Supply Chain Management

SUPPLY CHAIN MANAGEMENT
AND CORPORATE RESPONSIBILITY
ST. GALLEN, 13.11.2014
THOMAS SPIESS, DIRECTOR SCM
ODLO INTERNATIONAL AG
[2]
ODLO WORKSHOP ORGANISATION
12.30
Introduction to Odlo
The Odlo Supply Chain
Challenges in textile value chains
Odlo Corporate Responsibility
13.45
Briefing workshop groups
14.00
Break
14.15
Working in the groups
16.00
Break
16.15
17.00
Discussion group findings
Conclusion and prepartion
for plenum discussion
17.30
Wrap-Up
[3]
CONTENT
 Introduction to Odlo
 The Odlo Supply Chain
 Challenges in textile value chains
 Odlo Corporate Responsibility
[4]
ODLO MANAGEMENT 2014
Jonas Ottosson
CEO
Jonas Ottosson
Marketing
Claes Broqvist
Sales
Thomas Spiess
Supply Chain
Management
Thomas Rast
Finance
[5]
BRAND VISION
«To be a leading international premium sportswear
brand, always one step ahead, for people sharing
our passion for an active lifestyle».
[6]
BRAND MISSION
«To inspire the consumer with outstanding
products, distributed through the right channels,
and based on our vision and values».
[7]
OUR GOALS
To become a brand that moves forward by:
• Innovating our products constantly
• Inspiring ourselves and our consumers
• Increasing our brand value, sales growth and profitability
[8]
ODLO – A BRAND WITH A STRONG HERITAGE
[9]
ODLO IS AN AUTHENTIC BRAND
WITH A STRONG LEGACY
The brand was established in Norway in
1946 and moved to Switzerland in 1986.
Odlo is the inventor of functional sportswear
and offers consumers a broad range of
premium and high-quality products based on
a three layer principle.
Its sports underwear forms the core of its
product portfolio.
We strive to always be One Step Ahead:
[ 10 ]
FACTS AND FIGURES 2013
Headquarter:
Hünenberg/Zug, Switzerland
Employees:
Total:
Switzerland:
Worldwide:
Own Factories:
Romania
Portugal
Logistics Center:
Germany
Markets:
Subsidiary: CH, GER, FR, AT,
BeNe, NOR, CN
Distributor: 11 Europe, 4 Asia
Turnover 2013:
CHF 141 million
758
115
643
IT ALL STARTS WITH OUR BRAND
[ 11 ]
POINTS OF SALES (POS)
Odlo products are offered in more than 4,500 points
of sale worldwide, mainly at specialist sports
retailers.
The Odlo brand is distributed worldwide in more
than 20 countries
Odlo stores overall: 20 mono brand stores,19
franchise stores, 12 outlets and importers for 18
other countries with a worldwide distribution.
Odlo is the European market leader in the segment
of functional Sports underwear with a market
shares between 20% and 50%.
12
PRODUCT CATEGORIES
SPORTS UNDERWEAR
ENDURANCE
running
HIGHLINE
mountain
bike
performance
off-course
x-country
supported by
TEC SHIRTS ACCESSOIRES
[ 13 ]
THE TEMPERATURE CONTROL SYSTEM
X-LIGHT
[ 14 ]
SPORTS UNDERWEAR
[ 15 ]
SPORTS UNDERWEAR
[ 16 ]
RUNNING
[ 17 ]
RUNNING
[ 18 ]
BIKE
[ 19 ]
BIKE
[ 20 ]
CROSS COUNTRY
[ 21 ]
CROSS COUNTRY
[ 22 ]
HIGHLINE
[ 23 ]
HIGHLINE
[ 24 ]
TEC SHIRTS
[ 25 ]
MARKETS TURNOVER 2013
9%
4%
1%
10%
OI Importers
18 %
17 %
Switzerland
Germany
France
Austria
Belgium/NL
Norway
39 %
[ 26 ]
PRODUCT CATEGORIES: TURNOVER 2013
Sales 2013
Underwear
9%
11%
Tec Shirts
4%
48%
Running
13%
Bike
15%
Outdoor
Cross Country
90 % of the underwear and
Tec-Shirts are produced in
own production in Europe
