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Divided Pic 6: Whistles Women 74
S U P P L Y C H A I N, LOGISTICS, E T H I C S & S U S T A I N A B ILITY
6 By Aurelie Lacambre (Lily)
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INTRODUCTION
Pic 30: Ready to wear –AW 14
Whistles’ CEO, Jane Shepherdson set the band vision to be highly committed to ethical and eco-friendly fashion. Based on this principle, all Whistles products are said to be manufactured under safe and humane working conditions. Ms Shepherdson has created an ethical policy at Whistles which is to find out exactly where everything is made by visiting key suppliers and ensuring that nothing is subcontracted. This chapter will critically review the matters of product sourcing, supplier relationships, supply chain and logistics while focusing on the brand’s ethics and sustainability policies.
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Research rationale Supply chain operation are both essential and a challenge for any business. In order to get a comprehensive view of the organisation behind a fashion brand it is necessary to understand all the elements ensuring the business’ competitiveness. For this reason this research focuses on getting the knowledge about the supply chain operations and aims at evaluating them for Whistles’ company.
“Our values of fairness, integrity and transparency are encompassed in all that we do and are extended to those who touch our products so that they share in our growth and prosperity. We are committed to ensuring that our products are safe for consumers’ use and manufactured under safe, fair, and humane working conditions. We are dedicated to reducing our environmental impact and we strive to make a positive difference within the local and global communities in which we work. We will actively engage with critical stakeholders who want to contribute to our progress in a positive way.� (Whistles, official website)
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METHODOLOGY
T
he aim of the chapter is to evaluate the supplychain strategies of Whistles taking into account ethical matters such as sourcing policy and Corporate Social Responsibility while evaluating its logistics, distribution and risk management. Along with the pragmatism philosophy, realism and interpretivism paradigms were also chosen as researchers in this study interpret data gathered from another culture viewpoint which means it is subjected to different interpretations. This view emphasizes on the idea that researchers, contrary to scientific research, are not objective, but a part of what they observe (Collis and Hussey, 2014, Saunders, 2012). The inductive approach was followed as observations and data were first collected to then reach conclusions and theories concerning the brand Whistles. (Collis and Hussey, 2014, Saunders, 2012). The approach adopted for this study was qualitative, it was chosen because of the uniqueness of the research (Ali and Birley, 1999; Gilchrist, 1992; Hofer and Bygrave, 1992). A great part of the research strategy consisted of getting in contact with key informants that would agree to share their 78 knowledge on the various matters with us.
These key members were viewed as “individuals who possess special knowledge, status or communication skills, who are willing to share their knowledge with the researcher and who have access to perspective or observations denied to the researcher,” (Gilchrist, 1992). In depth e-mail interviews were conducted to collect primary data, some staff were contacted on the phone for interviews and we also had one-to-one meetings. Indeed this method was chosen as it was the best fit possible to get the information only the people in the company are aware of. Secondary data was also collected through a review of the literature. The research project was conducted over a three month period from February to April 2015. For this reason we can say that it had a longitudinal view but it also includes some time specific observations thus some parts are cross-sectional as well (Saunders, 2012).The encountered limitations for this research were the very small amount of official information publicised from the brand itself. The theories and models used in this chapter are Porter’s value chain and the SWOT analysis. Porter’s value chain is an effective tool to explain how the brand decided to focus on its core activity while outsourcing support functions. The SWOT tool was used to evaluate the supply chain operations in order to determine potential recommendations.
The supply chain can be defined as the flow of goods, information and also money. According to Hines: “the supply chain encompasses all activities associated with the flow and transformation of goods, products and services from initial design stage through the early raw material stage on to the end user. Additionally, associated information and cash flows form part of supply chain activities” (Hines, 2013). Supply chain management is defined as ‘aligning the processes of upstream and downstream supply partners to deliver superior levels of service to the end customer while minimising waste’. Logistics supports competitiveness of the supply chain by meeting end-customer demand by supplying what is needed when it is needed at low cost (Harrison, A., 2005). Whistles logistics is not aiming at speed or cost efficiency, unlike other brands, but at quality in the logistics process.
