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Trends-February 2007

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While DHL is a fixture on airport runways around the world, the company debuted on a different kind of runway earlier this month, as the official express carrier and logistics provider for IMG Fashion’s Mercedes-Benz Fashion Week in New York City.

As part of its deal with IMG Fashion, DHL operated shipping service kiosks for guests at the New York, Los Angeles, and Miami Fashion Week shows, and sponsored IMG’s FashionWeekLive consumer events in Houston, Dallas, Chicago, and San Francisco.

And, while DHL’s yellow-uniformed delivery workers may not have been the best-dressed attendees among the tents at New York’s Bryant Park, the company’s just-in-time services proved useful to many of the designers.

“DHL transported samples and merchandise from China, Italy, and Los Angeles for designers showing their Fall 2007 collections,” explains Tom Hickey, DHL’s vice president, fashion and retail.

Because of the industry’s reliance on global sourcing and the fickle nature of ever-changing styles, getting those size-zeroes to the Fashion Week catwalks on time was not without some hairy moments. One designer’s samples, for instance, were delayed in Customs the weekend before the show.

“We worked with Customs officials to clear the merchandise by Friday evening; sent it to a DHL service center on a 1 a.m. truck, and subsequently delivered the shipment to the designer’s showroom by midday Saturday so they could get the clothes to the tents on Monday,” Hickey says.

The global express carrier has long served the $250-billion fashion and apparel industry, offering sample room management, international vendor management, and consolidation sweeps services. It is ramping up its industry clout with its presence at these runway shows, says Hickey.

Could yellow be the fashion industry’s new black?

Supply Chain M&A: Ripe for Picking, Wrought with Problems

Acquisition and consolidation activity is rampant as enterprises look to expand their product offerings, global footprints, and the gap between themselves and their competitors.

But companies looking to juggle a new product launch and a new business acquisition at the same time might want to reconsider, according to a recent Accenture survey. Mergers resulted in increased product-launch disruption for nearly 70 percent of supply chain managers surveyed.

Accenture’s Supply Chain Post-Merger Integration Study solicited 154 managers involved in the planning and integration of their companies’ most recent mergers. Respondents were primarily C-level executives from the supply chain and other areas, and from a wide distribution of industries, including defense, aerospace, energy, utilities, computers, and pharmaceuticals, among others.

The study addresses one of the core challenges facing acquiring minds: properly integrating and assimilating disparate corporate supply chains in an efficient and mutually beneficial manner.

For companies manufacturing hard goods, supply chain costs can account for as much as 70 percent of annual sales, and supply chain synergies can account for between 30 percent and 50 percent of M&A savings, according to the report.

But perhaps most compelling—because the supply chain functions as the engine that drives customer satisfaction and new products to market—a lot can go wrong for customers when two companies integrate.

Besides flawed product launches, survey respondents identify a number of inherent roadblocks resulting from a merger or acquisition. Sixty-two percent of supply chain managers report that mergers resulted in the loss of key talent from their supply chain organizations, for example.

In addition, only 41 percent of non-supply chain managers view their post-merger supply chain integration as “extremely” or “very” successful, the report shows.

When asked to identify problems resulting from mergers, respondents cite the following:

  • Diminished product/service quality (53 percent)
  • Order fill rate problems (52 percent)
  • Stockouts (46 percent)
  • Inventory buildup (44 percent)
  • Increased supply disruptions (36 percent)

Other highlights from the Accenture study:

The limited involvement of procurement and supply chain organizations during the pre-closing portion of a merger is the factor identified by the greatest proportion of respondents – 21 percent – as most likely to impede the success of their supply chain integration efforts.

Nearly half – 45 percent – of supply chain managers note that their companies focused only on cost savings during merger-integration efforts, at the expense of other metrics such as quality, inventory turns, supply disruption, and order fill rates.

Non-supply chain managers said the main reason these issues were not addressed early on is that line organizations believed they could be handled later in the merger process.