Page 2: The supply chain strategy
The supply chain comprises the links involved in bringing a finished item to the end consumer and the methods of ensuring that each store has sufficient stock to offer items in every size and colour. Gaps in stock availability lead to lost sales. As a retailer, the Burton Group is not responsible for manufacturing clothing. Instead, it ‘sources’ them from outside suppliers who may have the garments made up in the UK or overseas, according to the needs of the supply chain. However, it is essential that the Group works very closely with its suppliers – from choosing the material for the garments, to when they are delivered. The Group’s success relies on its suppliers meeting very high quality standards. A great deal of work has been carried out recently, setting guidelines for suppliers and any that fail to achieve this close working relationship cease to receive orders from the Group. The Group ensures that each of the activities involved in bringing goods to consumers adds as much value to the goods as possible.
Fastflow was set up to improve supply chain performance by :
- reducing lead times (i.e. the time between the placing of an order and the delivery of the goods)
- increasing the availability of goods
- improving the accuracy of the goods delivered to orders placed.
In order to achieve these goals, it was decided that the Group needed to:
- direct its purchasing towards suppliers who could respond quickly and effectively
- move from a ‘warehouse’ concept to one of ‘distribution centres.
Distribution centres, whose objective is to move wanted garments and other goods to the retail outlets, would replace warehouses where goods were stored until they were needed in shops. The emphasis therefore was on creating a smooth flowing supply chain instead of one based around a number of storage points. Retailers, like the Burton Group, are exposed to some considerable risk when dealing with fashion because fashion trends change frequently. In order to reduce this risk, the Burton Group built a new set of relationships with suppliers, based on the Fastflow approach.
Although the Burton Group did not actively set out to reduce the number of suppliers, the emphasis placed on suppliers’ flexibility and responsiveness has led to a substantial rationalisation of the supply base so that those who are most responsive win the majority of the business. An important aspect of the new Fastflow process has been the upgrading of information and communication systems as well as the overhaul of distribution/handling systems. Faster product flow has reduced the need for warehouse space. At the same time, improvement of the information flow has meant that the Group has a far more accurate picture of what is selling well.
New stock of popular items can, therefore, be re-ordered quickly and stocks of less popular items can be run down. By knowing exactly what stock has been sold and therefore what needs to be replaced, it has been possible to satisfy customer demand more often. The net result is the stores have been able to sell far more goods thus increasing the turnover and profitability of the retailing operation.