SUPPLY CHAIN
LITERATURE REVIEW
THIRD PARTY LOGISTICS PROVIDER In a very competitive environment, more and more companies outsource their logistics operations to third parties. Logistics not only involve trucking but also warehousing, inventory control, information sharing systems and planning. Due to its complexity, the number of specialists in this industry has grown. Retail brands sign long term relationships with 3PL who firstly cater to the transportation activities. According to Lieb and Kendrick, 3PL service providers dealwith transportation, warehousing, freight consolidation and distribution, product marking, labelling and packaging, inventory management, traffic management, freight payments, cross docking, product returns, order management, carrier selection, rate negotiation and logistics information systems (Lieb and Kendrick, 2003). Clipper group is the 3PL service provider for Whistles and other fashion brands such as C&A and Mint Velvet.
ETHICS Pic 31: Whistles at London fashion Week
Svensson identifies two key elements in today’s supply chain management, globalization and ethics (Svensson, 2007). This is particularly true to the Whistle brand as it operates globally and has ethics matters embedded in its core values. Witkowski defines ethical sourcing as “assuming the responsibility from all actors in the supply chain” (Witkowski, 2005). This implies the company is responsible for engaging with suppliers to contribute to more ethical ways of working. Whistles puts great emphasis on making sure garments are manufactured in human respectful conditions and conduct factory audits on a regular basis.
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SUSTAINABILITY SSCM (Sustainable Supply Chain Management) is “the management of material, information and capital flows as well as cooperation among companies along the supply chain while taking goals from all three dimensions of sustainable developmentâ€? (Seuring and MĂźller, 2008). Sustainable development is the social progress which recognises the needs of everyone, effective protection of the environment, prudent use of natural resources and maintenance of high and stable levels of economic growth and employment (Waters, D., 2010).
CSR
RISK MANAGEMENT
Corporate social responsibility means that companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (Dahlsrud, 2008). The CSR construct is built on five dimensions: environmental, social, economic, stakeholder, and voluntariness (Dahlsrud, 2008). Communicating on CSR issues strengthens the brand and the company reputation (Ottman, 2011, Porter & Kramer, 2009). Therefore, CSR adds value to the brand equity and to stakeholders. Ethics and Corporate social responsibility are core to Whistles values. Those benefit the brand as consumers get more and more aware of ethical matters and base they purchase decisions on ethical criteria, as the following studies demonstrate (Grimmer and Bingham, 2013, Marquina and Morales, 2012, also refer to appendix 2).
As sourcing became more global, in recent years, a higher level of risk is then associated with such practices. Risks can be related to currency fluctuation, political or economic factors in the manufacturing countries, lead time variability, legal considerations and many more. This is true for Whistles which sources products both from Europe and from the Far East. Risk management seeks to address all three dimensions of the risk construct (i.e. likelihood of occurrence, outcome consequences and causal implications) by analysing the sources, seeking to understand the forces that may drive a particular events in a view to create positive outcomes preventing those to alter the business performance. Uncertainty is another key matter related to risk, describing a situation in which decision maker are not able to view all the eventual implications of an event, i.e. a situation in which information and awareness are very limited (Paulsson, 2004). Example of risk management solutions are insurance, information sharing, relationship development, agreed performance standards, regular joint reviews, joint training and development programs and inter-partnership structures (Ritchie and Brindley, 2007).
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1 . Logistics and distribution Whistles decided to outsource its warehousing and logistics operations to a third party logistics services provider. The contracted company in charge is Clipper Group. Clipper Logistics Group Limited is one of the UK’s leading high value and retail logistics specialists based in Leeds. The Group started in 1992 and has now grown to a network of 28 distribution centers throughout the UK employing 2,500 staff and occupying 3,500,000 square feet of warehousing space with a fleet of 650 vehicles (Clipper official website). Clipper’s clients include Armani, Harvey Nichols, Next, Top Shop, TK Maxx, C&A, Whistles and Mint Velvet. Clippers recently secured new contracts with John Lewis, Tesco, Asda, Anthropologie and Aurora Fashions. Clipper runs a long-term plan for its European contracts with C&A, Whistles and Mint Velvet (Clipper official website). This element identifies a great benefit for Whistles which is to achieve economies of scales by sharing resources, as Whistles and Mint Velvet share the same storage floor in the warehouse and uses the same Retail Assist Merret software solution (refer to appendix 4.2).
Clipper is a retail logistics specialist, which provides value-added, consultancy-led services to its blue chip client base. Clipper is a UK leader in its markets, with a longstanding customer base in: - e-fulfilment - fashion - high-value logistics (Clippergroup.co.uk, official annual account, 2014) This corresponds to the premium positioning of the brand and the high value of its product, Clipper as being expert for managing high value products even get the most valuable items to be air freighted (refer to appendix 4.2).
