UNIQLO. Fast supply for Fast Fashion. HEC Supply Chain Consul0ng Christopher Sharp Kim Bergeron Gert Kongehl Deniz Eras

Transcription

1 UNIQLO Fast supply for Fast Fashion HEC Supply Chain Consul0ng Christopher Sharp Kim Bergeron Gert Kongehl Deniz Eras

2 Agenda 1. Context & Problem Statement 2. Execu)ve Summary 3. Environmental Scan 4. Analysis & Key Success Factors 5. Alterna)ves & Op)ons 6. The Solu)on 7. Risks & Mi)ga)ons 8. Financials & Projec)ons 9. Conclusion

3 Context & Problem Statement Context: Uniqlo is fast growing Japanese lifewear brand that has built a strong supply and consumer base in Japan; they are looking to expand their reach to the US, Europe and abroad. Key to their success is a focus on: 1. Delivering consistent value to their customers 2. Working closely with suppliers and partners 3. Merging of innova0on and func0onalism Problem Statement: How can Uniqlo modify their supply chain model to ensure success in global markets?

4 ExecuFve Summary 1. Develop Hybrid Supply Chain 1. Local: Support development & JIT delivery of in- season (specialized) products 2. Decentralized: Ensure delivery of seasonal (flagship) products 2. E- commerce (click & mortar) plalorm 1. Increase sales reach in new markets and test 2. Sell overstock 3. Crowdsourcing plalorm to sustain innova0ve local products 1. Integra)on of latest per)nent fashion trends

5 Analysis Product & SC Product: Strengths Innova)on Price/Quality Ra)o SPA model Lifewear segment Weakness Local (Jpn) Trends Supply Chain: Strengths Takumi & Kaizen Delayed customiza)on Inventory pooling IT connected SC/ POS Weakness Local and focused on JPN Reverse Logis)cs (e- comm.)

6 Analysis - Environment Big brands with global reach Different market segments Compe))ve Rivalry (HIGH) New Entrants Threat (LOW) Market diluted Med barriers to entry on scale Mi)gate suppliers influence Maintain power Supplier Power (HIGH)

7 Analysis Supplier Power High Cap)ve Buyer Partnership Buyer Investment Transac)onal Cap)ve Supplier Low Supplier Investment High

8 Key Success Factors Agility Reduce lead )mes Produc)on capacity : Minimize specula)ve produc)on capacity and maximize the reac)ve produc)on capacity Supplier power Offer more volume for flagship items in Asia Manage risk with the local suppliers in US and EU Alignment with Key Success factors Low Medium High Innova)on R&D Centers and designers Products: high quality, func)onalism and affordable prices

9 AlternaFves Analysis Alterna0ve 1 Maintain supply chain in Asia Alignment with KSF Agility Supplier Power Innova0on Products Evalua)on Does not best enable adaptability in capacity produc)on for interna)onaliza)on. No innova)on in distribu)on interna)onally not Good rela)onships with exis)ng suppliers in Asia does not support the development of efficient supply chain system outside Asia Use of exi)ng R&D center Develop Web sales Maintain quality, Kaisen produc)on, func)onal design

10 AlternaFves Analysis Alterna0ve 2 Localized Supply Chain Alignment with KSF Agility Supplier Power Innova0on Products Evalua)on Can help reduce lead )me for product Responsive supply More flexibility to adapt to par)cular local demand Do not have advantage of volume produc)on Does not bring new edge adapt to various market and use of advantage in supply chain s different models Good control of quality. Might be difficult to maintain affordable prices.

11 AlternaFves Analysis Alterna0ve 3 Hybrid Supply chain (Centralized- localized) Agility Supplier Power Innova0on Products Alignment with KSF Evalua)on Enable to op)mize the produc)on capacity. Core products centralized produc)on in Asia. Specialized products local produc)on. Create interes)ng partnerships big volumes ordered for flagship products Local suppliers shorten design- to retail- cycle Open to adaptability in designs integrate newest local designs Maintain produc)on in Asia reduced costs U)lize R&D center interna)onally maintain high quality

12 SoluFon Alterna0ves 1. Maintain Supply Chain in Asia X 2. Localized Supply Chain X 3. Hybrid Supply Chain ü. SOLUTION Create Hybrid and Responsive supply chain model Crea)ng center of excellence through specializing suppliers (core product suppliers and technical or design products) Capitalize on growing web sales in the EU and US market in line with digital consump)on trend Crowdsourcing : Involve local designers to adapt to demand in new markets «Created by you» Crowdsourcing Program

