Small But Perfect Toolkit 4: Logistics

Logistics

2023

By Impact Hub Lisbon & Sonia Ferreira

Acknowledgements This toolkit was drafted thanks to the financial support of the European Innovation Council and Small and Medium Enterprises Executive Agency (EISMEA) COSME Programme, under the Call for proposals COS-CIRCFASH-2019-3-02.

We would like to acknowledge the contribution we received from: • The consortium of the project All otherRevolution stakeholders we have engaged with in the drafting process • Fashion • The Fair Trade Movement • The participants in the project’s Policy Dialogues we held in Berlin and Athens in 2022 • All other stakeholders we have engaged with in the drafting process

Index Background information and inspiration

4

Case study

8

•Goals Section 1: potential What is Fair Trade? and shifts

4 11 8 12

•Reflection Section 2: exercise Case studies •Worksheets, Section 3: Reflection exercises tools and templates • Section 4: Worksheets, tools and templates

10 13 12

SMALL BUT PERFECT

Logistics

4

Section 1:

Background information and inspiration

Logistics

5

Logistics

5

BACKGROUND INFORMATION & INSPIRATION

and delivered. Sustainability and Logistics refers to the process and coordination of products, raw circularity have become increasingly important when designing supply materials, and services across the a. Logistics refers the process and coordination of products, chain networks, allowingraw brands to supply chain.

Fromtomanufacturing materials, and services across the supply From manufacturing trychain. to build different scenariosand to and production to distribution, include new raw business fulfillment, final delivery to productionand to distribution, fulfillment, and final delivery tomaterials, customers and models or access market to offer customers and end is users, logistics end users, logistics a critical and essential component ofto a successful more sustainable solutions. is a critical and essential component supply chain. of a successful chain.and performance have a significant impact Logistics design,supply operations The main difficulty in choosing on companies’ commercial and financial results, companies’ logistics the mostwith sustainable choice is Logistics design, operations and traditionally set up a tosignificant focus on one of three main drivers: cost, speed or performance have considering the different variables quality.on These drivers commercial do not consider the environmental or social impact involved and understanding the impact companies’ of how and where materials or how a garment is made and costs involved in bringing and financial results, with are sourcedadditional it to life, including the logistics costs, companies’ logistics traditionally delivered. Sustainability and circularity have become increasingly important to decidebrands on the to solutions that can set updesigning to focus on one of three when supply chain networks, allowing try to build be presented to the right type of main drivers: cost, speed or quality. consumers who will recognise the These drivers do not consider the value of the product and will be environmental or social impact willing to pay for it. of how and where materials are sourced or how a garment is made in bringing it to life, including the logistics costs, to decide on the solutions that can be presented to the right type of consumers who will recognise the value of the product and will be willing to pay for it.

Source: www.vecteezy.com

oms clearance), account for around 30% of the cost of the product, 6 Logistics the possibility of an even higher percentage, depending on the mod and how linked it is to demand information and consumer behavio

arket but if they are supplying products that are not aligned to wha products that are not aligned On average, logistics costs (all of s arethe interested in buying, it can destroy the company’s m to what clients are interestedbusiness in expenses incurred moving buying, it can destroy the company’s productcosts — fromand sourcing raw inventory potential markdowns due to excess stock hav business model. High inventory materials to delivering customer nificant financial impact, and present a big sustainability issue, costs and potential markdowns due so it orders and every step in between, to excesswell stockand have adjust a significant for example transportation, melyasimportant to know your customers the logisti financial impact, and present a big warehouse costs or customs p to the best value proposition to your target issue, market. sustainability so it is extremely clearance), account for around

important to know your customers 30% of the cost of the product, with well and adjust the logistics setup to the possibility of an even higher the best value proposition to your percentage, depending on the model target market. used and how linked it is to demand and consumer behavior. chains can be split into omerinformation segments they target, as per Supply below: Supply chain networks may be cost different types, considering the type efficient or fast to deliver products of customer segments they target, to market but if they are supplying as per below:

Source: sciencedirect.com

Logistics

There are no right or wrong answers in logistics, only more efficient or less efficient choices, at any given time, depending on the product, target market/customers and strategy, but as these variables evolve over time, so should your logistics analysis.

Exercise Rank your supply chain main drivers: cost, speed or quality (considering supply sustainability practices in regards to the environmental and human impact of their products’ journey from raw materials sourcing to production, storage, delivery and every transportation link in between already included in the model) Is your customer aligned with these drivers? What do they value most?

How do you plan to keep informed of your customers needs and buying behaviors to avoid excess inventory and product?

7

and share best practice examples Section 2: Logistics

8

Case study

evi Strauss & CO.

Levi Strauss & CO. Source: Eldeman

ource: Edelman

9 Logistics

9

Source: Rutgers University

rs University

10 Logistics

Logistics

11

Section 3:

Goals and potential shifts More than focusing on the importance of logistics in your business, it is important to understand what you want to achieve, what are the different echelons in the value chain you belong to and how you can look to logistics as a tool to test new ways to approach your client/suppliers or optimize your capital flows, by using inventory in different ways (push or pull models: ). A pull system initiates production as a reaction to present

demand, while a push system initiates production in anticipation of future demand. In a pull system, production is triggered by actual demands for finished products, while in a push system, production is initiated independently of demands.

Look at trends in the industry, even with different products/services, that can give you ideas for new ways of organizing your logistics flows – and test different approaches.

See links in section 5 for more.

Logistics

12

Section 4:

Reflection exercise Exercise Logistics network design depends on what your main focus/differentiator is (considering that sustainability is already included regardless as the differentiator): 1.

2.

3.

Speed Cost Service/Product

Analyze which of these variables are more important in your business, considering the sustainability driver that is part of your value proposition and how much you are willing to compromise on or adjust the other variables. Test different scenarios to see the impact of your decisions, for example:

You sell mostly online, so you focus on speed. What if you would have a pop-up store and focus on cost, what would be the impact of that decision in your margin?

And in your customers?

You focus on a high quality product and do not compete on cost. What would allow customers to have a lower cost version of your product?

Can you differentiate on distribution or other variables related to logistics?

Besides deciding on your key differentiator, it is important to identify what your key challenges are. List the three items that can have the highest probability of negatively impacting your business and why. Think if logistics can support these challenges in any way, as a growth support function instead of a cost.

Logistics

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Section 5:

Worksheets, tools and templates

Logistics

How fashion brands can ensure a more sustainable supply chain.

13

Renewable Matter view here Eco fulfilment & sustainable fashion: logistics goes green view here Transforming the Fashion Supply Chain | Accenture view here

Source: www.sbcvaluechain.org.nz

Supply chain management

Source: www.sbcvaluechain.org.nz

Products

14 Logistics

Source: www.sbcvaluechain.org.nz

Services

15 Logistics