“We provide an end-to-end service from holding stock, taking orders from the website, picking and packing and handling returns – everything apart from taking the cash and making the deliveries, where we use standard parcel carriers.” says Clipper’s CEO, Tony Mannix (The report, retail warehouses magazine,2013).
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DISCUSSION
Figure 6.1: Clipper DC, valuable items such as jewelry are kept safely in a wire fence near by the office, (Author’s own).
Figure 6.2: Clipper warehouse, (Author’s own). Figure 6.3: Clipper DC, Whistles garment loading on the truck, (Author’s own)
E-fulfilment operations include the receipt, warehousing, stock management, picking, packing and despatch of products on behalf of customers to support their online trading activities (Clippergroup. co.uk, official annual account, 2014). The contract also includes an extensive range of pre-retail services, such as quality control, steam tunneling and hanging (Clipper official case study). Whistles products are received from supplier factories at Clipper’s Milton Keynes facility and distributed to more than 120 retailers and online customers worldwide (Clipper official case study). Allport cargo services is the freight forwarding company in charge of sending goods from suppliers factories to Clipper’s warehouse (refer to appendix 4.2).
stores
The freight forwarder collect relatively small loads and consolidate them into bigger loads travelling between the same points reaching lower unit cost and faster delivery. This company also provides all the administrative documents such as custom clearance and insurance (Waters, D., 2003). Milton Keynes is the strategic location for all UK retailers, as it is in the center of the country on the M1 motorway connecting London to Nottingham and Leeds. The first contract was signed for the 2011-2014 period and was renewed for the 2014-2018 period making the partnership endure for 8 years (Clipper official case study). The contract underlines the longevity of the partnership and will allow for continued customer service excellence.
e-commerce orders
Figure 6.4: Whistles Supply chain loop, (Author’s own).
wholesale To the DC in Milton Keynes clipper
From the port transported by Allport cargoship
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consumer
SUPPLY CHAIN
return to DC Return to store
Supplier 1 Supplier 2 Supplier 3
In the case of Whistles the decision to outsource was made to allow the company to benefit from the expertise of the logistics specialists whilst focusing on its core activity being sourcing and merchandising its product range. Whistles does not manufacture its products, i.e. not a vertical operator, the “make or buy decision is similar. Focusing thus on its core competence, Whistles outsources the manufacturing process to independent suppliers.
Figure 6.5: Reasons for outsourcing, (Monczka, et al, 2005).
Figure 6.6 : Gaining a competitive advantage, inspired from Michael Porter’s value chain model, (Author’s own).
The in-house activities only focus on the stages of designing the product, sourcing the raw materials, sourcing the finished product and then managing merchandise allocations to stores and to on-line orders. All support activities, not seen as a source of competitive advantage, are outsourced including manufacturing, transporting, warehousing, managing the website platform and IT business programs. The role of the 3PL is to be flexible to accompany and allow Whistles to pursue their international growth strategy as the business continues to grow its customer base and sales.
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Figure 6.7: The advantages and problems associated with the use of 3PL, (Author’s own).
PROS • • • • • • • • •
Reduce infrastructure costs and investment. Access to logistics expertise allowing users to achieve supply chain solutions that minimise total delivered costs. Increased access to world-class resources, processes, services, and technologies. A strategic partnership with a company, whose core activity is specialising in logistics, allowing you to increase focus on your core competencies. Reduced inventory costs through improved management. Economies of scale through sharing resources. The flexibility to respond quickly to changing market trends, changing business environments, and peak periods without major disruptions. Real-time integration of distribution system into ‘host’ system leading to accurate and timely data reporting – adding value to the manufacturing and marketing operations (refert to appendix 4.2). Improved customer service through shorter shipment times. More scalable logistics operations and clearly identified total logistics costs. Productivity gains through more effective management with the use of infromation technology systems.
