Logistics and supply chain management in luxury fashion retail: Empirical investigation of Italian firms

The Italian industry of fashion goods is a business worth 67.6€ billion in 2006 (Il Sole 24ore, January 10, 2007), of which about 26€ billion is due to the luxury segment. Marketing gurus state that “consumers everywhere at every income level want more luxury” [Danziger, P.N., 2005. Let them Eat the Cake: Marketing Luxury to the Masses as well as the Classes. Dearborn Trade Publishing, Chicago]: therefore, companies should move brands towards a higher positioning and add more valuable features to products and services, but this cannot be obtained only by means of marketing efforts. Which is the role of operations and supply chain management in luxury fashion companies’ success? This paper presents the results of the exploratory stage of a research project ongoing at Politecnico di Milano and dealing with supply chain management in the luxury fashion industry. In total, 12 Italian luxury fashion retailers have been studied in order to describe the main features of operations and supply chain strategies in the luxury fashion segment and to identify their role with respect to the relevant critical success factors.     

An empirical analysis of supply chain risk management in the German automotive industry

The purpose of this paper is the empirical analysis of supply chain risk management practices. The analysis is based on a survey with 67 manufacturing plants conducted in the German automotive industry. After investigating the vulnerability of supply chains in general and examining key drivers of supply chain risks, the paper identifies supply chain risks by analyzing their likelihood to occur and their potential impact on the supply chain. The results are visualized in the probability-impact-matrix distinguishing between internal and external supply chain risks. Furthermore, instruments for dealing with supply chain risks are investigated. Therefore, the impact of supply chain risk management on performance is tested. In order to distinguish between companies with a high degree of supply chain risk management and those with no or only limited implementation the plants are grouped by means of a cluster analysis based on factors reflecting the instruments of supply chain risk management. In particular, groups are created representing two different approaches to deal with supply chain risks, i.e. reactive and preventive supply chain risk management. The clusters are investigated concerning differences in terms of performance criteria. The analyses reveal that companies with a high implementation degree show a better supply chain performance. Furthermore, the results show that the group using reactive supply chain risk management has higher average value in terms of disruptions resilience or the reduction of the bullwhip effect, whereas the group pursuing preventive supply chain risk management has better values concerning flexibility or safety stocks.     

The selected determinants of manufacturing postponement within supply chain context: An international study

Modern supply chains focus on an ultimate consumer satisfaction and often require essential dynamic reconfiguration. Manufacturing companies constitute important central nodes in supply chains, where almost all physical flows are concentrated.Postponement is the operating concept, which aims at delaying activities until a customer’s order has been received. The growth of interest in the postponement concept partially results from the increased demand for customized products.Data for the analysis has been collected through the survey carried out by researchers in several countries. The main research instrument used for this research was a questionnaire developed by the Global Manufacturing Research Group (GMRG). The conclusions formulated on the basis of data analysis proved that market and demand characteristics do not seem to be important for the choice between postponement and speculation strategy. The research showed that assembly postponement depends mostly on managerial decisions about the goals of company and the level of acceptance of an assembly postponement strategy on the market. Full postponement strategy is dictated mainly by the level of product customization and capacities of manufacturing and logistics systems. Production postponement has to be accepted on the market and should be associated with excellent forecasting techniques.     

The role of e-marketplaces in supply chain management

Electronic marketplaces (e-marketplaces) have a profound influence on the way in which organizations manage their supply chains. Proponents of the e-marketplace concept suggest that web-based trading systems, such as World Wide Retail Exchange (WWRE) and GlobalNetXchange (GNX), would enable companies to more efficiently buy, sell, and manage their supply chain processes on a global scale. This study investigates the extent to which e-business tools of the e-marketplace are used by channel members in the retail sector for business-to-business supply chain management (SCM). The study is based on a survey involving food service companies, retailers, and wholesalers in the UK. It is shown that the e-marketplace supply chain applications enable the majority of companies to automate transaction-based activities and procurement-related processes rather than strategic supply chain activities. The results also indicate that full participation in e-marketplaces requires companies to integrate their internal and external supply chain activities and share strategic information.     

