I recently did some research on the fashion industry's supply chain. Although I have not worked in the fashion industry's supply chain, I found the fashion industry's supply chain to be very interesting. Absolutely not simple.

The first is the huge number of SKUs. We will talk about Wei Mi, a business that focuses on women's underwear, and there are more than 10,000 stores. SKU, online business has more than 90,000 SKUs, and some unconventional sizes, called fringe size in the industry, the average customer will try on and buy again, the demand is extremely difficult prediction.

The second seasonal feature is obvious. If this inventory is wrong, you will face Convertible Sofa Bed a loss of out-of-stock profits or a clearance sale.

The fashion industry's supply chain cycle is actually very long. A new product launch is close to a year and a half, and each supply chain is spread all over the world.

Our traditional equipment manufacturing industry often suffers from a variety of small-volume supply chains. Look at how other industries do it, and the stone of other mountains may be able to attack jade.

"Victoria's Secret"

Let's first take a look at what kind of company is Vimi.

Vimi's parent company, Limited, was founded in 1963 and went public in 69. In the US fashion retail market and major companies have a lot of roots. In the 1980s and 1990s, the company expanded strongly and acquired a large number of brands and product lines, including A&F. The main business strategy of the company at the time was to follow the fashion Fire Pit Table trend to do rapid design imitation, especially for the buyers to go to Europe to explore potential design products and get back to the US market for commercialization. But by the end of the 1990s, the company's growth rate was already very ugly, because too many competitors are doing the same thing.

Limited began to make strategic adjustments in 1995, starting with closing a group of poorly performing stores. , a series of brands sold, of which A & F was completely stripped in 1998, the company hopes to strengthen the brand's recognition, become the creator of the design and fashion trends in the eyes of consumers. And Wei Mi, is the flagship of Limit in the strategic tree.

Vimi itself consists of three business units:

    < Li>Victoria's Secret Stores (VSS) Vimymen Store
  • Victoria's Secret Beauty (VSB) Vimy Beauty
  • Victoria's Secret Direct (VSD) Wei Mi Direct
>

Which VSB and VSS share a nationwide network of retail outlets, while VSD is primarily a website and mailing catalog.

Product Line

In the product line of the store, a large number of SKU options are formed due to differences in brand, style and material. For example, PINK is for young girls around the age of 19, and Sports is obviously sports (why do I understand these things...) according to the very incomplete statistics on the website (there are too many categories):


In so many dazzling products, there are actually three categories of real products:

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  • Fashion new
  • fashion style
  • Basic
  • The basics account for 60% of sales, fashion accounts for 25%, and new models typically account for 15%. The basic model refers to the style and color of the annual sales. The fashion How To Check Fuel Pressure Without Gauge model is generally designed and sold in a sales season (6 months). The new model is the company's key promotion and may become a category in the future.

    These three product categories actually correspond to completely different supply chains. Settings.

    in the supply chain strategy model of Fisher M., the supply chain The focus is highly tied to the product classification:


    Basic models are typical functional products: Relatively stable demand, product profitability Lower, the overall supply chain needs to pay attention to efficiency and reduce costs;

    and fashion and fashion new is innovative products, demand is extremely Make sure that the supply chain needs to respond quickly to market conditions.

    And the supply chain of Wei Mi is composed of these two different strategies.

    Vimy's Supply Chain

    The high-end flow chart of the company's supply chain should look like this:


    • Products Design and release

    A process from concept to product delivery to the store, called "Concept- To-market". Concept-to-market defines the process of each link in detail, including market positioning, sample trial production, procurement, and store testing. The new cycle will generally last about a year and a half.

    • Product Planning and Forecasting

    In the commodity forecasting and planning stage, the general manager of each brand will generally set the growth roadmap for the category in a three-year time dimension. This plan is further Decomposed into annual plans, quarterly plans and monthly plans, communicated to the layered distribution network. In this process, the composition and proportion of each product in the sales plan is also determined, in other words, a process of selecting goods.

    The designer will be assessed for a "Design Ratio" indicator, which is the ratio of product design and sample selection.

    The entire planning team is limited to a metric called Costof Goods Available for Sales (COGAFS), which defines the maximum inventory allowed in the distribution center. The amount means that at any point in time, the total inventory of the commodity plan cannot exceed this value.

    • Purchasing and Production
    • < /ul>

      Limited has a subsidiary called Mast, which has undertaken 80% of the purchase and production of Limited. Every year at the trade fair, the executives of the product team jointly develop a supply plan.

      Mast’s supply chain setup is essentially compliant with the requirements for functional product requirements, and Innovative products require flexible speed settings. The main manufacturing and procurement bases are located in China, Sri Lanka and India, and there are some small-scale production and procurement in Europe for raw material innovation. All suppliers are divided into two categories: for functional products, as well as for fashionable new products.

      • Logistics >

      All shipments of Wei Mi are completed by the parent company's Limited Logistics Service (LLS). LLS itself acts as an independent unit within the Group and undertakes the logistics and transportation business of each business group.