CONS • • • • • • • •
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Pic 31: Best of LWF Back Stage Beauty SS15
• •
The brand and the 3PL do not share the same objectives which may lead to disagrement or dissatisfaction. Efficient communication is essential to sustain a business healthy relationship. If trust level is low then the relationship is bound to failure. The 3PL has to be honest and transparent about operations. The brand has less control upon operations. Responsiveness to customer needs can be low (van Damme and Ploos van Amstel, 1996) Leakage of sensitive information is a risk Loss of customer feedback (Selviaridis, 2008)
2. Sourcing from contracted suppliers The key criteria for supplier selection are skills and expertise primarily, then come cost and lead time. European manufacturers are chosen for they can provide particular quality of expertise, as well as for their proximity to the markets in which products are sold resulting in shorter lead times (refer to appendix 4.3). The choice is also made on the basis to select skills and qualities for the lowest price acceptable. Italy is a famous country for accessories manufacturing, i.e. shoes, bags, jewelry, glasses. When visiting the DC we found out about an Italian supplier, Lunatika SRL which is a manufacturer of travel luggage, leather goods and handbags. We concluded that Whistles sources some of its bag collection from this manufacturer.
Figure 6.9: Boxes of Whistles goods, Clipper DC, (Author’s own).
Spain is used a lot for shoe manufacturing (refer to appendix 7). Shoe manufacturing in Spain is concentrated in the Catalonia region and especially near Valencia. In 2013, Spanish footwear exports reached a record value of 2 286 million euros, a 9.1% growth from 2012 (worldfootwear.com, May 2014). Almost two thirds of the total Spanish footwear exports go to the European Union (74%). In fact, top 5 buyers of footwear from Spain are France (21%), Italy (10%), Germany (9%), Portugal (9%) and United Kingdom (8%). The Spanish Footwear Association highlights innovation as the key element to guarantee Spanish products staying competitive in the future. “The challenges and priorities facing the sector in the coming years are to remain competitive in the segments of mediumhigh and high consumption through technological innovation as the basis for improving globally product quality and enhance even more the ‘made in Spain’ brand in international markets” (worldfootwear.com, may 2014).
Figure 6.9: Boxes of Whistles goods, Clipper DC, (Author’s own).
Figure 6.10: Whistles shoe in Nottingham’s store, (Author’s own).
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Turkey is specialised for jeans manufacturing (refer to appendix 7). Turkey is an important producer of both denim fabrics as well as denim garments. With over $2 billion of denim jeans exports (out of a total of about $5 billion + textile exports) and over 200 million meters of denim exports, denim is a big part of the Turkish Textile Industry (Agarwal, S., 2009).
Pic 32: Best of LWF Back Stage Beauty SS15
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Portugal is specialised for jersey wear and basic casual t-shirts (refer to appendix 7). Portugal has around 5000 companies working in all sectors of textile and clothing industry. The majority of them are small and medium companies, all well-known for their flexibility and quick response, expertise and innovation. The textile and clothing companies are mainly placed in the north of Portugal (Porto). The cost is more expensive than in the Far East but the quality is high.
Whistles also has some leather pieces in its collection, mainly jackets which are sourced from India. The ultimate quality of the Indian leather combined with efficient craftsmanship has secured a sturdy place for Indian leather goods in the global market. Indian leather industry is getting more organized, with a springing capacity for expansion (Indian mirror). Apart from being the ninth largest exporter of leather products it is also the second largest producer of footwear and leather garments, with an annual revenue of USD 8,500 million for 2011-12 with exports of USD 4,868.71 million (onicra, 2014).
Figure 6.11: Whistles bright green tunic, (Author’s own). Figure 6.12: Whistles leather jacket, (Author’s own).
Sourcing from China for very detailed and silk products (refer to appendix 4.3). China’s garment industry is mainly located in Pearl River Delta, Yangtze River Delta, Bohai Sea region and southeast coastal areas. According to the China National Garment Association (CNGA), “with continuous technical innovation and progress, China’s garment industry has gained an advantage in making garment in a fast and timely manner ranking itself first in the world market in terms of capacity and quality” (cnga. org.cn). Recent laws voted in favour of workers pushed companies seeking low manufacturing costs to move out from China to produce in cheaper locations leaving only industries focusing on quality rather than on lowest production costs (refer to appendix 2).
To conclude on these findings Whistles base the selection of suppliers, for its quality fashion garments, on the expertise and skills available. The cost of production is not key to the decision even though still a consideration (refer to appendix 4.3). As among Whistles core values Ethics is a significant part these suppliers are regularly monitored and have to abide by high standards. That is how the next part of the chapter will discuss sustainability matters and suppliers auditing.
