relation to the 3PL
- Highlight and quantify the impact of responsibilities that are not within the 3PL responsibility stream and lie within the client’s decision making processes
- Identification of potential value adding and cost saving opportunities and projects within the supply chain.
The Assessment Findings
The assessment identified several improvement opportunities:
- Reduce reliance on air freight from 27% to industry standard of 5%
- Tighter supplier contracts to maximise container and lorry loading
- Reposition main warehouse to reduce inbound logistics cost
- Set up distribution hubs in Europe to eliminate unnecessary transport to and from UK
- Analyse UK store sales and change supply processes and time scales to ensure all stores are sufficiently stocked
- Align KPIs across the supply chain to ensure a common business focus
- Introduce A-B-C product classification to ensure correct stock levels
Depot positions not ideal
High variation in delivery time to main DC against plan
WBS Group Supply Chain Consultants recommended a route map of improvement initiatives that could be implemented as an integral part of an overall supply chain strategy:
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