[ 27 ]
Sales per division
SALES 2013:
Inline assortment size:
e.g. Fall-Winter 13/14
Styles on
pricelist
Styles/colors
on pricelist
Division
% of sales
Underwear
48 %
189
541
Tec-Shirts
15 %
62
324
Running
13 %
74
183
Bike
4%
25
30
Outdoor
11 %
62
174
X-Country
9%
60
146
Accessories (for turnover incl in divisions):
95
282
Total size:
687
[ 28 ]
CONTENT
 Introduction to Odlo
 The Odlo Supply Chain
 Challenges in textile value chains
 Odlo Corporate Responsibility
[ 29 ]
ODLO & GLOBAL SUPPLY CHAIN
Suppliers
Production
ODLO International
Importer
Dealer
ODLO
International
ODLO
D
ODLO
Portugal
Fabrics
Accessories
ODLO
CH
ODLO
Romania
EU
ODLO
F
International
Distribution Center
Brüggen (D)
Others
ODLO
AT
ODLO
BeNe
ODLO
NO
Israel
ODLO
CN
ODLO
Trading
Far East
Importers
Warehouse
Importers
Local
Local
Dealers
Dealer
Dealers
Local
Local
Dealers
Dealer
Dealers
Shops
Customers
POS
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
[ 30 ]
FABRICS PRODUCTION
Yarn and Fabrics Suppliers
Production
Importer
ODLO
International
Filament
Yarn
(D)
ODLO
D
ODLO
Portugal
Spinning
(D)
Knitting
(P)
Finishing
(P)
ODLO
CH
ODLO
Romania
EU
Dyeing
(P)
Dealer Shops Customers
ODLO
F
International
Distribution
Center
Brüggen (D)
ODLO
AT
ODLO
BeNe
ODLO
NO
Israel
ODLO
CN
ODLO
Trading
Far East
Importers
Warehouse
Importers
Local
Local
Dealers
Dealer
Dealers
Local
Local
Dealers
Dealer
Dealers
POS
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
[ 31 ]
SUPPLIER FABRICS
[ 32 ]
PRODUCTION PORTUGAL: MAKING
[ 33 ]
PRODUCTION PORTUGAL
[ 34 ]
PRODUCTION ROMANIA
Odlo Factory
In Roman
[ 35 ]
PHASE III: DOUBLING OF SPACE IN 2012
out
in
New building 4:
Export and
Stock:
2‘500 m2
• Total Employees 400
• 10,000 sqm of production area
• 12’000 pieces / day
New building 3:
Sewing Lines: 2‘500 m2
[ 36 ]
PRODUCTION ROMANIA
[ 37 ]
PRODUCTION ROMANIA
[ 38 ]
PRODUCTION ROMANIA
[ 39 ]
PRODUCTION ROMANIA
[ 40 ]
PRODUCTION ROMANIA
[ 41 ]
PRODUCTION ROMANIA
[ 42 ]
PRODUCTION ROMANIA
[ 43 ]
PRODUCTION ROMANIA
[ 44 ]
PRODUCTION ROMANIA
[ 45 ]
PRODUCTION ROMANIA
[ 46 ]
PRODUCTION ROMANIA
[ 47 ]
PRODUCTION ROMANIA
[ 48 ]
PRODUCTION ASIA
[ 49 ]
PICKING AND PACKING
[ 50 ]
PACKING AND SHIPPING
[ 51 ]
ODLO GLOBAL SUPPLY CHAIN: LOCATIONS AND GOODS FLOW
[ 52 ]
ODLO GLOBAL SUPPLY CHAIN: LOGISTICS CENTRE
Suppliers
Production
ODLO International
Importer
Dealer
ODLO
International
ODLO
D
ODLO
Portugal
Fabrics
Accessories
ODLO
CH
ODLO
Romania
EU
ODLO
F
International
Distribution Center
Brüggen (D)
Others
ODLO
AT
ODLO
BeNe
ODLO
NO
Israel
ODLO
CN
ODLO
Trading
Far East
Importers
Warehouse
Importers
Local
Local
Dealers
Dealer
Dealers
Local
Local
Dealers
Dealer
Dealers
Shops
Customers
POS
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
[ 53 ]
2013: CONCENTRATE AT 1 LOCATION
[ 54 ]
SALES AND LOGISTICS OFFICES
[ 55 ]
LOGISTICS PROCESSES: OVERVIEW AREAS
Goods entry
Expedition / Shipping
Palettes storage
Pick area
Returns department
Buffer erea returns / value added services (VAS)
Value added services (VAS)
Packing area (1st floor)
Reserve area (2nd floor)
1600 m²
1200 m²
5900 m²
5900 m²
600 m²
600 m ²
600 m²
1800 m²
7800 m²
[ 56 ]
AERIAL VIEW
[ 57 ]
ODLO GLOBAL SUPPLY CHAIN: POS
Suppliers
Production