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3 . Sustainability and ethical policies Whistles and all its suppliers’ factories abide by a strict Code of Conduct. This Code of Conduct focuses upon 11 core labour rights, e.g. fair remuneration, ethical business behaviour and freedom of association (Whistles press statement, 4 November 2014). Ethics is core to the brand DNA. This comes first from the CEO, Jane Shepherdson view and self-personality. As the non-executive director of People Tree, the fair trade fashion brand, and as creative advisor for the Oxfam charity Jane has been engaging in ethical fashion by helping those organisms with their fashion strategies (refer to appendix 1). Ms. Shepherdson’s commitment to ethical fashion is not something new or shortterm, on the contrary as while working at Topshop she helped investigate labour exploitation among suppliers. She has also been committing socially by taking part in various young fashion designer initiatives including the Centre for Fashion Excellence and was awarded an MBE awards in December 2006 for her services to the British Fashion industry (Khauksson , 2008).
Pic 33: Whisles Campaign SS14
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Another commitment to social responsibility appears through the initiative to launch an exclusive range of accessories in partnership with the charitable organisation Trekstock (April, 2013). The collection features five exclusive accessories by five guest designers - Katie Hillier, Holly Fulton, Kate Moross, Maria Francesca Pepe and Bex Rox. The limited edition pieces were made available online at whistles.co.uk and at standalone Whistles stores throughout the UK and all proceeds went directly to the music and fashion charity which raises awareness and support for young people with cancer (fashion united, 2013). Jane Shepherdson engagement in the fight for greater gender equality in the industry is also a part of her CSR commitment. The fashion industry is led by top executives, whom predominantly are males. Due to her own experience, Ms. Shepherdson, reckon it is a tough environment for a women to make her voice heard and for this reason she believes that quotas of women on executive boards should be implemented (Cave, A., 2014; refer to Appendix 2). Whistles label focuses on empowering women, “we’re quite clear that it is a brand run mostly by women and for women. We like to call ourselves the thinking women’s brand. It’s about independent women who are going to look strong and powerful. We’re all feminists here.” says Ms. Shepherdson (Kin Woo, 2012).
for Figure 6.13: The mail on Sunday, Newspaper cover, November 2014 issue.
4. CSR: Campaigning women’s rights
In November 2014, Whistles in collaboration with Elle, launched a range of feminist slogan t-shirts. Following this launch the brand faced some controversy about the working conditions of the people manufacturing those t-shirts from a Mauritian factory. After allegedly touring the factory, yet having no evidence for their claims, allegations originated from the Mail On Sunday newspaper in an article written by Ben Ellery (Meredith, C., 2014). It was agreed between the brand and the Fawcett Society, to whom 100% of the benefits would be donated, that the garments would be ethically produced in the UK. The Fawcett Society is a UK charity which has been campaigning for women’s rights since 1866. Their beliefs are that every woman has the right to be treated with respect and dignity and be valued for who she is. Today’s political, economic and social structures were designed principally by and for men; women should have the power to redress that state of affairs. Changes that improves women’s lives today also creates a legacy for future generations, freeing both women and men from the limitations of traditional gender roles and expectations (The Fawcett society, official website). When the Fawcett Society noticed that samples of the t-shirts had been produced in the Compagnie Mauricienne de Textile (CMT) factory they contacted Whistles by email to ask them to give proof of the ethical working and compliance of this supplier. Whistles assure that CMT is a world class multinational company, with manufacturing sites in Mauritius and regional offices in the U.K., in France & in Asia. They state that CMT is a completely integrated textile mill and its ongoing
success can largely be attributed to its innovative and integrated approach (The Fawcett society, November 2014). More retailers are requiring vendors to sign contracts that mandate them to guarantee that all goods are produced in compliance with laws such as fair labor standards acts. In the absence of any vendors standards, companies run the risk of having their images tarnished when substandard working conditions are made public (Diamond, E., 2006).
was operating in ethical ways as the various audits conducted did not reveal particular issues (supply management, 2014). In 2013 four BSCI (Business Social Compliance Initiative accreditation) and four SMETA audits were undertaken at CMT. In September 2014, CMT was audited four times under the Ethical Trading Initiative (ETI) and Sedex Members’ Ethical Trade Audits (SMETA) by certification company INTERTEK (supply management, 2014).
Regardless of its accuracy, this news had bad impact on the brand, especially on the consumer trust and loyalty. Customers may feel deceived and the way they perceive the brand is impaired (Saunders, M., 1997). They may think that the level of transparency is lower than they originally thought. This could have bad repercussions on customer loyalty as they may be willing to switch to substitution brands.
