Fast Retailing Supply Chain Reform

Transcription

1 October, 2018 Fast Retailing Supply Chain Reform Takuya Jimbo Fast Retailing Co., Ltd Group Senior Vice President 1

2 Today s Key Discussion Points 1 Ultimate supply chain direction & aims 2 Our former supply chain 3 Our future supply chain 2

3 1 Ultimate Supply Chain Direction & Aims Make only what is necessary. Distribute only what is necessary. Sell only what is necessary. 3

4 1 Ultimate Supply Chain Direction & Aims The Fast Retailing supply chain premise The Fast Retailing Group produces 1.3 billion items annually UNIQLO LifeWear clothes are: 1 thought through with life s needs in mind 2 ingenious in detail 3 simple, highly finished clothing parts 4 always evolving 5 high-quality for people everywhere Sell everything, no waste. Clothes customers no longer need are collected for our All-Product Recycling Initiative 4

5 2 Our Former Supply Chain Currently, it takes over one year to create 1.3 billion clothing items, from planning and design through production, distribution, retail. Design, planning Production Distribution Retail UNIQLO LifeWear is unique clothing, thoroughly thought through with customers life needs in mind. UNIQLO doesn t simply chase fashion trends and create similar clothes to other companies, so product planning and design takes time under the current system. It takes time to produce 1.3 billion items of clothing annually, each piece carefully manufactured from carefully selected materials to ensure highfunction, high-quality clothes. 5

6 2 Our Former Supply Chain Ended up making, distributing and selling unnecessary things Making Design, planning Only collect a portion of information which doesn t get reflected in product design, sales volumes. Global information Product design, sales volumes Lead time long on mass production. Can t sync production with sales trends. Long lead times Production Sales trend-linked production Distributing Distribution Capacity shortage from storing stock not required for retail. Personnel costs soar on tight labor conditions. Capacity shortage Tight labor Selling Retail Strong discounting to sell off sluggish items, popular item shortages Discount sales Product shortage M size.. Supply chain issues Unable to collect full global information as rely on human information collection. Product designs and volumes often miss the mark as reflect just a portion of information, collected manually. Creating mass volumes of high-function, high-quality LifeWear requires vast materials preparation, careful production. Long lead times. Have to produce in advance to be in time for actual sales period. Pre-producing clothes means unnecessary stock enters warehouse early, causing capacity shortages. Receiving, storing surplus stock is unproductive but requires labor. Hard to hire staff, personnel costs soar. Discount sluggish items until the sell, weighing on gross profit margin. Strong-selling items run out as don t have enough stock, resulting in missed sales opportunities. Insufficient visualization of important supply-chain related info/volumes, comprehensive SKU management 1What products produced when, how much? 2 What products stored when, where, how much? 3Where what products are right now? 4What product will arrive at which store when? Unable to link production partners, warehouses, stores & headquarters directly and uniformly Current communication works on a relay system so no directly, uniform links between regions, between managers and staff, or between managers themselves. 6

7 2 Our Former Supply Chain Customer opinion on fashion trends This shirt is comfortable and holds its shape, but I wish the silhouette was a slightly slimmer fit. I love this knitwear and buy it every year, but this year s trend colors and shades are a little different. Customers Customer opinion on sales volumes The things I want to buy from UNIQLO always sell out just when I want to buy them. Can t you make more of them. Newsworthy UNIQLO items sell out on the first day. It s disappointing as I made the effort to come. 7

8 3 Our Future Supply Chain Build a supply chain that makes, distributes and sells only what is necessary by forming partnerships with leading global companies Making Design, planning Collect vast, high-quality global information in real time, and reflect in product design, sales volumes. Product design, sales volumes Production Build system that fulfills customer needs through accumulated materials and short lead-time mass production Accumulated materials Distributing Distribution As we develop automated warehousing worldwide, ensure we only store & transport necessary product for retail. Production country warehouses Selling Retail Reducing surplus stock, eradicating product shortages will help our shift away from the discounting model. Eradicate surplus stock, shortages Move away from discounting Supply chain reform Current practice Collect vast, effective global information using Google AI. Determine accurate designs and sales volumes using Accenture algorithms based on global information and past performance data. Greatly reduce production processes through initiatives with our Toray partnership Build warehouses in low-cost production countries to store stock. Only store required Reduce surplus stock and eradicate product shortages simultaneously. and individual production retail stock in retail country Improve gross profit margin partner factories. warehouses. and escape need for stock Make products that customers Develop worldwide automated rundown discounting by only want, reduce lead time through partnership with Shima Seiki. warehouses through partnership with Daifuku. producing strong-selling items. Use RFID for full visualization of important supply-chain related info/volumes, thorough SKU management, local store management Attach RFID tags on all products at point of manufacture to facilitate coordinated comprehensive SKU management and achieve true local store management that enables customers to buy whatever they want, wherever they want to buy it. Link global production bases, warehouses, stores and headquarters directly and uniformly for fast evaluation, decision-making, implementation Use Google G Suite and other tools to facilitate seamless communication between managers and staff in all areas. 8

9 3 Our Future Supply Chain: The RFID example 2When, how much product to arrive at warehouse from factory? 4 When, how much product to arrive at store from which warehouse? Production Distribution Retail By attaching RFID tags to all products when they are manufactured, we can ascertain instantly and accurately what product is where, and how much. We are now able to instantly share inventory information with all staff, and achieve SKU management using a fully coordinated supply chain. Production Distribution Retail 1How much of what product has already been produced 3How much product is in which warehouse? 5How much product on shop floors and in store back rooms? RFID RFID RFID RFID It took time for production partners, warehouses and store staff to check inventory volumes, and sometimes resulted in errors. Introducing RFID has enabled us to check inventory levels instantly, and greatly reduce errors. 9

10 Make what customers want. Distribute what customer want. Sell what customers want. 10