On the move
What will be the most significant change the sector will experience in the year ahead?
Dean World Cargo managing director Bruce Haines:
Bruce: Over the next 12 months, the key issues in supply chain management will be increasing freight rates - both for air and sea consignments - and potential delays in transit times due to new security measures, particularly in relation to air freight.
TNT Fashion Vertical Market manager Kayleen Wilkinson:
Kayleen: The most significant change that we're seeing is the direct shipping of items from factories in China to Australian stores, bypassing the requirement for warehouses. This will result in faster deliveries, the ability to introduce more styles to the market, reduced inventory costs and reduced supply chain costs.
Australian Fashion Partners partner Dominic Beirne
Dom: The advent of incredibly detailed and organised supply chain systems within major retailers - whether it be vertically integrated retailers or traditional independent retailers.
How critical is good supply chain management to the success of a fashion business?
Bruce: Supply chain management is crucial with regard to fashion, as the market is moving faster than ever before. The next 12 months will be volatile at retail level, so importers will need to have their planning in place to take advantage of quick-response items and hot sellers.
Kayleen: The most crucial part of the supply chain to the fashion business is to ensure the distribution of product to the retail store in ready-to-display retail condition. The right inventory needs to be in the right place i.e. to minimise inter-store movements. As important as that is the timing of deliveries to retail stores to ensure stock is delivered displayed and available for peak selling windows - which generally tends to be lunchtime and weekends. If the fundamentals of supply chain are not met, the outcomes for product sales and visibility in the market are missed.
Dom: It is as critical as the product design and concept development process. There's no one aspect of business that is more important than anything else. But SCM has not been given the prominence that it should have.
What is the most common mistake made by wholesalers in regards to supply chain management?
Bruce: The most common mistake with wholesalers is lead times and usually they're too short. In an effort to get an order, many promise an in-store date that is unrealistic. It's difficult for them, because the retailers are pushing hard. But it's also folly to promise a delivery date that cannot be achieved.
Kayleen: The most common mistakes relate to IT processes and underestimating the impact of incompatible consignment shipping and labelling systems. The importance of good IT process labelling means the customer has full visibility of product from point of collection to delivery into store.
Dom: The belief that they can get their manufacturing facilities to minimise their price as much as possible and get their customers to pay as much as possible and then not perform in delivering in full, on time and to specification.
What is your busiest time of the year and why?
Bruce: The seasons have flattened out to a large degree, with many more smaller orders being placed and sold on. The major summer season still exists - i.e. July, August and September - and obviously special dates such as Mothers Day and Easter are significant - but, overall, everything is much more even than it used to be. Winter is very short these days.
Kayleen: TNT's Fashion Express business is busy throughout the year. However, the Fashion Express business does experience huge seasonal fluctuations in peak demands for new season stock to be shipped to stores. The volume spikes that need to be handled at such times are significant and can increase by up to 300 per cent, which can place huge demands on resources for both TNT and clients, and also retailers.
Dom: From a consulting perspective SCM is ensuring that I have enough people available to complete the project. The first quarter of the calendar year because they are looking to get their funding applications in. and then generally the first quarter of the financial year because people have received their funding and looking to get things underway.
Who is your ideal client and why?
Bruce: An ideal client is one who understands the whole
Kayleen: The ideal client is one that has a whole-of-business approach. While design is vital, equally important is the business end, so it's the client who understands the supply chain and its challenges and has their supply chain operations organised.
Dom: My ideal client is a business that has a turnover of between $500,000 and $12 million. They understand their business, they know what they have to do, they know where they're going but may not have all the resources they need to get there.