Logistics Executives Learn to Cope With Retail's Changing Trends at SDI Forum
LAS VEGAS—The world of retail is changing, with customers increasingly slipping behind the steering wheel and taking over the driver’s seat. And that, in turn, is creating challenges for store owners and clothing chains to create more-efficient warehouses and delivery systems that trim costs, improve delivery times and deal with a growing number of online customers.
That was the word at the sixth annual SDI Logistics and Supply Chain Forum, held April 13–15 at the Four Seasons Hotel , where about 100 supply-chain and logistics executives gathered to hear what various retailers and apparel makers are doing to move their goods through multiple channels. The event was hosted by SDI Industries, a Pacoima, Calif.–based provider of logistical and supply chain solutions.
Brian Jackson of Nordstrom talked about the company’s latest initiative to jump-start profits by handling inventory over several platforms. Two years ago, the Seattle-based retailer linked its online inventory to its store inventory and vice versa. One of the key items is helping customers hunt for merchandise not immediately found on the retailer’s online shopping site or in the store.
Let’s say you saw a navy-blue sweater you like, but the store only has it in a large size and you need a small. Nordstrom employees will track down the right size and ship it for free to your house. Or if your size is missing from the store’s online site, Nordstrom employees will touch base with the stores and locate that item for you. Another option is allowing online shoppers to reserve an item and pick it up at a nearby store. “It gave us the ability to maximize our inventory for all of our customers, no matter where they are,” said Jackson, the retailer’s business and systems integrations manager. Last year, Nordstrom’s onlinefulfillment center in Cedar Rapids, Iowa, shipped 15 million packages out to customers.
Investing in one-day employee-training sessions to explain how the system works and why Nordstrom needs it was a wise investment, Jackson said.
Bob Silverman, vice president of information technology business systems at Tommy Hilfiger USA, addressed the challenges of integrating a worldwide system of warehouses and distribution centers working with a far-flung supply chain. “It’s really a relationship issue to a large degree,” he said. “If you want to improve the supply chains across various time zones and languages, you have to understand the issue your supply-chain partners face and make them better.”
Tips for enhancing logistics opportunities included improving the data that moved between the various parties and making sure people could accurately predict when goods would arrive. “Companies may want to know they are getting their goods in three days or one week as opposed to getting it faster,” he noted.
Cost control was another factor to consider. Rising fuel prices are altering distribution-center locations. Logistic experts need to decide whether it is more practical to have smaller distribution centers located closer to the customer or one big distribution center situated in a remote location with cheaper labor and lease rates.
Sustainability was another element that logistics people will be needing to integrate in their future plans. Many distribution centers are installing solar panels to cut energy costs. “About 25 percent of a building’s power can be provided by panels on a distribution center’s roof,” he said. “With a 15-year lease on a facility and a seven-year payback on a panel, it is like printing money.”
Other warehouse managers are employing electric energy–saving lifts as well as lights that turn off automatically when no one is around.
Dick Ciesco of Levi Strauss & Co. gave advice on how to win over top executives when trying to get major capital projects approved. “Decision makers look at every judgment they make with a high level of scrutiny,” said the vice president of Levi Strauss America’s distribution, finance, planning and procurement. “They will pick the project that generates the highest return.”
You not only need to make a financial presentation but a sales presentation. “Sales presentations are about the sizzle, not necessarily the bacon,” he explained.
Presentation tips included:
bull; Always do your homework and identify who the decision makers are in your company and tailor your presentation accordingly.bull; A face-to-face presentation is always better than talking over the telephone. If distance prevents that, videoconferencing is the best alternative.bull; Encourage the decision makers to visit the site so they understand what you are talking about.bull; Utilize outside experts to make your point.bull; Provide a cost-benefit analysis.bull; Look at the options and alternatives and what would happen if you kept the current facility instead of building a new one.bull; Summarize the cost of all the alternative projects and ideas.
On the software side, Mark Burstein, president of sales, marketing, and research and development at New Generation Computing Inc., explained how web-based tools can improve supply-chain efficiencies. “The goal is to enable top-line growth, increase market share without increasing personnel, cut down on chargebacks, cut costs and avoid product recalls,” he said.
Using tools such as PLM (Product Lifecycle Management), SCM (Supply Chain Management) and ERP (Enterprise Resource Planning), the entire production cycle can be monitored from design concept to the sale of the finished good.
Burstein said that when Billabong—which has a stable of surf-inspired brands and three main offices in Europe, Australia and the United States— started using web-based systems, the company saw an improvement in leadtime optimization and collaborative development over various time zones. Billabong was able to monitor production around the world and increase the throughput of its distribution centers.
“They made better decisions, and because they had improved on-time delivery, they had fewer markdowns and faster turns,” he said.