Linking product modularity and innovativeness to supply chain management in the Italian furniture industry

Much of the literature on modularity assumes that firms with modular products adopt modular organization. In the realm of supply chain management, no consensus has been reached on the effects of product modularity on supply chains (SC). This paper investigates whether SC choices depend on product modularity and innovativeness, and how SC choices can be aligned to these product features to maximize performance. A medium scale survey has been performed in the Italian furniture industry. By means of factor and cluster analyses, the SC of firms that introduced products with different levels of modularity and innovativeness have been compared. The results show that both product features must be considered when designing the SC.     

Modeling agility of supply chain

Agility is the fundamental characteristic of a supply chain needed for survival in turbulent and volatile markets, which are becoming norms as product life cycles shorten and environmental forces create additional uncertainty resulting in higher risk in the supply chain management. Agility further helps in providing the right product, at the right time to the consumer, which is the main objective of any supply chain. In the present paper, using interpretive structural modeling, interrelationships of the variables, influencing supply chain agility, have been derived. These variables have been categorized according to their driving power and dependence. This methodology provides a means by which order can be imposed on the complexity of such variables. The insight from model would help supply chain managers in strategic planning for improving supply chain agility.     

Conceptual modelling for supply chain inventory visibility

Visibility becomes increasingly important for companies that seek to globalise their supply chains due to the increasing complexity involved. This paper contributes to the research on Supply Chain Visibility (SCV) from an inventory perspective with a focus on inventory visibility, which is a critical part of SCV. The characteristics of Inventory Visibility (IV), which are inherited from SCV, are conceptually analysed. A theoretical model in terms of atom, single, and compound visibility, is developed based on the characteristics identified. A method for objectively measuring IV is presented together with a case example to demonstrate its convenience and usefulness.     

The integration between marketing and purchasing in the traceability process

This paper provides an overview of the implications of integrating marketing and purchasing offered by traceability. The research offers some evidence of the adoption of different traceability approaches by actors along the supply chain, illustrating the relevance of the traceability issue and how traceability can be exploited. The paper presents findings from a case analysis process of five actors in the fashion industry. This industry has experienced strong integration between industrial and retail functions and relevant changes in the organisation of production networks (global shift of production to new industrialized countries and emerging markets) which place emphasis on the traceability topic. Traceability emerges as a complex concept that concerns the sharing of information about the product and production processes along the supply chain in BTB networks up to the consumers in the final market. The issue analysed focuses on organising, with a discussion of two different uses of traceability: traceability as a tool for inter-organisational control and traceability as a tool for market power. The two approaches give rise to different implications at the individual company and business network levels. The traceability process has intraorganisational consequences in terms of contents, technologies and actors involved in its implementation. These consequences are different according to the role played by the process.     

The relationship between legitimacy,reputation, sustainability and branding for companies and their supply chains

This paper aims at filling a gap that we perceive to exist in the scientific literature as to legitimacy, reputation and sustainability and their interrelationship to corporate and supply chain branding. A series of innovative theoretical frameworks are provided interrelating companies and their value (supply) chains with legitimacy, reputation, and branding which are essential conditions to achieve sustainability and competitive advantage based on dyadic and social context consonance to the benefit of society and all stakeholders involved. An urgently required better understanding of the concepts and their interrelations is enhanced by a synthesized explanatory basis entailing an eclectic mosaic of interdisciplinary theories (institutionalist, neo-institutionalist theories, the viable system approach, isomorphism and identity) to improve corporate and supply chain performance. To better inform managerial practice the theoretical considerations are spiced with case studies among which especially the currently debated supply chain case of the European horse meat scandal is illuminated suggesting concrete managerial cross-functional implications in the food industry. The paper culminates in the call for a newly to-be-established marketing stream we call ‘Sustainable and Curative Marketing’.     