ODLO International
Importer
Dealer
ODLO
International
ODLO
D
ODLO
Portugal
Fabrics
Accessories
ODLO
CH
ODLO
Romania
EU
ODLO
F
International
Distribution Center
Brüggen (D)
Others
ODLO
AT
ODLO
BeNe
ODLO
NO
Israel
ODLO
CN
ODLO
Trading
Far East
Importers
Warehouse
Importers
Local
Local
Dealers
Dealer
Dealers
Local
Local
Dealers
Dealer
Dealers
Shops
Customers
POS
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
Local
Local
Dealers
Dealer
Dealers
POS
[ 58 ]
ODLO RETAIL STORES
[ 59 ]
NEWEST STORE IN DÜSSELDORF
[ 60 ]
CONTENT
 Introduction to Odlo
 The Odlo Supply Chain
 Challenges in textile value chains
 Odlo Corporate Responsibility
[ 61 ]
SCM CHALLENGES
TRADE OFFS & INTERDEPENDENCIES
Lead time
internal
development
Transport
Truck/Sea/Air
Time
cost
Complexity
of collection
- Fabrics
Lead - construction
time
fabric
Lead
time
producer
Optimal
Capacity
load
Sourcing
EU production
FE production
right product
right quality
right price
right quantity
at the
right time
Production
Orders
based on
estimation
Fixed
Capital
at stock
Demand
Planning
accuracy
Delivery
Delays
Late
customer
orders
Trade
demand
for earlier
delivery
windows
61
[ 62 ]
SEASONAL DEMAND
Seasonal preorder and reoorder demand on time axis
Jan
Feb
Mrz
Apr
Mai
Jun
Jul
Aug
Sep
Okt
Nov
Dez
[ 63 ]
WILL IT BE A COLD WINTER ?
[ 64 ]
WILL IT BE A COLD WINTER ?
[ 65 ]
WILL IT BE A COLD WINTER ?
2013
2014
Average season
Week 34
Week 47
Week 7 2014
[ 66 ]
NEVER OUT OF STOCK SALES: WEEKLY REORDERS DURING WINTER SEASON
[ 67 ]
STOCK MANAGEMENT
NOS-Availability in %
100.00
99.00
98.00
97.00
96.00
95.00
94.00
93.00
92.00
91.00
90.00
[ 68 ]
FLEXIBLE SETUP - ODLO SUPPLY CHAIN ORGANIZATION UNITS
ODLO International SCM Coordination
Europe (EMEA)
Far East
Central Warehouse
ODLO Innovation
Tech Center
Portugal
ODLO
Sourcing
ODLO Logistik GmbH
Development
Samples
Protos
Production
control
ODLO Factory
Romania
Producers
Producers
EMEA
EMEA
Warehouse operations
International Distribution
Outbound Logistics
QA
Development
Coordination
Sourcing
Follow-up
QA
Producers Asia
[ 69 ]
SUPPLY CHAIN STRATEGY
Sourcing & Production & Logistics:
 Sourcing decision based on a
service/quality/technology and cost matrix
Core Business Underwear and Midlayers
• Major volumes at own Production in Romania
•
in Portugal
•
Swing
Europe
• Partners for specific technology in Europe
Other Divisions
• Labor intensive products (jackets/pants) with Asian
producers
• Based on fabric origin and production technology
Logistics
• Central distribution with value added service
• With own European Logistics Centre
(bonded warehouse)
• Fast deliveries to customers and consumers
[ 70 ]
PRODUCTION IN LOW COST COUNTRIES
KEY SUCCESS FACTORS
•
•
•
•
•
•
•
•
•
Internal production know how important for sourcing
decisions
Combination between European knowhow and low cost
production facilities
Very common in the textile industry:
• HQ in Portugal  production in Romania
• HQ in Italy  production in Romania
• HQ in Germany  production in Bulgaria
Long term partnerships
Asian production with western management to bridge
cultural issues
 do not underestimate the language!
Direct contacts and collaboration with factories
 avoid agents!
