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While the luxury industry is benefiting from increasing global demand, it is also having to adapt to clients’ changing expectations: consumers have a growing taste for novelty, customisation and a fluid, customer-oriented omnichannel experience, as well as increasing expectations that companies take responsibility for social and environmental issues in relation to their business. 

Challenges

These market evolutions are driving the traditional luxury industry towards business transformations in order to stay competitive. There are particular challenges including a need to improve attractiveness through faster product launches and total customisation.  This requires reinventing product development processes including 3D conception and “lean” cycles. Luxury goods companies also need to transform effectively to omnichannel retailing, offering custom-fit services guaranteeing a perfect fluidity between channels. Another challenge is to optimise collection management (control of breadth and depth) through a location-based assortment approach, relying in particular on merchandise planning and data science tools. There is an urgent requirement to be more socially and environmentally responsible through transparency in production processes (especially in low cost countries) and the reduction of greenhouse gas emissions (IOT traceability, low carbon transportation technologies etc). There is also a need to counter demand volatility and consumer versatility and to avoid soon-to-be forbidden product destruction, driving them to develop predictive technology and supply chain agility.

How we can help

We collaborate with our luxury clients worldwide, along the entire value chain, to guide them in their transformations. We help with: 

  • Process re-engineering from product conception to warehouse deliveries, with a mindset of optimising delays and increasing quality standards
  • Collection, assortment and inventory planning and steering on both a macroscopic (categories and regions) and microscopic scale (in-store SKU) based on the best merchandise planning tools and practices
  • Improving reliability of sales forecasts using data science
  • Implementation of an agile supply chain (reliability of the production plan, DDMRP)
  • Management of shortage and allocation (raw materials, new products, best-sellers)
  • Lean procedures in logistics and production sites
  • Redesigning logistics networks and optimisation of transportation flows, taking advantage of the benefits of IOT technologies, real time traceability and warehouse automation
  • Definition and implementation of omnichannel transformation (service pallets, inventory centralisation strategies, order management) and optimisation of in-store back-office operations
  • HR transformation and change management: mobilising stakeholders and support in the business and organisation transformation

Luxury goods case studies

Logistics masterplan for retail and e-commerce

luxury goods

Logistics masterplan for retail and e-commerce

Our client is one of the world leaders in luxury watchmaking, based in Switzerland. Present on all continents, the brand is distributed through a variety of different channels.

A three-year plan was introduced which also supported a ramp-up of retail and e-commerce channels, implying an evolution in logistics service and inventory management strategies worldwide.

Argon & Co was selected to assist in this strategic review.

 

“Deliverables are high quality and executed on time. We will be able to reuse them easily”

Operations Director

 

  • Formalise and validate targeted customer promises per channel
  • Build a short-term and medium-term vision of the logistics and transport scheme and the evolution of associated organisations (export-teams, sales administration), across all areas (Europe, Americas, Asia-Pacific, Middle East and Africa)
  • Measure inventory impacts, environmental impacts and arbitrate between “make” and “buy”
  • Build the trajectory and assess the associated resources
  • Redefinition of the warehouses network with a regionalisation logic (3 regions – Americas, EMEA, Asia-Pacific)
  • Significant reduction of delivery lead times for agents
  • Stocks reduction of13% with a better availability rate
  • 20% cost savings
  • Improved network resilience (continuity plan)

 

Asia Pacific supply chain optimisation

global drinks

Asia Pacific supply chain optimisation

Moët Hennessy is part of the French multinational luxury goods conglomerate, LVMH Group. It’s turnover is in excess of €38 billion from brands including Dom Pérignon, Hennessy, Mercier, Moët & Chandon and Ruinart.

The Asia Pacific business wanted to re-design its existing supply chain to support future market developments and move towards a best in class model. Argon & Co was asked to review all products flowing through the Singapore hub to the markets where multiple practical options exist; namely China, Australia, India and Japan.

 

  • Conduct a study of regional supply chain operations to understand the maturity of current processes
  • Identify the initiatives required to help move the business towards best practice in the drinks sector
  • Identify how SAP and APO could better support process and performance reporting
  • Identify how the logistics network from the Singapore hub to markets could be improved to reduce costs, lead times and capacity constraints

 

  • Identified that supply chain planning in APO had been configured to best support constrained production supply (which was only 20% of SKUs)
  • Two year roadmap to enable the regional supply chain to better support the target market service propositions
  • Identified the process enhancements and logistics network reconfiguration required for the region

 

Customer service organisation

consumer goods

Customer service organisation

Guerlain is a global player in the dermocosmetics and perfume sector. With a turnover of 700 millions euros and 3400 employees in 80 countries, it is part of the LVMH group.

In a context of commercial activities increase in a mature market, Guerlain France’s Customer Service team was experiencing difficulties, putting the business at risk. It was the result of more complex relations with internal partners, lack of formalised processes and objectives as well as a multiplication of manual or poorly automated operations.

  • Complete diagnosis identifying exhaustive list of difficulties and dysfunctions
  • Identify improvement levers in terms of processes, tools, RACI and performance, highlighting quick-wins
  • Define target organisational structure with related objectives and workload
  • Prepare new organization for implementation and identify prerequisites and project resources workload
  • Implementation of quick-wins on supply allocation and promotional operations process simplification (tools and RACI)
  • Definition of new customer service objectives and functions
  • Plan to improve productivity of the new organisation to achieve circa 20% workload reduction for customer service staff
  • Construction of a road map over 18 months for new organisation implementation

Multi-channel distribution centre retrofit

luxury apparel

Multi-channel distribution centre retrofit

Coach is a luxury American fashion company that designs and manufactures handbags, accessories, apparel, footwear, and other leather products. It has a large network of retail stores, a strong eCommerce presence and serves international and wholesale customers.

Steady business growth was straining storage and processing capacity. More productive processes were required to reduce the reliance on labour as the business doubles in size, and through peak demand periods.

  • Develop a plan to rearrange the facility and keep it running during the transition
  • Accommodate a Manhattan WMS upgrade
  • Develop new, more productive processes, including the redesign of direct to consumer fulfilment
  • Where possible, utilise components of the existing MHE system and its control system(s)
  • A redesigned facility, including a put-to-light module
  • Doubled processing capacity and increased storage capacity by 80%
  • Significant increase in value-added services processing capacity
  • New processes to dovetail with the WMS upgrade process and functionality

WMS evaluation

luxury fashion

WMS evaluation

Burberry is a luxury fashion house, distributing outerwear, fashion accessories, fragrances, sunglasses, and cosmetics. Burberry products are sold globally through its stores and online channel, as well as through third-party wholesale customers, both offline and online.

Whilst upgrading its ERP system, Burberry had the opportunity to simultaneously upgrade its existing warehouse management system (WMS). However, the business felt that the current system was not suited to their operations and wanted to evaluate the market to understand which system was the best solution for the fashion business.

 

  • Review the WMS market to understand the alternative options for Burberry
  • Produce detailed operational requirements and user specifications to use as a basis for evaluation
  • For the leading two systems (SAP EWM and Manhattan), manage detailed scenario testing and capability analysis
  • Recommend, with evidence, which system best supported the fashion business

 

  • A detailed recommendation on which WMS to select
  • Understanding of the impact on current productivity levels of each system
  • All systems scored on flexibility, functionality and user-friendliness in key activities (picking strategy, carton fill, slotting, labour management etc.)
  • Non-functional assessment completed (implementation risk, position in fashion industry, full-life cost and benefits)