Demand supply network opportunity development processes in emerging markets: Positioning for strategy realization in Russia

This paper aims to shed light on the management of supply chains, or rather, demand supply networks (DSN) in emerging markets by foreign companies. According to our definition, specific DSN opportunity development processes are directed towards better functionality and coordination of product, finance and information flows across the DSN. As a consequence, improved performance of the DSN may be achieved, in order to support and realize competitive business strategy and facilitate value creation for customers. To illustrate the concepts and the model, empirical evidence is presented that establishes the role of changing network structures and incumbent capabilities as constraints for DSN opportunity capture, especially in emerging markets. Our results show that DSN positioning strategies designed to overcome these constraints and facilitate opportunity capture, must be proactive, well-timed and innovative.     

Getting rid of trans fats in the US diet: Policies, incentives and progress

Artificial trans fats in foods increase chronic disease risk in the US population. Federal nutrition label regulation enacted in 2003 requires mandatory disclosure of trans fat content on packaged foods. This action created incentives for the food industry to reduce trans fats both in response to consumer demand and through competition to maintain product reputation. Subsequent public actions include a ban on trans fat use in New York city restaurants and lawsuits against food companies, which created further incentives to remove trans fats, especially in the food service industry. Industry has reformulated packaged foods and found substitutes for restaurant fry oils and trans fats are disappearing from the US food supply. Market response extends throughout the supply chain, and has spurred research to alter oilseed crop characteristics. The widespread and relatively rapid industry response likely has improved the quality of US diets, and demonstrates the potential for policy actions to spur such improvements.     

Environmental sustainability in fashion supply chains: An exploratory case based research

In recent years, both researchers and practitioners have devoted attention to environmental sustainability issues in the fashion industry, but, despite the topic's relevance, a structured analysis of the problem is missing.This paper presents the results of exploratory case-based research aimed at identifying three factors: the drivers that push companies to adopt “green” practices, the different practices that can be used to improve environmental sustainability, and the environmental KPIs measured by fashion companies. Results include a comparison of two approaches pursued by established international companies with green-positioned brands with the efforts of small firms that have adopted alternative supply chain models.     

The US fashion industry: A supply chain review

The fashion industry has short product life cycles, tremendous product variety, volatile and unpredictable demand, and long and inflexible supply processes. These characteristics, a complex supply chain and wide availability of data make the industry a suitable avenue for efficient supply chain management practices. The industry has also been in a transition over the last 20 years: significant consolidation in retail, majority of apparel manufacturing operations moving overseas and, more recently, increasing use of electronic commerce in retail and wholesale trade. This paper aims to review the current state of operations and recent trends across the fashion supply chain in the US. We use industry-wide data, articles from business journals, industry reviews and extensive interviews with an apparel manufacturer in California, and a major US department store chain to describe the current operational practices and how the industry is restructuring itself during the transition, focusing at the apparel manufacture and retail segments of the supply chain.     

Agility index in the supply chain

To achieve a competitive edge in the rapidly changing business environment, companies must align with suppliers and customers to streamline operations, as well as working together to achieve a level of agility beyond individual companies. Consequently, agile supply chains are the dominant competitive vehicles. Embracing agile supply chain requires asking some important questions, namely: what exactly is agility and how can it be measured? Moreover, how can agility be effectively achieved and enhanced? Due to the ambiguity of agility assessment, most measures are described subjectively using linguistic terms. Thus, this study develops a fuzzy agility index (FAI) based on agility providers using fuzzy logic. The FAI comprises attribute’ ratings and corresponding weights, and is aggregated by a fuzzy weighted average. To illustrate the efficacy of the method, this study also evaluates the supply chain agility of a Taiwanese company. This evaluation demonstrates that the method can provide analysts with more informative and reliable information for decision.     

Strategic marketing in global supply chains: Four challenges

Supply chain management has emerged as a critical arena in which firms can find significant cost reduction opportunities, giving them a cost advantage over competitors. When supply chain management orientations are adopted by several firms in a supply chain, together they can significantly reduce supply chain costs pitting supply chain against supply chain. However, the pursuit of cost savings opportunities is not the only objective of supply chain management. Superior supply chain management can facilitate marketing strategy and lead to the creation of superior customer value, satisfaction, and loyalty, which in turn lead to improved product profit margins, overall firm profitability, and overall corporate growth. However, marketing strategy is problematic in global supply chains. Specifically, four significant strategic marketing challenges exist that relate to the development and execution of marketing strategy in global supply chains. This article draws attention to these challenges to stimulate managerial and research efforts that will move marketing strategy through the 21st century.     