No material «tourism»
 local material and components sourcing
A flexible sourcing portfolio that allows cross quotations
and fast source allocation if needed
Combination with own production, external production in
different world regions
[ 71 ]
EUROPE VERSUS ASIA
•
•
Consider the needed technology: Asia is sometimes even
more advanced than in «old» Europe
High production minimums are for small companies a
challenge
Closeness to the main markets: responsiveness & speed
Transport costs are not influencing the sourcing
•
•
Different situations in different Asian countries
India
•
Sri Lanka: Very professional setup attractive cost base
(very good price/value relation)
Bangladesh: A lot of negative reports in the news /
critical situation
Thailand: increasing salaries
China: in the last years we experienced a steep salary
increase (higher salaries than in Romania)
Made in China = means more and more  high quality
/advanced technology
Vietnam: increasing salaries but still interesting because
of advanced technology
•
•
•
•
•
•
[ 72 ]
SUPPLY CHAIN MANAGEMENT: COST & MARGINS
Sourcing & Product Development:
•
Design to cost / Fabrics development
•
Fabrics suppliers relationship management
•
Management of collection / range complexity
Sales and Operations Planning
•
Constantly improved forecast quality
•
Demand and supply management organization
•
Reduce leftovers and better stock level / service
level relation
Production (internal and external)
•
Manage seasonal demand and capacity load
•
Efficient order runs (production minimum
quantities)
•
Production flexibility
Logistics & Distribution
•
Efficient warehouse processes for specific
customer needs
•
Fast deliveries to customers and consumers
•
Efficient returns handling
[ 73 ]
CONTENT
 Introduction to Odlo
 The Odlo Supply Chain
 Challenges in textile value chains
 Odlo Corporate Responsibility
[ 74 ]
CORPORATE SOCIAL RESPONSIBILITY
CSR is an ongoing process, integrated in our
organisation and not a project.
We are a member of the Fair Wear
Foundation in order to continously challenge
ourselves as well as our producers.
It is our goal to take all measures to avoid
any crises or incidents
When taking business decisions we are
considering ecological and social aspects
equally to economical aspects
BE INSPIRED.
GO FURTHER.
[ 75 ]
WE ACT WITH SOCIAL AND ECOLOGICAL
RESPONSIBILITY
CR
Corporate
Responsibility
CSR
corporate
social
responsibility
CER
corporate
ecological
responsibility
[ 76 ]
THE CR FRAMEWORK
Social Responsibility
Social Partner:
Fair Wear
Foundation
Transparency
Code of Conduct &
social auditing
Measures following new
findings (CAPs)
International activities like “bike to
work” or “charity runs”
Exchange with other
brands (EOG, WFSGI)
Processes
Training
ODLO Climate
Initiative
Eco Partners:
ÖkoTex100,
myclimate,
(bluesign)
Ecological Responsibility
[ 77 ]
CR VISION FOUNDED IN THE CORPORATE VISION
passion
we care
one step
ahead
we share
we act
[ 78 ]
CR POSITIONING
High investment
understatement
CR = USP/UAP
Big
players
Odlo
2016
Odlo
2013
Reactive
communication
Proactive
communication
Odlo
2003
wait, see and die
Low investment
greenwashing
[ 79 ]
FAIR WEAR FOUNDATION MEMBERSHIP
Odlo is member of Fair Wear Foundation
since 2008:
•
•
•
•
•
•
Multi stakeholder initiative, independent
organisation
Mission: Improve labour conditions in the
garment industry
International verification initiative
(social audits at producer site)
Yearly assessment of management system
improvements
Most restrictive Code of Conduct on the market
High level of transparency
[ 80 ]
FAIR WEAR FOUNDATION MEMBERSHIP
Code of Conduct
•
•
•
•
•
•
•
•
Employment is freely chosen
No discrimination in employment
No exploitation of child labour
Freedom of association & right of
collective bargaining
Payment of a living wage
No excessive working hours
Safe & healthy working conditions
Legally binding employment relationship
We have all of our manufacturers sign the
code, which is based on the conventions of the
International Labour Organization (ILO) and
the Universal Declaration of Human Rights.
[ 81 ]
ODLO CLIMATE INITIATIVE 2013-2016
EXISTING PROJECTS
Awareness
Program
•
•
•
CSR Training
Local Eco Reps
Life Cycle Film
Innovation
Program
•
•
•
Guidelines for
Design & Sourcing
New Materials &
Technologies
Evaluate STEPS by
Oekotex
Resources
Program
•
•
•
•
•
Cutting waste
Packaging (boxes)
Office garbage
Product donations
myclimate life cycle
study for greentec
[ 82 ]
COOPERATION / MEMBERSHIPS
CSR Committee
SWG
[ 83 ]
CR 10 KEY MESSAGES
1.
Odlo is a Swiss company with a long family
tradition and high quality standards.
2.
Odlo produces nearly two Third of its
products in Europe, most of it in its own
factories in Portugal and Rumania.
3.
