Sewing UP your supply chain Montreal, 1/5/2016

Transcription

1 UNIQLO Sewing your supply chain Montreal, 1/5/2016

2 Driving ques8on Improving supply chain to feed global expansion Time to market Market requirements/demand à sizing Difference between fashion trends and basics Price and quality 2

3 coming solu8on Time to market Breaking up supply chain in basic and trendy R&D separated for basic and trendy Produce in cheap countries 3

4 Agenda Analysis of status quo Evalua6on of strategic alterna6ves Detailed implementa6on plan Costs + Benefits Next steps 4

5 Your business model Product Affordable basic goods E.g. polar fleece jacket Seasonal fashion goods with short life- 6me Fast fashion More than 400 items Large quan66es Dynamic pricing Channel Online only 4% of sales so far Offline à own stores Customer Trendy fashion Price sensi6ve Rising disposable income à Trendy is becoming more important Direct customer feedback 5

6 Supply chain of Inditex insourced Fabric procurement Dyeing prin6ng marking Fabric cu`ng Quality control Direct controll of all stages & Packaging & logis6cs Retailing outsourcd Lower value- added av6vi6es e.. sewing Robots working around the clock crea6ng grey goods Fast fashion provider (Seasonal and in season) Produc6on at low cost loca6ons à Fast 6me to market days à Stocks refilled twice a week. Compe6tor Inditex uses wholly integrated supply chain. 6

7 Supply chain of H&M insourced Outsourced insourced outsourced insourced Star designer Manufacturing by subcontractors Quality control R&D Packaging & logis6cs Retailing outsourcd Lower value- added av6vi6es e.. sewing Opera6on wit directly owned produc6on facili6es (30) Focus on Long shelf life basic products IT to control quality and connect design centers with the supply chain à Time to market Compe6tor Inditex uses wholly integrated supply chain. 7

8 Your supply chain Fabric and garmet produc6on Planning Produc6on Quality control Retailing insourced outsourced outsourced insourced insourced R&D Marke6ng Takumi Team to work with supplier Close partnership with suppliers 6 weeks 6me to market IT to visionalize sales data, use to plan and design to meet demand 8

9 Your footprint 850 Number of stores USA 3% UK 1% France 0% Germany 0% Korea 9% China 25% Japan 62% Japan China Korea USA UK France Germany Strong presence in Asia (96%) and first steps taken to go for US and Europe. 9

10 Essen8als of your industry basic products demand Season Business for basic products is correlated to the four seasons. Products can be planned in advance. 10

11 Essen8als of your industry trendy fashion profits Prices are decreasing over 6me Inventory costs at the end of a hype are increasing Entering late to a trend leads to lower margins - > High profits can be earned at the beginning of a fashion trend Fashion hype Fast 6me to market is essen6al for being profitable in the fashion industry 11

12 Financial health check Sales history in bn Yen % Sales in 10 years Launch of new products results in sales push in 2001 Constant sales growth trough store expansion Expansion of last years was investment heavy à Moderate investments are feasible Budget for investments: 1% of 2014 Sales Intensive expansion strategy results in a tremendous growth in sales. 12

13 Where your revenues come from Sales channel Online 4% Sales mainly come store sales Online Sales with partner website Offline 96% There is room for improvements in the online sales channel. 13

14 Agenda Analysis of status quo Evalua8on of strategic alterna8ves Detailed implementa6on plan Costs + Benefits Next steps 14

15 Building a supply chain for global expansions Supply Chain Expansion Supply R&D Further expansions require a strong supply chain. 15

16 How to manage your supply Outsourcing Source produc6on to third party. Insourcing Set up own plants in order to get full control of produc6on. Partnership Look for a partner who produces apparel and delivers us but s6ll control Cost Implementa6on 6me Time to market Efficiency Choose the best alterna6ve with the provided criteria. 16

17 How to manage the supply of your basic apparel in your supply chain Criteria Outsourcing Insourcing Partnering Cost Implementa6on Time Time to market Efficiency Outsourcing of your basic products is the perfect strategy to stay cost efficient. 17

18 How to manage the supply of your trendy apparel in your supply chain Criteria Outsourcing Insourcing Partnering Cost Implementa6on Time Time to market Efficiency Insourcing of your trendy products is the best op6on for quick delivery. 18

