Import Logistics: Process or Project?
The advantages of importing products - even with a recently strong dollar - from countries like China, India, Bangladesh and Indonesia are indisputable, to structure a diverse national retail.
It is true that imports meet two key retail goals: - offering a differentiated mix to consumers who are increasingly eager for new items and pricing; - and a possibility of increasing the category's gross margin when compared to a 100% national operation.
However, in our view, an import process can bring great risks to the retailer's forecast results, especially one who needs to coordinate their activities, as fashion retailers.
Therefore, how to manage imports to ensure that they will add and not subtract value in a retailer's Supply Chain?
The first item that must be understood: imports for this retailer are a process or a project? What does that mean?
For a retailer with a continuous flow, such as a supermarket or superstore, which needs to compose its product mix continuously with dry food and general merchandise items, for example, imports are a process.
That is, imports happen all year round, based on a strategic sourcing process that is renewed annually. An additional feature is that these are manufactured and commoditized products - "make to stock". There is no specific development.
On the other hand, for fashion retailers, imports are a project because each designed collection tends to produce a single result during a specific period. It is the essence of the PMBOK definition for a project. That is, it must be treated as a project from trend analysis to the sale of fashion products at stores.
Therefore, typical project tools are needed, such as schedule with activities, responsibility assignment and deadlines; and someone who can act as a PMO to manage the fronts that are part of a project, such as scope, deadlines, financial and human resources, supplies, etc.
We at Cosin recently helped a major fashion retailer to structure its imports based on the project concept. In the end, almost paradoxically, it was a project to organize a process:
- Structure dates;
- Ensure alignment between areas;
- Set deadlines and responsibilities;
- Consider several particularities of product origin/type;
- Give visibility to ongoing processes;
- Structure the routine to generate indicators, analysis and taking action (cancel/anticipate/delay/ etc).
Thus, a management schedule was created for follow-up meetings as well as a detailed schedule for routine management. A "waterfall" chart was also structured to control the different status from production to product arrival in Brazil. All this with a "war room" running alongside to ensure performance of the current "project".
Examples of these products are below:
As a result, the company achieved much better control of import steps, allowing a significant improvement in complying with its commercial planning. And that clearly is reflected in the stores where, for example, national styled jeans need to be matched, at a specific time, with an imported cotton blouse, designed for the winter season and that is much more valued when exposed together with the pair of jeans.
Finally, due to the work developed and monitored by Cosin, this approach has allowed higher "same store sales" with increased margins when compared year over year.
In conclusion, we are certain that importing is an activity that increasingly becomes more important for national retailers, whether for industrial goods or clothing and fashion products.
The degree of value that this activity can bring goes through recognizing initially its nature in the Supply Chain and managing it appropriately.
In times of crisis, an important part of sales and margin may be hidden within your imports. And replacing import is not the strategy that retailers have adopted.