CMT has the Oekotex accreditation. The Oekotex accreditation is a certification system for environmentally friendly production sites in the textile and clothing industry. The aim is to test and certify the production conditions at a certain textile production site. Verification is carried out by independent auditors from one of the 14 member institutes of ‘Oeko-Tex International - Association for the Assessment of Environmentally Friendly Textiles’. The certificate is valid for three years and has to be renewed regularly.
In order to anticipate such issue from customers, Whistles quickly reacted and claimed the factory
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CMT is a 100% organic cotton, CMIA approved and fair-trade certified garment manufacturer. All of CMT’s vertically integrated operations are accredited by the FLO-CERT Trade Certification for fair trade compliance (CMT official website).
Figure 6.14: Vendor selection and audit criteria, (Author’s own).
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Sam Maher, policy officer at Labour Behind The Label, argues that the certification schemes such as the one used by Whistles to monitor its factories are quite meaningless because they are based on social audits rather than in-depth investigations. He declares: “being ethical requires more effort than making a statement; it requires investment” (Hoskins, T., 2014).
Pic 34 : Whistles Backstage beauty SS15
Benefits of CSR It is believed that orientation towards sustainable development helps today companies increase their market share, build customer loyalty, positively distinguish their brand, improve employee’s morale and loyalty and increase the effectiveness and productivity of their activities. Along with reducing risks of negative social opinions and avoiding future safety threats of the supply chain (Waters, D., 2010).
CSR link with stakeholder value and customer loyalty A firm can develop over time if it is able to build and maintain sustainable relationships with all the members of its stakeholder network (Kakabadse, A., 2006), e.g. CSR issue can be important in attracting retaining and motivating employees thus increasing productivity. As mentioned previously, customers are more and more aware of ethical issues and base their purchasing decisions on their assessment of the trustworthiness of the brand. We can say that Whistles customers are highly loyal to the brand as 58% of the visiting customers on the online platform are returning shoppers (refer to appendix 4.2). Their loyalty can come from various aspects such as quality, style, fit but also fashion garments produced in respect of ethical considerations.
CSR link with shareholder value, i.e. financial value of the company. According to Burchell, “it has not yet been possible to make a strong causal quantitative link between CSR actions and financial indicators such as share price stock market value, return on assets and economic value added (EVA). Some correlations have been shown to exist but not necessarily demonstrating a causal link. In the absence of hard data, most analysis focus on qualitative rather than quantitative relationships, they touch on risk and opportunities, revenues and costs, reputation and access to capital “ (Burchell, J., 2008). Investors are increasingly interested in ranking companies according to their environmental and social performance (Burchell, J., 2008). CSR thus seems to be a strength for the company.
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Figure 6.15: Whistles three spheres of sustainability, (Author’s own).
To conclude better risk management is achieved though CSR practices. Factors such as new technologies, changing societal, regulatory and market expectations take company to have a broader perspective when analyzing the range of risks they may encounter (Burchell, J., 2008).
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CSR helps compliance with regulation and avoidance of legal sanctions when having cross border relationships (Burchell, J., 2008). Notwithstanding it is important for the brand to consider that CSR is costly, e.g. increased cost of reporting and transparency, cost of training on ethical matters, more effort on labour relations, as well as implementing human rights policies (Burchell, J., 2008).
5. Technology and risk management Enterprise Resource Planning (ERP) is a software which allows companies to integrate and store their data so that all functions and working can be found at one place. This software centralizes the data and it is distributed for transparency. By the help of ERP a company can integrate different type of data and flow of information is clearly transferred to all concerned departments. It is a combination of two functions which were used earlier, material resource planning (MRP) and material requirements planning (MRP). Whistles selected Retail Assist’s Merret merchandising and warehousing solution, featuring a Business Intelligence and Corporate Performance Management module powered by BOARD to power its Distribution Centre managed by Clipper Logistics (Retail Assist, 2011). Whistles also uses BT Expedite Store6 EPoS solution (Retail Assist, 2011).
According to the 2014 GS1 US Standards Usage Survey, which measured the use of RFID by manufacturers and retailers, the reason for implementation is to enhance inventory visibility and respond to consumer demands for omni-channel options (Smith, K., 2015 see appendix 2). As a result, for retailers, the technology provides more than 95% inventory accuracy, improved sales, decreased out-of-stocks, increased margins and expedited returns (Smith, K., 2015).
