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Supply Chain Best Practices Consortium Apparel Best Practices Executive Seminar Track 4, Session B September, 2006 1 Scope This session explores the trends of the apparel supply chain, including similarities and differences between wholesale and retail distribution. Supply Chain Costs: Facilities, transportation and operations. Distribution Best Practices: Receiving, VAS and order fulfillment. Opportunities For Improvements Copyright © 2006 Supply Chain Consortium. All rights reserved. 2 How Am I Doing on Costs? How do our supply chain costs compare with other companies? Supply Chain Cost as a % of Revenue Industry Segment Performance Apparel Industry 3.9% Apparel - Wholesale 3.9% Apparel - Retail 3.9% Copyright © 2006 Supply Chain Consortium. All rights reserved. 3 How Am I Doing on Costs? What impact does transportation have on our overall supply chain cost? Transportation Cost as a % of Revenue Industry Segment Performance Apparel Industry 1.6% Apparel - Wholesale 1.3% Apparel - Retail 1.7% Copyright © 2006 Supply Chain Consortium. All rights reserved. 4 How Am I Doing on Costs? How do our distribution center (DC) operations costs compare? DC Operations Cost as a % of Revenue Industry Segment Performance Apparel Industry 1.9% Apparel - Wholesale 2.7% Apparel - Retail 1.6% Copyright © 2006 Supply Chain Consortium. All rights reserved. 5 Cost Drivers in the DC Is the receiving process contributing to wholesaler’s higher DC operations cost? Advanced Shipment Notification Received Industry Segment Performance Apparel Industry 98.4% Apparel - Wholesale 99.0% Apparel - Retail 98.0% Copyright © 2006 Supply Chain Consortium. All rights reserved. 6 Cost Drivers in the DC What about handling costs inside the DC? Percentage of Inbound Shipments that are Crossdocked Industry Segment Performance Apparel Industry 33.9% Apparel - Wholesale 5.0% Apparel - Retail 53.2% Copyright © 2006 Supply Chain Consortium. All rights reserved. 7 How Am I Doing on Inbound Shipments? % of Receipts Wholesalers are clearly handling product inside the DC more than retailers. 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Apparel Wholesale Crossdock Flow Through Copyright © 2006 Supply Chain Consortium. All rights reserved. Retail Pick/Pack 8 How Am I Doing Inside the DC? Wholesalers are providing a high level of value-added services in their DCs. Apparel Industry Apparel - Wholesale 15.0% 16.0% 50.9% 32.0% 21.1% 19.8% 13.3% 31.9% Ticketing Fold/Hang/Bag Ticketing Fold/Hang/Bag Price Ticket No Value Added Price Ticket No Value Added Apparel - Retail 5.3% 11.7% 8.2% 74.8% Ticketing Fold/Hang/Bag Price Ticket No Value Added Copyright © 2006 Supply Chain Consortium. All rights reserved. 9 How Am I Doing on Outbound Shipments? How do my DC operations’ outbound shipments compare to other companies? 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Apparel Pack-Load Wholesale Retail Pick-Load Stage-Load Copyright © 2006 Supply Chain Consortium. All rights reserved. 10 Important Takeaways While our overall supply chain costs are similar between wholesale and retail distribution, we see that: Transportation – Wholesalers have a slight edge in cost as a percentage of revenue. DC Operations – Retailers realize a significant reduction in handling. Value-Added Services – Majority of this work content is performed in the wholesale DCs. Crossdocking – Preparation upstream allows retailers to flow more product through the DC. Opportunity – What can wholesalers do to reduce handling inside the DC? Copyright © 2006 Supply Chain Consortium. All rights reserved. 11 Questions? 12