Best-in class cost management at global fashion retailer
Accelerated cost optimization program to deliver long term impact
Our client is an up-market fashion retailer with an international presence. The retailer hosts exclusive first to market launches of fashion items alongside one-time new to market lines.
Objective: Enable growth after takeover
As part of a private equity takeover from one of the world’s largest Private Equity firms, ambitious growth plans had been set for the client and a reset on the largest spend areas were needed to ensure the right partners were in place, while reducing the cost base to ensure the client is fit for future global growth plans.
Approach: Establishment of highly efficient cost optimization measures
Quick-win cost reductions – benchmarking exercise
During the project, we identified areas in which our client could cut costs and drive quick cost reduction by benchmarking against its competitors. We evaluated the full supply chain from ordering, picking, packing and delivery to see where elements could be manipulated, removed or reduced to immediately impact the client’s P&L and enhance operational efficiencies.
Packaging specification optimization
There was huge value to be driven in this area across a multitude of levers. The most impactful being optimizing the packaging specification by simplifying the specification of the cardboard and optimizing dimensions of core packaging products to reduce wasted material and improve content security. This not only reduced the cardboard cost per unit but also reduced distribution spend as the newly designed boxes were classified in a lower volumetric weight/cost bracket.
We were able to achieve a competitive cost price and innovative designs by conducting a comprehensive RFP with credible supply options, partnering our client with an innovative new supplier whilst ensuring future competition through raised awareness in the market and allowing for continued price security in future tenders.
Choosing suppliers who can support sustainability credentials
Alongside focusing on cost, another of our client’s priorities is sustainability, given its importance to its customer base. When developing the packaging with the prospective suppliers, we looked to reduce transportation and the carbon footprint by onshoring sourcing where possible as well as introducing recycled cardboard content into boxes with virgin material. This approach helped to contribute to the longer-term sustainability ambitions of the client.
Reevaluate distribution network cost base without having a detrimental effect on customer experience
We ensured that customer complaints did not increase and the overall experience for the customers isn’t negatively impacted – to do this, we needed to take a sensitive approach to changing supply base while considering the main objective of reducing cost.
Methods:
Due to the requirement to deliver cost savings in a short period of time, the project operated at a highly efficient pace. We also needed to respect the wider business context, as a lack of resources meant that the client would be unable to implement a major transition program.
We therefore accelerated the go-to-market strategy for the two initiatives, working hand in hand with the client. This relationship was made possible through close collaboration and spending time as a team on-site. Using a bespoke negotiation evaluation tool, we were able to accelerate resubmission and competitiveness during the tender. This allowed us to ensure that feedback and commercial response times were rapid, so that we could successfully deliver long term value at pace.
Results:
- 17% cost reduction across distribution and packaging categories.
- 14% reduction in distribution cost base with £0 cost to achieve.
- Packaging dimension manipulation to drive down distribution spend.
- OPEX efficiency delivered through innovative packaging design.
- Reduction in plastic tonnage going into the supply chain through reverse printing and alleviating need for outer packaging.
- Robust and reliable supply base for logistics and packaging to support our client’s future growth.
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