1. Optimizing Fashion Supply Chains between Turkey and the Netherlands Kees Verweij Senior Logistics Consultant, TNO Logistics Clustering Conference Istanbul, October 25-26, 2007

2. Logistics strategies for EU fashion sector Around 1000 European DCs located in the Netherlands Many fashion EDCs: e.g. Liz Claiborne/Mexx, Donna Karan, C&A, We International Trend: product life cycle of fashion articles is decreasing: from 6-9 months to 3 weeks-2 months EU fashion retailers need reliable fashion manfacturers

3. European Distribution Centers in Netherland

4. Logistics strategies for each article

5. 1.Design/manufacturing based on demand from shopping outlets 2.Quick design decisions in the head office 3.Short throughput time of production 4.Cross-dock function of Dutch Distribution Centre 5.Quick sale of fashion articles in shopping outlets Logistics for fast fashion

6. Focus on lower logistics costs Critical success factor in fashion: focus on lower integral logistics cost instead of sub optimizing parts of the chain Method: Keep stock of low value upstream in the supply chain at manufacturers

7. The supply chain

8. Lay-out Zara European DC Zaragoza, 135,000 m 2 Sorting of boxes 33% Sorting of hanging garment 67% 1 2 3 11 1 5 7 6 89 12 13 14 15 16 17 18 4 10 Lay-out not to scale Storage/picking of small/special articles Unloading of boxes (33%) Storage pallets/boxes Female Storage pallets/boxes Male/Kids Sorting of boxes Selection/merge area box sorter Mini load area (23 m high, 5 cranes) Sorting center complete/ break down boxes Manual unpacking of articles article sorter Sorting ovals of articles Sorting of loose articles in box to shops Sorter for boxes to loading area Unloading of hanging garments (66%) Aorta sorter hanging garment Storage of hanging garment (1- 2 days of storage) Stock of hanging garment (at first floor above 1-2 days buffer) Sorting of hanging garments Loading of trucks with boxes/hanging garment

9. INDEX 10.Sorting ovals of articles 11.Sorting of loose articles in box to shops 12.Sorter for boxes to loading area 13.Unloading of hanging garments (66%) 14.Aorta sorter hanging garment 15.Storage of hanging garment (1-2 days of storage) 16.Stock of hanging garment (at first floor above 1-2 days buffer) 17.Sorting of hanging garments 18.Loading of trucks with boxes/hanging garment 1.Storage/picking of small/special articles 2.Unloading of boxes (33%) 3.Storage pallets/boxes Female 4.Storage pallets/boxes Male/Kids 5.Sorting of boxes 6.Selection/merge area box sorter 7.Mini load area (23 m high, 5 cranes) 8.Sorting center complete/ break down boxes 9.Manual unpacking of articles article sorter

10. Late design & ordering implies less sales Business case Zara: every 2 weeks 50% of shop fashion collection is new this leads to less sales and more profit

11. Commitment

12. Logistics costs % in different European sectors (2003) Fashion retail supply chain is very cost sensitive Stock Administration

13. Three different transport modes NL TK

14. Use of rail/shortsea Total cost door-to-door Distance

15. Economic Trade-Off analysis Lower transport costs by rail and short sea should off-set against higher handling and pipe line costs

16. Pipe line

17. Times of transport: Road

18. Times of transport: Short sea

19. Evaluation of the multimodal system Main benefits 1. Savings on logistics cost Transport cost of rail/short sea are lower 2. Potential for bundling flows Bundling LTL flows through cooperation 3. Extra flexibility Potential use of 3 transport modes Main disadvantages 1. Longer pipeline times Extra activities can lead to longer pipe lines 2. Changing customer demands How can bundling be achieved with changing customer demands 3. Change in logistics processes Does the use of multimodal transport result in logistics changes?

20. Comparison of transport modes Price index Average transit-time (days) Freq.Q (000 t) Load Unit Flexib. Road100,007Daily13Trailer 85 m 3 High Rail87,505 - 61/w-Container 45 ft low Short sea 52,0812 - 21Many/w611Container 20/40 ft low

21. Hybrid network for changing fashion demand patterns Demand Pattern Fashion Peaks and urgent shipments Guaranteed demand

22. Managing the Fashion Chain 1 supply chain orchestrator (4pl) FCC: Fashion Consolidation Center FDC: Fashion Distribution Center

23. FCC Terminals Manufacturer fashion Manufacturer basics Manufacturer trendys Supplier mixed goods Warehouse retailer Retailer Optimal supply chain