Sustainable, Quality, Fast (KELANO)
Forecasting of demand, consumer preferences and fashion trends is difficult. Decisions regarding collections are often made 6 to 12 months before the selling season. Production has been outsourced to far-away locations, which increases lead times. As result:
- One third of products sourced by retailers is not equal to demand and must be sold at reduced prices.
- Purchases exceed demand in general, which wastes raw materials and energy.
- Inventories are high through-out the whole sourcing-production-supply chain.
A holistic approach to managing supply chain is required, and this research project aims at answering the following research questions:
- Is it possible to improve profitability of the whole supply chain and especially retailing by switching from long lead time up-front buying to continuous, short lead time sourcing, and if so, how much higher can purchase price be?
- How low can inventory investment be through-out the whole chain if sourcing is totally demand driven?
- What is the ecological impact of demand driven sourcing from near-by areas, when considering transport costs, material utilization, need of energy and waste?
- Which are the financial and economic benefits of demand driven, quick response sourcing-production-supply chain to different players in the whole chain, when sudden market changes occur (for example the current global economic crises)?
- What kind of production, communication and planning facilities and tools are required for ecologically effective and fully demand driven sourcing-production-supply chain?
- What kind of strategies will ensure the economic interests of various independently operating links in the global supply chain, when common ownership does not exist?
- How can small or single product orders be manufactured, supplied and distributed and how can so called Long-tail economy applied to fashion supply chains.
The project consists of the following main work packages:
Finnish, Swedish, Spanish and British fashion chains are modelled in terms of how eco-friendly, demand driven they are. Success factors and profitability is analysed with selected measures. Firms with different type of strategies are selected in order to broaden the approach.
- Developing of measures
How to measure ecological qualities, profitability and success of a demand driven fashion supply-chain will be defined. The success of a fashion company depends for example on Sell-Through, Lost Sales, Service Level, Stock Turns and Lead Times. How to measure the relationship of sustainability, flexibility and profitability are defined.
Recommended strategies and methods will be tested and their impact will be measured in the following areas:
- Lead times and costs of product development and design
- Raw materials and production
- Demand driven sourcing and distribution