Supply contract with options

The purpose of this paper is to analyze the impact of an option contract for two companies of a supply chain: retailer and supplier. With an option contract the retailer orders a quantity of units and has the right to modify his order if necessary. A model to calculate the performance of an option contract in terms of contract value for the two companies engaged is presented. The two considered cases are multiple suppliers and one retailer, and one supplier and one retailer. The performance improvement obtained using this kind of contract is compared by simulation.     

Streamlining inventory flows with time discounts to improve the profits of a decentralized supply chain

We consider a decentralized supply chain, whereby a supplier sells a product to a group of independent buyers, and develop a strategy for the supplier to offer an all-units price discount or cash rebate for orders that are synchronized with its replenishments. As synchronized orders can be met with inventory directly from receiving to shipping without warehousing, the proposed strategy streamlines system inventory flows to minimize inventory and, hence, the related costs. On the other hand, by increasing the replenishment interval of the supplier, the proposed strategy is able to induce buyers to order in large quantities and hence achieve the objectives of quantity discounts. We show that the proposed strategy can achieve nearly optimal (minimum) system cost, and is much more effective than the existing coordination strategies for decentralized supply chains in the literature.     

Impact of demand uncertainty on supply chain cooperation of single-period products

Cooperation is an approach of improving competitive advantages of a supply chain. A two-echelon supply chain consisting of a manufacturer and a retailer for a single-period product is studied, and retail-market demand uncertainty is described by coefficient of variation. We develop a cooperation mechanism to address the cooperation and its implementation between the manufacturer and the retailer, two market situations are considered: (i) the wholesale price and the order quantity are decision variables, (ii) the wholesale and the retail prices as well as the order quantity are decision variables. In both market situations, our research shows that: (1) the cooperation mechanism can improve the overall channel profits and the supply chain members’ allocated profits, (2) the described cooperation is conditional on retail-market demand uncertainty: it can be implemented if, and only if, the fluctuation of retail-market demand is relatively small and coefficient of variation of retail-market demand does not exceed an upper bound. Impacts of retail-market demand uncertainty on wholesale price, order quantity and/or retail price have also been investigated through analytical and numerical analyses. Although our research is based on the assumption that the manufacturer dominates the supply chain in the non-cooperative situation, which is not the case for most retailer-driven supply chains, this research is still significant on providing guidelines for practitioners in current China mid-level car market that is similar to situations described in the paper.     

Moderating the impact of global sourcing on inventories through supply chain management

In recent years, companies have paid growing attention to supply chain management at a global level. With regard to the upstream part of the supply chain, the need for better suppliers, the research into specific competences and concerns related to international competition have forced companies to improve their ability to cope with suppliers located in different countries around the world. The literature suggests that the geographical distance of suppliers should create higher inventory levels primarily because of longer and more uncertain lead times. However, as this paper aims to demonstrate, companies can limit this effect by means of specific investments in the supply chain and in their relationships with suppliers. The empirical analysis is based on data from the last edition of the International Manufacturing Strategy Survey (IMSS). The results show that companies performing global sourcing have invested in supply chain management (SCM) and that this has been helpful in keeping their inventories under control.     

Lead time reduction through ICT application in the footwear industry: A case study

This paper analyses some relevant supply chain management issues for Italian firms operating in the footwear industry. The analysis is carried out on representative firms, located in a specialized regional district with a high density of shoe manufacturing companies. Companies were experiencing substantial problems in the management of supplier relationships, as well as in the commercial/distributive channel. Specifically, synchronization issues in the logistics pipeline were weakening firms’ lead time performances.The case study presented strives to highlight the critical points in the set up of the supply chain management programme, as well as the main results obtained. The case study also shows that the adoption of tailored Information and Communication Technology (ICT) tools has the potential to save significant lead time in supplier/buyer relationships. From the case study, generalities can be drawn and transferred to the footwear industry.