5 supply chain management tips

Let’s imag­ine you’re the chief exec­u­tive of XYZ plc, a com­pa­ny that makes train­ers. The glob­al mar­ket for train­ers has grown by more than 40 per cent since 2004 to around $55 bil­lion a year and so there’s plen­ty of scope here. How­ev­er, XYZ will have to rethink every link in its sup­ply chain.

“The struc­ture of sup­ply chains has changed immense­ly. Lin­ear sup­ply chains – buy-make-move-store-sell-deliv­er – have evolved into sup­ply chain grids, with each part in the tra­di­tion­al sup­ply chain replaced by a series of sophis­ti­cat­ed net­works,” says Puneet Sax­e­na, vice pres­i­dent of indus­try strate­gies at JDA Soft­ware.

Train­er brands, like oth­ers, are increas­ing­ly oblig­ed to guar­an­tee integri­ty and trace­abil­i­ty through­out the process. “One of Nike’s core beliefs is that progress starts with trans­paren­cy and col­lab­o­ra­tion, and that’s why a decade ago, Nike became the first com­pa­ny in our indus­try to pub­licly dis­close our fac­to­ry base,” says a spokesper­son for Nike.

Here are five ways to man­age the sup­ply chain:

1. Procurement 

As with so many prod­ucts these days, train­ers are sur­pris­ing­ly com­plex. For instance, the Adren­a­line GTS 17 by train­er brand Brooks, which hit the mar­ket on Novem­ber 1, is made up of 106 pieces.

“What’s impor­tant when sourc­ing in the UK is crit­i­cal when sourc­ing over­seas,” says Jayne Hussey, part­ner at law firm Mills & Reeve. “Com­pa­nies need to make local con­nec­tions, under­stand the mar­ket place, car­ry out numer­ous fac­to­ry vis­its. Ref­er­ences can also help to under­stand who your poten­tial sup­pli­ers are.”

Tech­nol­o­gy can help train­ers com­pa­nies such as XYZ, accord­ing to Ad van der Poel, head of financ­ing ser­vices at enter­prise soft­ware provider Basware. “E‑procurement enables exec­u­tives to make quick and informed deci­sions which result in a healthy bal­ance sheet,” he says. “By pro­vid­ing teams with a new lay­er of vis­i­bil­i­ty and access to action­able infor­ma­tion, e‑procurement places the user at the cen­tre of the process. Busi­ness­es are able to source, man­age and col­lab­o­rate with the right sup­pli­ers, and bring spend­ing under con­trol.”

2. Rules and regulations 

The Bribery Act 2010 and the sup­ply chain report­ing require­ments of the Mod­ern Slav­ery Act 2015 apply to XYZ’s activ­i­ties both over­seas and in the UK.

“The reg­u­la­to­ry land­scape is already com­plex and ever-chang­ing, and the chal­lenge is exac­er­bat­ed when expand­ing into new mar­kets,” says Son­al Sin­ha, vice pres­i­dent of solu­tions at Met­ric­Stream, a provider of gov­er­nance, risk and com­pli­ance soft­ware. “There needs to be a con­trolled, cen­tralised sup­pli­er on-board­ing, mon­i­tor­ing and off-board­ing process to ensure they are work­ing com­pli­ant­ly with laws and appro­pri­ate­ly reviewed for any oth­er risks.”

Train­ers need to have mul­ti­ple size codes if they’re being shipped from a home mar­ket, Andrew Blath­er­wick, chair­man of sup­ply chain solu­tion provider RELEX Solu­tions, points out.  XYZ will also need an under­stand­ing of dis­play prac­tices. For exam­ple, in coun­tries such as Egypt the soles of shoes should not be dis­played upwards as this is con­sid­ered to be offen­sive.

3. Manufacturing

XYZ might want to con­sid­er licens­ing its brand to com­pa­nies already oper­at­ing in its new ter­ri­to­ries. In 2015, man­u­fac­tur­ing under licence grew its rev­enue 4.2 per cent, an increase of more than $10 bil­lion, accord­ing to the Inter­na­tion­al Licens­ing Indus­try Mer­chan­dis­ers’ Asso­ci­a­tion.

“If you’re a man­u­fac­tur­er with a UK licence for a par­tic­u­lar brand, you would need to add fur­ther ter­ri­to­r­i­al rights before you could sell these prod­ucts into oth­er coun­tries,” says the association’s UK man­ag­ing direc­tor Kelvyn Gard­ner.

Either way, eth­i­cal con­sid­er­a­tions are increas­ing­ly impor­tant. “Some brands, for exam­ple, will now only source from coun­tries that are above a cer­tain rank­ing on the World­wide Gov­er­nance Indi­ca­tors list, pub­lished by the World Bank, which gives a macro view of fac­tors such as rule of law, polit­i­cal sta­bil­i­ty and cor­rup­tion,” says Kosten Metreweli, chief mar­ket­ing offi­cer of Segu­ra, a sup­ply chain soft­ware provider.

4. Logistics

For train­ers brands, expand­ing into new mar­kets is eas­i­er today because tech­nol­o­gy is reduc­ing devel­op­ment and pro­duc­tion lead times, and pro­mot­ing greater prod­uct trans­paren­cy, accord­ing to Ed Grib­bin, pres­i­dent of Alvanon, a glob­al appar­el busi­ness and prod­uct devel­op­ment con­sul­tan­cy. “3D vir­tu­al prod­uct devel­op­ment tools speed design and buy­ing deci­sion-mak­ing on the head­quar­ters side, and simul­ta­ne­ous­ly speed the pat­tern mak­ing and fit­ting assess­ments on the fac­to­ry side,” he says.

FedEx has been work­ing with train­er retail­er Sneak­er­snstuff to dri­ve its inter­na­tion­al expan­sion. It has a store in London’s Shored­itch, but 70 per cent of the Swedish brand’s sales come from online cus­tomers as far afield as the Unit­ed States and Asia.

“Vis­i­bil­i­ty is fun­da­men­tal to oper­a­tions,” says David Poole, man­ag­ing direc­tor of UK sales for FedEx Europe. “Mak­ing use of your logis­tics provider’s range of track­ing options pro­vides busi­ness­es with greater aware­ness of any poten­tial delays, so cus­tomer updates can be giv­en. This is an essen­tial aspect of ensur­ing repeat cus­tomers.”

5. Marketing and sales 

XYZ will have to study the com­pe­ti­tion in its new ter­ri­to­ries, advis­es Trish Young, UK and Ireland’s head of busi­ness con­sult­ing tech­nol­o­gy provider Cog­nizant.

“Only then will they be able to deter­mine their prod­uct posi­tion­ing and dif­fer­en­ti­ate them­selves,” she says. “From there, they will need to cre­ate localised assets and ser­vices through the var­i­ous retail chan­nels. Beyond this, they’ll also need to ensure their prod­uct is in front of impor­tant influ­encers and, where pos­si­ble, ana­lysts to get the nod of approval.”

For train­ers pro­duc­ers, iden­ti­fy­ing the appro­pri­ate chan­nels, be they whole­sale, own retail, e‑commerce or fran­chise, is also essen­tial. “Brands and retail­ers that go down the whole­sale or fran­chise route need to put in the leg work in the ear­ly days to ensure the part­ners they select have a clear frame­work with­in which to oper­ate, so they can sup­port the con­sis­tent exe­cu­tion of glob­al brand val­ues,” says Sue But­ler, direc­tor at man­age­ment con­sul­tants Kurt Salmon.