4.2 Supply Chain/Sourcing Management
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“Online-only retailers have caused a revolution in the supply-chain business, pushing up standards in order to keep customers coming back.” - Nick Robertson
Supply chain management (SCM) is one of the most prevalent business concerns for fashion retailers. Asos has agreements with suppliers across the world. It sends out 24 million garments every year, and its supply chain manages production, storage and delivery in the warehouse with more than 250,000 parcels handled every week. In general, the life cycle of fashion products is shorter than that of others. High street fashion retailers have to recognise and adapt to the latest fashion trends and allow frequent changes in product assortment. Asos adopts a quick response strategy to run an efficient logistics operation and therefore ensures order fulfillment and product availability. The lead time of Asos is six to eight weeks compared to the six month period of traditional retailers, which requires local sourcing and efficient logistics management. Research conducted by Helixa in 2011 shows that Asos has only 30 per cent of sourcing from Asia compared to 35% of that for the Inditex group, and 75% of that for H&M. Moreover, it replaced three warehouses in Hemel Hempstead by one Barnsley warehouse in Yorkshire with over 1.1 million sq. ft. of floor space in which the company archives a central inventory. In order to build capacity ahead of demand, ASOS plans to extend the Barnsley warehouse by 25 per cent in 2014 to meet its target of £1bn worth of sales by 2015 (Asos annual report, 2012). Cost efficiency is largely driven by operational and technological changes. Asos selected supply chain specialist Allport to manage its international logistics. It also utilizes the LIMA (Logistics Information Management Application) software of Allport to increase visibility and cooperation across the international supply chain (Kachhwaha, 2013). In addition, Asos adopts robust policies regarding supply quality control. It monitors production, quality and ethical standards through regular factory visits and independent garment testing. On top of this, Asos continuously upgrades the delivery service to satisfy its consumers. A full explanation can be found in Appendix 2 - Delivery Service.