Copyright 2006, Traffic World, Inc.
Polo Ralph Lauren works as hard at keeping a cutting edge supply chain as it does anticipating fashion trends.
The $3.3 billion New York City-based apparel maker must sew together 350-plus contract manufacturers supplying multiple brands (Chaps, Polo, Lauren, Club Monaco) to more than 375 outlet and retail stores, as well as online and wholesale channels, worldwide.
That''s forced changes in transportation and distribution.
"Our supply chain used to be linear," said Russ LoCurto, Polo''s senior vice president of global logistics. Supply lines stretched from outsourced foreign manufacturers through U.S. West Coast ports to the retailer''s single distribution center in North Carolina.
But company expansion, cut-throat retail competition and ballooning transportation costs are pushing Polo toward a more direct-sourced, technology-enabled strategy, said LoCurto.
The goal is to have containers pre-packed at origin (usually Asia) for direct delivery to retail stores around the globe, bypassing distribution centers whenever possible.
"Polo is moving toward a leading-edge distribution strategy," said Ben Hackett, executive managing director, international consulting, at Global Insight. More shippers are moving to direct-source strategies as technology lets them see what''s being made, where and when, so that pallets, boxes and even items can be distributed to customers by the shortest and least costly route, said Hackett. "It just takes more management and better systems to facilitate it," he said.
LoCurto says Polo''s new logistics programs have reduced labor and transportation costs. These programs rely on visibility into the operations of the apparel company''s suppliers, carriers and third-party logistics providers to assess capabilities, distribution networks, processes and procedures.
All that is handled by Polo''s centralized supply chain management operations in North Carolina. "Visibility is one of the arguments against decentralization," LoCurto said.
LoCurto described one Polo program as "3PL Direct Ship." Customer orders are pre-packed at origin. Ocean consolidators build dedicated containers by customer. Product is then taken by a 3PL near a U.S. port of entry and shipped directly to the customer''s distribution center, completely bypassing Polo''s North Carolina facility.
Order lead times are reduced seven to 10 days, LoCurto said, while speed to the sales floor is increased.
Polo also operates an "International Drop Ship" program for its foreign customers and outlets. Again the North Carolina DC is bypassed and the product never crosses U.S. borders. Polo sends a customer- and supplier-specific purchase order to its suppliers and consolidators. The supplier sends product and associated advanced shipping notices to the consolidator. The consolidator confirms receipt and notifies Polo, which issues export and other compliance documents to the consolidator, who forwards freight to international customers.
Polo also utilizes a "Direct to Store" DC bypass strategy that eliminates unnecessary transport to the DC while offering the fastest available movement from initial product design to delivery.
Fashion designs are delivered electronically to manufacturers supplying Polo''s Rugby line. The factory ships via air freight directly to the store, which immediately places product for sale, bypassing all distribution centers.
"All of this requires an enormous amount of supply chain visibility," LoCurto said. Polo''s North Carolina-based central supply chain management office uses a Web-based systems for global accessibility. The office maintains standard EDI interfaces between Polo''s systems and partners, with real-time visibility that supports in-transit planning and decision-making critical to hyper-competitive fashion markets.
The system especially requires close cooperation with suppliers, customers'' distribution centers and Polo''s own third-party logistics providers.