A way to reduce risk in the supply chain is through the use of the RFID technology. Indeed the use of paper is bound to create errors that is why scanners and computerisation helps minimising the level of risk (refer to appendix 2 and appendix 4.2). Moreover, RFID tags enable tighter inventory control and precise tracking of where every skirt or top is at any moment in time. RFID is a maturing technology that supports the modern lean and responsive supply chain to provide better customer service while reducing costs and making better use of resources (Turbide, D., 2015 see Appendix 2). The Auburn University research evidences that RFID offers multiple benefits to manufacturers, including reinforcing authenticity, decreasing inspection costs, reducing shrinkage and enhancing logistics accuracy (Smith, K., 2015).
Whistles use wholesale as a mode of distribution to access new and risky markets such as Russia and Asia. As in the wholesale model, stock is given away to the retailer, Whistles has less control on the operations and it is a way to cease the retail activity to a partner who possesses the knowledge of the local market. The Whistles wholesaleled approach to expand internationally appears as a safe practice. Benefits gained are to face minimal risks, to test the market and benefit from the partner knowledge of the local market. However, relying on traditional wholesale for distribution also comes with challenges, e.g. many of these distribution channels offer only a limited product range from the brand, with no control on merchandising, no customer feedback and lower margins (Court, F ., 2015).
Pic 35 : Whistles Backstage beauty SS15
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The principal risk faced by the company is that product offerings decline in popularity leading to reduced revenues, margin and cash flow. This risk is mitigated by operating a sourcing and merchandising model which focuses on generating fashionable product lines, short lead times and low stock levels (Whistles financial account, 2014). Another solution to mitigate this risk is to have new products in store more often.
According to Jane: “we know that the thing that drives sales is newness of course - we’re obsessed with having something new all the time, so every week we have about 20 new styles that come in. We kind of phase it so that the collection is constantly moving and evolving. It doesn’t just come in, sit there and then we replace it with pre-season. And also we’ll take pieces out, and mark them down if they’re not right. There’s a little bit of the fast fashion trading mentality still within what we do, keeping that flexibility and excitement coming through” (Indvik, L., 2014). Risk of damaging garments along the supply chain process are mitigated with solutions such as opening boxes thanks to punch panels and no sharp tools such as scissors or cutters are allowed, they are strictly forbidden in order to avoid to cause damage to the garments (refer to appendix 4.2).
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Pic 36: Whistles at London fashion Week
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Pic 37: Whisles Campaign SS14
Figure 6.16: Supply chain challenges faced by Whistles, (Author’s own).
Supply chain challenges Quality control Controlling costs Flexibility SC visibility
Whistles QC checks are done upon receiving goods at the DC and also for returned products to decide wether they can be put back on the available stock or sent to factory outlets (appendix4.2). Use of 3PL ensures better management of inventory costs. Whistles SC benefit from good levels of flexibility in tems of the services provided by the 3PL and in terms of sourcing locations. The use of information technology enables Whistles to achieve high level of visibility.
Environmental and social responsibility requirements
Both suppliers and 3PL providers are committed to CSR matters.
Political or environmental risk disrupting SC flow
Whisltes is subjected to regulations concerning Europe and Asia as well.
Local customs and legislations
The freight forwarder manages the administrative paper work which would suggest this risk is tranfered to Allport.
Freight rate volatility
Use of freight forwarder consolidation reduces the potential consequences of rate volatility.
Delivering a successful multi-channel offering
Customers can decide to return products either directly to DC or to stores. I-pad in stores give access to the website this ensures the success of the multi- channel offering.
Avoiding 96 inefficiencies and increasing profitability
It was decided to make goods arrive to the DC in the flat pack form.
Figure 6.17: Supply chain operation reference model level 1 for benchmarking, adapted from Harrison, A., 2005, p.83.
6. SC EVALUATION
Figure 6.18: SWOT analysis of Whistles Supply Chain, (Author’s own).
