In a two-to-three page paper (not including the title and reference pages), complete the New Look and P&O learning activity. Identify and analyze the strengths and weaknesses in the warehousing, outsourcing, and supplier aspects in the case of “New Look and P&O (Retail Fashion and 3PL Distribution” case on page 222-223 of the text. What would be your recommendations for improving the supply chain?
Your paper must be formatted according to APA style as outlined in the approved APA style guide and should cite at least two scholarly sources in addition to the textbook.
Requirements: 3 PAGES
22 EXCELLENCE IN WAREHOUSE MANAGEMENT
- 22% – people issues (‘hide’, ‘fear’, changed) • 11% – service levels were not what expected • 10% – more resource/costs involved • 8% – initial data found to be suspect • 14% – other reasons, e.g. culture clash, no clear agreements before
Implementation will not always be easy and automatically trouble free. Implementation will nearly always involve managing change – a topic that is fully discussed in Chapter 10.
ACTION TIME 9.1: NEW LOOK AND P&O (RETAIL FASHION AND 3PL DISTRIBUTION)
Maintaining an efficient supply chain is a major priority for women’s fashion retailer New Look in its ambitious plans for growth. The company is upgrading its stores and is widening its appeal beyond its traditional 16–24-year-old customers to older age groups, and needs the slickest possible logistics operation to support its strategy.
Logistics director Alan Osborne has control of both inbound and outbound movements to maximise the smooth-running of the oper- ation and to allow the company to respond quickly to the volatile fashion market.‘That approach is absolutely critical in fashion. Speed to market – from sheep to shop is fundamental,’ he says.
The business strategy has already reaped benefits. Profit for the year to 30 March had more than doubled to £62.3 million and by July sales revenues were up 12.3%. But the company has plans for further growth which the logistics department must support. Project Heartland aims to double overall retail floor space within five years to 200000 square metres and will involve relocating stores to larger premises in key towns and cities – so far 41 stores have undergone the process with another 119 to go.The company is also refurbishing 300 smaller stores over two years in Project 300, intended to boost sales through existing space. Originally New
Look had a strong southern bias and most of its stores were in south coast resort towns.This has changed as it has expanded and its distribution network has altered accordingly.
The company’s main distribution centre, run in-house, is based at its Weymouth headquarters, where it has around 50000 square metres of warehouse space arranged over three floors. New Look is the town’s largest employer and, at peak, 700 staff are employed in the distribution centre.‘We have no plans to change that.We have a very loyal and reliable set of staff,’ Osborne says.‘The distribution centre is next to the buying office which is a great advantage. I am able to have regular contact with the buying and merchandising director and I am constantly talking to distribution centre staff as well.’
However, the geographic shift in the business has made it neces- sary to use an additional facility in Doncaster to serve the North and Midlands.The warehouse opened last September and is owned and operated by P&O TransEuropean. Goods are trunked from Wey- mouth overnight and merged with those at Doncaster and sent out to the stores on New Look’s fleet. Around 48% of the company’s deliveries to stores are now made through the facility. P&O TransEu- ropean also uses the site for a contract with Flymo manufacturer Electrolux Outdoor Products.
As well as benefiting from shared overheads, the two companies have different trading peaks and the resources they use can be flexed accordingly. ‘There is a good mix of demand. They have a summer peak whereas we are more winter based,’ Osborne says. This part of the operation was outsourced because New Look did not want to invest large amounts of capital in a distribution centre. ‘It was also a case of P&O having the resource available to allow us to make the move quickly,’ says Osborne.
As well as distribution to stores, New Look is paying a great deal of attention to inbound logistics. In future it intends to store more stock overseas, where storage costs are cheaper; and use cross-docking when goods arrive in the UK. The company is setting up overseas consolidation centres for this purpose
nd one of these has opened in Greece, with another planned in Turkey.
Rather than packing single items, New Look is moving to ratio packs, where possible, to reduce handling. These contain several of the same garments in the most popular sizes – for example, packs might include a size 8, a 10, two 12s and a 14.
IT systems will play a major part in making the inbound opera- tion work more efficiently and Osborne says that the company will use fourth party logistics. It is currently talking to the major providers about the work. ‘We’ll be using a company with global representation.We want them to give us one systems solution so that we can have visibility of stock movements all around the world,’ Osborne explains.
Traditionally New Look has owned all its vehicles, mainly Scanias, and has 44 trucks, either 25 feet or 30 feet long. However, it is cur- rently switching to leasing and has signed up to take 28 demount- able Scanias.This followed its decision to lease six Renaults last year. ‘By the time we are finished we will have ten company-owned vehi- cles left, all under three years old,’ says transport manager Paul Bennett. Although there is a full servicing and maintenance contract, all the work will be carried out on site, using New Look’s garage but adhering to Scania’s servicing schedules.
The drivers at the Weymouth depot are employed directly by New Look and those at Doncaster are contracted from BRS, although no trucks are taken from BRS. Despite the national driver shortage there have been few recruitment problems at Weymouth, where a 48-hour contract was introduced in April to fit in with the WorkingTime Directive.‘Last year we took volunteers from the dis- tribution centre’s picking staff and gave them the chance to do Class HGV driver training,’ Bennett says.
Store deliveries are made at night, a policy brought in some years ago which other fashion chains are beginning to follow. Secu- rity risks are reduced because each vehicle is double-manned; where there are local authority restrictions, deliveries are made before a certain time in the evening or after a certain time in the morning.
The company intends to stock more inventory overseas and use cross-docking when goods arrive in the United Kingdom. To facilitate this, the company created a consolidation center in Greece and plans to add another one in Turkey (Emmett, 2005). The fact that the company intends to use IT systems to monitor this inbound operation is a significant strength. This is because the company will have visibility of inventory movement from its consolidation centers to the UK (Emmett, 2005). Integrating IT into its inbound operations is also a weakness, considering it leaves the company vulnerable to technological and security failures affecting its operations. When this happens, operations will be disrupted since the company cannot track stock movement.