Odlo has less than 20 producers which are
carefully checked.
4.
Odlo has long term partnerships with its
producers.
5.
Every Odlo producer has signed the Odlo
Code of Conduct (CoC).
 see next slide
[ 84 ]
CR 10 KEY MESSAGES
6.
Odlo is a member of Fair Wear Foundation
(FWF) since 2008, an independent non-profitOrganisation with the goal to continuously
improve working conditions.
7.
All Odlo producers are regularly audited by
FWF (social audits).
8.
The entire Odlo Sports underwear is
suppliers are bluesign or Ökotex certified.
9.
Odlo products have a very long durability and
are used several years.
10. Odlo has a team which is responsible for CR,
reporting directly to the Executive Board.
[ 85 ]
Extern
• Communicate more actively
• Intensify PR
• Locate CR site on www.odlo.com more
prominent
• Intensify factory trainings
• Update life cycle film
communication
COMMUNICATION
new
old
Intern
• Intensify communication/workshop about
CR (Gipfelimeeting, Odlo Intranet, actions)
actions
[ 86 ]
COMPLETE TRANSPARENCY
 ANNUAL CSR REPORT ON 30 PAGES
Check out the report on:
www.odlo.com
www.fairwear-org
[ 87 ]
INTERNAL AND EXTERNAL STAKEHOLDERS
•
Consumers: buyers and potential users of
Odlo products,
•
Dealers: Key Accounts, buying responsibles,
chains & individuals
•
NGOs: Non profit organisations, government,
unions, Initiatives (e.g. Greenpace, WWF,
Amnesty International, CCC, Erklärung von
Bern etc.)
•
Member companies: of Fair Wear Foundation
•
Partners: importers, event organisers,
sponsors, business partners etc.
•
Media: trade, consumer, special interest,
lifestyle, finances, general interests,
newspapers, radio, TV (print & electronic)
 see next slide
[ 88 ]
INTERNAL AND EXTERNAL STAKEHOLDERS
•
Opinion Leaders and Influencer: athletes,
personalities from sport industry, personalities
of politics and society
•
Employees: Odlo International, subsidaries
•
Management: International Mgmt Team,
Executive Board, Board of Directors
•
Investors: Herkules, Banks, further share
holders
[ 89 ]
IMPORTANCE FOR STAKEHOLDERS
•
Consumers: more and consumers care about the ethical behaviour of a brand
•
Dealers: we have often compliance requests from bigger key Accounts
questionnaires with k.o. criteria as a basis to be selected supplier
•
NGOs: Partly very aggressive, organise surveys and publish rankings
•
Member companies: group power
•
Partners: element to differentiate, growing awareness (see master study)
•
Media: a lot of request from news papers / journalists, risk of scandals / non compliance
•
Opinion Leaders and Influencer: sympathy and media awareness, good PR
•
Employees: proudness, attractive employer, secured future
•
Management: proudness, attractive employer
•
Investors: Social and Ecological Responsible Investing starting discussions
SRI study shows that social and ecological behaviour has a positive impact on company value
QUESTIONS?
90
[ 91 ]
BRIEFING WORKSHOP GROUPS
A) CSR Communication Strategy
B) Sustainable products: How to
influence consumer behaviour?
C) Corporate Responsibility in a
Private Equity owned company
[ 92 ]
A) CSR COMMUNICATION STRATEGY
•
•
•
•
•
What should be communicated?
What are the right tools and
channels?
What is the organisational
impact?
What information do the
consumers need?
How to adress the different stake
holders?
[ 93 ]
B) SUSTAINABLE PRODUCTS:
HOW TO INFLUENCE CONSUMERS
•
•
•
•
•
•
The consumer / enduser has a big
power to influence the CSR
behaviour of companies
How to influence the consumer?
How to promote sustainable
products?
When is the consumer willing to pay
for a more sustainable product?
Case 1: Odlo green tec
Case 2: Odlo ZeroMiles
[ 94 ]
C) CORPORATE RESPONSIBILITY IN A
PRIVATE EQUITY OWNED COMPANY
•
•
•
•
Shareholder value thinking and
investing into CSR
Social & ethical responsible
investing (SRI)
Is there an easy way to
demonstrate the influence of CSR
on the company value?
High responsibility - High
margins: a contradiction?
[ 95 ]
ODLO WORKSHOP ORGANISATION
14.00
Break
14.15
Working in the groups
16.00
Break
16.15
Discussion group findings
17.00
Conclusion and prepartion
for plenum discussion
17.30
Wrap-Up