S
W
O
T
• Clipper skills and expertise • Allport consolidation of all supplier shipments shared warehouse facilities costs reduction • IT programs used nsure high level of stock accuracy • having only one DC endures consistent value added level of service • wholesale mode of distribution overseas as a way to minimise risks • sourcing from mulptiple suppliers spread the risk and provides more flexibility
• increasing use of IT • sourcing from closer location to reduce lead time • suppliers could produce only Whistles goods which would reduce the risk of copy • for greater availability in the future the brand needs to have a single view of all stock, i.e held in the warehouse but also displayed in stores (appendix 4.2)
• CSR and trasparency issues appeared though the CMT controversy • suppliers audits are not done through in-depth investigation (Hoskins, T., 2014) • sourcing far. as from China, may not fit an ethical image as shipments causes polution product availability for on-line orders, i.e. lack of single view of stock (appendix 4.2)
• risks associated with external factors, politic, economic, environmental, legal, e.g. recession, armed conflict, moonson, theft, environmental laws. • risks from suppliers such as delays or quality issues • Rrsks of counterfeit and copy 97
Pic 38: Whisles Campaign SS14
CONCLUSION AND RECOMMENDATION
Logistics challenge is to reinforce customer loyalty by exceeding expectations via superior service quality. Customer expectations are met with the multi-channel offering and the various choices of deliveries when ordering on-line. Challenge in the supply chain is to satisfy customer needs, i.e. customers require even shorter delivery times, when they buy online they want to receive the product the following day. The 3 to 5 working days for delivery is no longer fast enough, current good practice is to offer next day delivery (refer to appendix 4.2). Currently, Whistles logistics is not providing the company with a sustainable view of all the stock. In the future the company has to achieve greater visibility in the overall stock, the stock held in the warehouse and also the stock available in the stores. This will increase the product availability for e-commerce orders as products can be picked either from the DC or from stores (refer to appendix 4.2). IT systems are crucial to the sustainability of any business that is why in the future the brand will have to keep up to date with business technologies innovations, e.g. as discussed RFID, EpoS and WMS systems. Due to its unique contemporary fashion-forward style Whistles collection is threatened to be copied. Another reason for this is the fact that manufacturers also have other brands as their clients. Recommendations to mitigate such risk would be either to implement patents to protect the intellectual property of Whistles designs or to source from manufacturers that would only produce Whistles goods. These to solutions, surely, will be costly for the brand. But the consequences of the grey market are much more costly to fashion retailers. To provide greater shareholder value the brand should strengthen even more its CSR practices and conduct in-depth investigations in the manufacturing plants as for example when Jane Shepherdson went to visit women working in Bangladesh, with Safia Minney the founder of People Tree (Harries, R., 2009).
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Pic 39: Whistles Menswear
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List of illustration Figure 6.1: Clipper DC, valuable items such as jewelry are kept safely in a wire fence near by the office, (Author’s own). Figure 6.2: Clipper warehouse, (Author’s own). Figure 6.3: Clipper DC, Whistles garment loading on the truck, (Author’s own). Figure 6.4: Whistles Supply chain loop, (Author’s own). Figure 6.5: Reasons for outsourcing, (Monczka, et al, 2005). Monczka, R.M., Markham, W.J., Carter, J.R., Blascovich, J.D., and Slaight, T.H. (2005). Outsourcing strategically for sustainable competitive advantage. CAPS Research. Tempe, AZ. Figure 6.6 : Gaining a competitive advantage, inspired from Michael Porter’s value chain model, (Author’s own). Figure 6.7: The advantages and problems associated with the use of 3PL, (Author’s own). Figure 6.8: Boxes of Whistles goods, Clipper DC, (the opened part on the top of the box is the punch panel referred to in appendix 4.2) , (Author’s own). Figure 6.9: Boxes of Whistles goods, Clipper DC, (Author’s own). Figure 6.10: Whistles shoe in Nottingham’s store, (Author’s own). Figure 6.11: Whistles bright green tunic, (Author’s own). Figure 6.12: Whistles leather jacket, (Author’s own). Figure 6.13: The mail on Sunday, Newspaper cover, November 2014 issue. Available at: http://i.huffpost.com/gen/2234228/thumbs/oMAIL-ON-SUNDAY-FRONT-570.jpg Figure 6.14: Vendor selection and audit criteria, (Author’s own). Figure 6.15: Whistles three spheres of sustainability, (Author’s own). Figure 6.16: Supply chain challenges faced by Whistles, (Author’s own). Figure 6.17: Supply chain operation reference model level 1 for benchmarking, adapted from Harrison, A., 2005, p.83. Harrison, A., & Hoek, Remko I. van. (2005). Logistics management and strategy (2nd ed.). Harlow ; New York: Financial Times/ Prentice Hall. Figure 6.18: SWOT analysis of Whistles Supply Chain, (Author’s own).
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Divided Pic 7: Whistles 104 SS14