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Issue 2 2012


Strutting your stuff on the logistics catwalk


Green is the new colour for this season, as fashion companies strive to cut their costs with a return to ‘near sourcing’ in Europe – and the move can also flatter your carbon figure, say logistics experts. At the same time, companies are bringing in yet more automation to cope with the complexity and uncertainty of a fast-changing market. And just to further complicate matters, many of the stalwarts of the British and European high street are setting up shop much further afield.


Keeping abreast in a fast moving world


Delamode,= as the name suggests (de la mode) started out as a fashion logistics company in the 1980s and apparel is still an important business for the Essex-based operator. “When we started, a lot of ‘cut make and trim’ business was already being outsourced from the UK to other countries - but in those days it was places like the Benelux and Malta,” explains group chief executive officer Shaun Godfrey. All the materials and components used to make finished garments would be shipped overseas and the finished garment would be re- exported back to the UK. Many changes have happened in


the trade since those days, including a shift of much production to Asia but in the last few years there has been a big move back to Europe, and in particular Romania, one of Delamode’s major spheres of operation. Romania and Bulgaria used to be


big makers of garments before they joined the EU but on accession, “a lot of the fashion trade moved to the Far East, almost overnight,” explains Shaun Godfrey. EU membership pushed up wage costs, making production there unattractive – or so it was thought. “But a lot of that production has come back to Romania,” Godfrey continues. “In fact, it is now second only to China as far as some UK retailers are concerned.” The new wave of Romanian


manufacturing tends to be more diverse


and in much smaller quantities than the old mass


production, which by and large has remained in Asia. Fashion houses have found though that Chinese wage costs are creeping up and while still attractive for very large production runs, are no longer quite the draw they were. Also, they have found that there are a lot of hidden costs involved in manufacturing there, not to mention constantly fluctuating


shipping rates and


capacity issues, all of which make planning very difficult. Having production nearer at hand also makes it much easier for retailers to reduce stock levels, something they obviously want to do in the current uncertain economic climate. As a result, retailers are now using


Romania as a near-at-hand source of supply to cope with the sudden fluctuations that occur in the fashion trade. “We might, for instance, make 70-odd factory


collections week,” Godfrey explains. each “These


might be relatively small shipments of perhaps 2-3,000 pieces.” The whole logistics profile has


changed, he says, and Delamode now offers a service in which small vehicles are used to pick up shipments from individual factories in the main production belt – to the east of the Carpathian mountains - and bring them to its cross-dock facility where they can be transferred to one of Delamode’s specialist high- cube mega trailers for the journey to the UK, which handle both flat pack and hanging garments. Romania is also emerging as a major importer in its own right.


The fashion supply chain is second to none in terms of its complexity. A retailer can easily have 40,000- 50,000 different lines, if all the different variations in colour, size and so on are taken into account and in what other industry does the complete product line up change twice, four times or even more oſten every year? The supply chain, having altered


out of all recognition in the past couple of decades or so, could be set for yet more dramatic changes as rising labour costs in the Far East start to challenge at least some aspects of global sourcing. That is


Kenneth Porter


the verdict of two experts at supply chain consultancy Total Logistics – director Kenneth Porter and project director Gavin Parnell.


Parnell says wage inflation in the Far East is higher than it is in Europe at around 10% a year as opposed to 2% and also, given the long lead times from there, people are once again beginning to ask whether there can be advantages in moving some production to east or even west Europe. “Once the wage cost differential reduces, then other factors become more important,” says Parnell. One UK clothing chain, River


Island, has even moved a small amount of production to the UK. “The cost penalty is less than it used to be and there is a certain


cachet from having products that are ‘made in Britain’. American Apparel has made a similar play in the US, he adds. The trend towards far-


flung sources of supply has led to clothing retailers and manufacturers setting up ever larger warehouses in the UK, which suggests that inventories have had to be increased as a result, though general growth in the fashion business may of course play a part too. Bigger warehouses are of course another added cost and one that is likely to increase as finance capital becomes scarcer.


Quite apart from materials and


components used in its own manufacturing, some of the major retailers are setting up stores to cater for the country’s fashion- and brand- conscious youth. Delamode – which is part of the Faxion network of distributors – can offer its facility in Romania as an inbound DC for the local market, where modern DCs have tended to be lacking. (Stores in Romania have tended to hold a much greater proportion of their stock in their stockrooms than in the West.) In fact, the expansion of the UK major retailers to Romania is part of


a global phenomenon that has seen them expand to many European countries, the Middle and Far East and the US. At the moment, much of this market is served via the UK, even where that is illogical from a logistics point of view, but the big retailers are aware of this and are looking seriously at it, says Godfrey. Truly global retailing is quite a recent phenomenon and it will take time for systems to be geared up to support a big change, indeed, for the necessary data to be obtained – especially in a market that is as fast-changing as fashion.


U-Freight starts 2012 in fine fashion


Asian-based U-Freight Group –has refitted one of its logistics facilities in Hong Kong with a special emphasis on fast fashion apparel and accessories. The 39,000 sq ft facility, at Tsing Yi, close to Hong Kong


International Airport, offers around 1,350 pallet positions and has already attracted one new fast fashion customer, says Simon Wong, Chief Executive Officer of the U-Freight Group. Mr Wong says: “There is already an excitement within the


Hong Kong garment industry about our newly refurbished Tsing Yi. This has translated into a new customer that was attracted by our first-rate facilities and state-of-the- art processes. We’re open for business and we invite any company involved in the city’s vibrant garment and fashion industry to arrange a visit.”


///APPAREL


It’s all about managing complexity, say the experts


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