Faced with operational difficulties and pressure to manage costs, apparel retailers are increasingly realising the importance of efficient supply chain management.

For Italian fast fashion brand, OVS Industry (owned by Oviesse SPA, which is part of the Gruppo Coin group), which seeks to replace merchandise very rapidly, efficient stock management becomes a critical component of its operations. While the average lifecycle of fashion products is typically four months, OVS stocks are replenished in just 6-7 weeks.

“Since our cycles are shorter, it does put a lot of pressure on the back-end of our organisation. But efficient supply chain is key to success. We are investing on sound enterprise resource planning and are also learning from our parent company,” says Mr Ashok Dalal, Managing Director of Brandhouse Oviesse, the joint venture between Oviesse and Brandhouse Retail (the retail arm of S Kumars Nationwide), which is launching OVS Industry in India.

Economies of Scale

Brandhouse Oviesse has set up a central warehouse in Bhiwandi (near Mumbai) and two regional warehouses in Bangalore and Delhi. “To achieve economies of scale, supply chain needs to do large numbers. As the brand expands its presence across the country, including Tier I and II towns, more warehouses will be set up,” says Mr Dalal.

With rising inputs costs (cotton prices have gone up by 20 per cent in the last six months), the pressure on retailers to keep prices under a leash increases. World Player, the low-cost brand from S Kumars Nationwide, with a price range of Rs 99-499, is banking on an efficient supply chain to resist pricing pressure. “Through volumes and efficiencies in the supply chain, we will keep our cost structure to the basic minimum,” says Mr Johnny John, Chief Operating Officer, World Player.

World Player has in place a network of 47 outsourced warehouses across the country “to ensure quick supply and replenishment.”

Apparel retailer Indus League Clothing which went live with SAP early this year, has increased its IT budgets quite a bit for back-end transactions so that it is not “stocking up for the heck of stocking,” says the company''s Chief Executive Officer, Ms Rachna Aggarwal.

If you now walk into any of Madura Garments'' brand stores and can''t find the size or colour you want, the store personnel scans the computerised database and checks if any other store (anywhere in the country) has it.

And if there is a match, the customer can have it delivered to his home within two days.

Source: The Hindu Business Line, India (July 29th 2010)