      Generally speaking, LLS will enter into a service agreement with the business unit, agree on various aspects such as the time-sensitive freight rate, and then request the framework of the service agreement. Within this, LLS can make decisions on its own operations. LLS can decide whether it is air or sea when it receives the delivery notice, provided that the service level agreement is met. The advantage of doing this is obviously to give LLS a certain degree of freedom to integrate the volume. Of course, in most cases, the basic models are all shipping, and the new and fashionable models are generally arranged by air.

      To mention here, it is said that there is a bra called IPEX, which is said to be the most advanced bra by Wei Mi because it uses the most advanced materials, not only It feels very light to wear, and it saves a lot of air freight because of its light weight.

      Store Operations

    Vimi’s stores are divided into four forms:

    • 34thStreet Design Flagship Store: Flagship Store in New York
    • Franchise Store: Basically based on underwear, less than 10% of beauty and body products
    • Sisters: underwear stores and beauty shops are built side by side
    • Independent Beauty Shop

    Each store will be assessed for unit area sales, return rate, and damage (shrink in the industry) ) and a series of indicators.

    So Wei Mi’s supply chain faces a very complex process system:

    Diversified brand and design choices;

    Two completely different product and supply chain priorities: Basic vs. Fashion New

    Online and offline synchronization operations;

    Globalized supply Chain

    So how does Weiwei customize various commercial customizations to achieve the established strategy? aims? And listen to the next decomposition.

    Next



    < p class="ql-align-justify">In the previous article, we introduced the operating model of Wei Mi, and the supply chain of Wei Mi itself is a fairly complex system engineering:

    Diversified brand and design choices;

    Two completely different products and supply chain focus: basic vs. new fashion

    Online and offline synchronization operations;

    Globalized supply chain

    And Wei Mi’s business strategy is to make himself a trend leader in the eyes of consumers. Young, sexual Innovation and brand image, which means secret dimension of the supply chain must for the business strategy.

    This means that Vimy's supply chain setup and Zara have The essential difference.

    What is Zara? Fast fashion.

    One ​​of the most significant differences: the out of stock in Zara is not at all The problem, because Zara is a very small batch in fashion items, out of stock and even a positive word-of-mouth effect in the eyes of consumers;

    In Vimy, out of stock is not desirable. Especially for the basic models.

    A trend leader who wants to make himself a consumer, young, sexy and Innovative brand image, why is there a basic model? My answer to this question is not necessarily correct. My judgment is that Wei Mi has its own risk control: use fashion new style to build brand image, and use basic money to control operational risk to meet mainstream demand.

    So WiMid’s supply chain must also meet both settings.

    Two configurations - two sets of play

    Vimi sets a completely different configuration and style for two different product categories: basic, stylish, and <: /p>

    Basic: Pursuing asset utilization, pursuing efficiency, cost

    Fashion: Pursue fast response, Supply and demand balance

    These two different configurations determine different operations in each part of the supply chain:

    • Supplier selection: basic Looking for Asian suppliers, there are some European suppliers in the fashion category, which value value-added capabilities
    • Production Arrangement: The basic production focuses on efficiency, and the factory is fully loaded to achieve maximum scale effect
    • Logistics: Basic Shipping, Fashion Airlift

    This This means that the two supply chains are assessed according to different KPIs.

    I think the most successful part of the Wei Mi supply chain is this Divide and conquer, and restraint on complete integration.

    Why do you say this? If you take the basic price of the supplier and the fashion supplier to bid for the price and win at the lowest price, do not think about the result. If you let all the fashion models to save shipping costs, can Weiwei maintain the image of the brand's innovative trend? Etc., etc.

    I have to mention the balance triangle of the supply chain KPI here.


    Like the Mundell Triangle, this triangle is often Uncoordinated.

    For example, the pursuit of process utilization, using queuing theory analysis can be known to cause The queue time grows; while a system with a short queue time has many workstations that are idle for quite some time.

    Many bosses like to give a sigh of relief when setting indicators for the supply chain. Big KPI indicators: efficiency/variable cost, inventory, order execution rate, capacity utilization, and then think about it is not enough, and then a big stroke plus quality and new product development cycle. By the end of the year, the supply chain team's report may be: boss, our six major indicators, three have been completed... If all six are completed, then the boss with a clear mind will say that you have a problem with this indicator. .

    The biggest problem with this generic KPI management approach is that the team will be in six metrics. Seek the most likely indicators to work hard.

    I personally think that cost reduction is much easier than improving customer service: finding cheap suppliers to talk about prices, reducing inventory, changing transportation patterns... but these can help Does the company maintain the brand image that the company expects?

    So the biggest success of the Wei Mi supply chain is the restraint of further integration. . Let the most appropriate supply chain to serve corporate strategy. Although there will be a lot of cost to do so, it will add a lot of management complexity, there will be more suppliers, the overlap between online and offline SKU is very small, and the capacity utilization rate of some factories is not very high, but these costs It is not important compared to the benefits of the image of Wei Mi in the customer's mind.

    Supply chain strategy, ultimately serving the business strategy of the company.