19 How to manage your supply Centralized R&D Centralize R&D to save costs and gain control Decentralized R&D Tailored R&D to fulfill the demand of local trends Cost Implementa6on 6me Time to market Efficiency Choose the best alterna6ve with the provided criteria. 19

20 How to manage future research and development for your basic products Criteria Centralized Decentralized Cost Implementa6on Time Time to market Efficiency Centraliza6on of basic R&D is the best alterna6ve. 20

21 How to manage future research and development for your trendy products Criteria Centralized Decentralized Cost Implementa6on Time Time to market Efficiency Decentraliza6on of basic R&D is the best alterna6ve. 21

22 Challenges Impact Demand grow bigger than supply Ø Use the strong network for basic to outsource peaks 2. Quicker changing trends in basic products Ø Use experience from decentralized R&D departments Probability Use the dynamic approach to react on changes on the supply and demand side quickly. 22

23 Our strategy in a nutshell Expansion Insourcing supply basic Centralized R&D basic Outsourcing supply trendy Decentralized R&D trendy Philosophy IT 23

24 Agenda Analysis of status quo Evalua6on of strategic alterna6ves Detailed implementa8on plan Costs + Benefits Next steps 24

25 Leveraging strong founda8on IT Dynamic, digital price tags Maintain horizontal IT integra6on Philosophy Strengthen Takumi team Emphasize Kaizen throughout the supply chain Strong founda6on necessary for supply chain op6miza6on. 25

26 Pooling suppliers by product group for the basic products 1. Build up project team with support of Takumi team 2. Crea6ng comprehensive concept à Industry Contrac6ng the suppliers Every product group will be served by 5 suppliers. 26

27 Centralizing R+D for basic products Move opera6ons to HQ in Japan Evaluate clothing sizes of designated markets Every product group will be served by 5 suppliers. 27

28 Evalua8ng insourcing opportuni8es for trendy fashion Criteria Green- field investment Acquisi6on Buy- in local knowledge Implementa6on Time Risk Establishment of company culture 28

29 Steps of the acquisi8on process 1. Partnering 2. Minority share 1. 10% 2. 30% 3. Full acquisi6on Slow approach allows to test the fit between the acquisi6on target and UNIQLO. 29

30 Evalua8ng produc8on facility loca8ons for the US market launch Criteria US Mexico Canada Produc6on costs Supplying experience Proximity to target market Mexico is the favorable des6na6on to supply the targeted US market 30

31 Create your own style for decentralized R+D ac8vi8es Tinder for fashion trends Build up trend community Invite community leaders to fashion HQs Not Hot Connect to strong, exis6ng IT backbone to give fresh impetus to decentralized R+D 31

32 Preparing the launch to the US market Establishing ware house infrastructure 1 st 6er warehouses one on west and east coast each 2 nd 6er warehouses 5 on west and east coast each 1 st 6er warehouses will serve online distribu6on channel Opening 40 stores/year Achieving the objec6ve of 200 stores in

33 Your road to success Basic products Trendy products Expansion Streamline standard supplies centralize R+D Assesment of maxican market Partnering Minority share acquisition local R+D Warehouses store openings

34 Agenda Analysis of status quo Evalua6on of strategic alterna6ves Detailed implementa6on plan Costs + Benefits Next steps 34

35 Costs and benefits Investments in $ mio ) Streamlining standard suplliers 20 2) Centralizing of R&D for Basic good 5 3) Insourcing for trendy fashion sup ) Developing App ) Warehouses 2 Central ( 10 Mio. $ each) 10 Regional (4 Mio. $ each) Total Benefits Op6mized logis6cs Reduced 6me to market à Higher profit margins Strengthen online channel à Overall sales increase Scale effects for basic products à Cost reduc6on Being prepared for the future growth. 35

36 Agenda Analysis of status quo Evalua6on of strategic alterna6ves Detailed implementa6on plan Costs + Benefits Next steps 36

37 Next steps Issue Improving supply chain to feed global expansion Time to market Market requirements/demand Difference between fashion trends and basics Price and quality Solu6on Time to market Breaking up supply chain in basic and trendy R&D separated for basic and trendy Produce in cheap countries How to get started Set up project tram for supply chain op6miza6on and find project team for R&D improvement Find a suitable loca6on in mexico 37