13 MarkeFng Plan Focus US and EU Price Product Place Promo)on Affordable for basic Allow varia)ons to sell overproduc)on Basics and special edi)ons (local designs) Brick- and- mortar and web Web adver)sing, boost e- commerce (reverse logis)cs returns) Magazines Bloggers (try products) Partner with museums and ar)sts special edi)on clothings Differen)a)on customer feedback on website

14 ImplementaFon Plan Year 1 Year 2 Year 3 Test suppliers for US (North Mexico) and EU (Eastern EU and Turkey) to determine reac)ve capacity. Test local designers and crowdsourcing market for fashionable designs. Upscale e- commerce capability to increase sales. New stores: 30 in US and 20 EU Asia: Maintain aggressive growth strategy in China stores per year 3PL distributor : establish partnership in US and EU that will minimize design- to- store lead )me. Select suppliers under guidance Takumi team, 5 suppliers per region. Get each supplier to invest to reduce lead )me and minimum order quan)ty. Establish a network of highly talented US and EU designers New stores: 30 in US and 20 EU Asia: Maintain aggressive growth strategy in China stores per year Focus on further global integra)on of R&D centers and TORAY materials to maximize collabora)on with designers in US and EU markets New stores: 30 in US and 20 EU Asia: Maintain aggressive growth strategy in China stores per year

15 Risks and MiFgaFon Risks 1. Fierce compe))on from large players in US and EU 2. Suppliers inefficiencies delaying design- to- store lead )me 3. Currency fluctua)ons in foreign markets 4. Cost of quality inspec)ons on all products Low High Impact Mi0ga0on 1. Maintain R&D to ensure product differen)a)on 2 a life wear brand 2. Takumi team and Kaisen methods to maximize efficiency to stabilize 4 cash flows 3 3. Hedge currency in futures markets 4. Implement sta)s)cal process control to test batches 1 High Probability

16 Financials - AssumpFons SALES COSTS STORE SALES PER 533,333 PRODUCTION COSTS Online Migration Y1 Y2 Y3 US 20% EU 10% 15% 20% EU 15% US 20% 30% 50% SUPPLIER TEAM FTE (10) 100, per Online sales costs 25% SHIPMENT AND WEBSITE VP 300,000 returns 10% OH 144,000 Stores Sales Costs 30% STAFF AND RENT TOTAL 544,000 Crowdsourcing Cost 3% Store opening Cost Design on New Stores 40,000 ASIA GROWTH 5%

17 TOTAL SALES 1,600,000,000 1,724,160,000 1,832,640,000 1,955,400, % 7.8% 6.3% 6.7% Financials Y0 Y1 Y2 Y3 EU EXISTING 24 NEW STORES TOTAL STORES STORE SALES 23,466,667 34,133,333 44,800,000 ONLINE SALES 2,346,667 5,120,000 8,960,000 TOTAL EU SALES 25,813,333 39,253,333 53,760,000 US EXISTING 39 Stores TOTAL STORES STORE SALES 36,800,000 52,800,000 68,800,000 ONLINE SALES 7,360,000 15,840,000 34,400,000 TOTAL US SALES 44,160,000 68,640, ,200,000 REST OF WORLD 1,680,000,000 1,764,000,000 1,852,200,000

18 Financials Graph OPERATING MARGIN GROWING FROM 47% TO 52%

19 Financials Scenario P&L Y1 Y2 Y3 SALES 69,973, ,893, ,960,000 PRODUCTION COSTS 12,704,000 13,728,000 20,640,000 SALES COSTS 21,477,333 33,416,000 49,256,000 SUPPLIER TEA 1,088,000 1,088,000 1,088,000 CROWDSOURCING 2,099,200 3,236,800 4,708,800 TOTAL OPEX 37,368,533 51,468,800 75,692,800 OPERATING MARGIN 32,604,800 56,424,533 81,267,200 OPERATING MARGIN 47% 52% 52% CAPEX 2,000,000 2,000,000 2,000,000 NEW STORES

20 Conclusion & Summary 1. Develop Hybrid Supply Chain 2. E- commerce (click & mortar) platorm 3. Crowdsourcing platorm to sustain innova)ve local products

21 Thank you