Supply Chain Management of Burberry Essay
Supply Chain Management of Burberry
Burberry’s Supply Chain involves a complex network of retailers, distributors, transporters, storage facilities and suppliers that participate in the sale, delivery and production of the brand’s unique, luxury product.
Instead of shipping merchandise from the central warehouse, Burberry delivers product from factories directly to consumers, thanks to a much more efficient supply chain. This eliminates stock-out cost and improves service levels. Burberry’s back-end capabilities are critically important in its success. The brand is adept at managing the various options available in the omni-channel retail world.
Burberry employs the following programs:
* Supply sourcing: locating a source of supplies not manufactured by the brand * Shipment tracking: This allows users to establish an account and obtain real-time information about cargo shipments. They may also create and submit bills of lading, place a cargo order, analyze charges, submit a freight claim, and carry out many other functions. In addition, customers can track shipments down to the individual product and perform other supply chain management and decision support functions. The application uses encryption technology to secure business transactions.
* Shipping notice: This automates the receiving process by electronically transmitting a packing list ahead of the shipment. It also allows Burberry to record the relevant details of each pallet, parcel, and item being shipped. * Freight auditing: This will ensure that each freight bill is efficiently reviewed for accuracy. The result is a greatly reduced risk of overpayment, and the elimination of countless hours of paperwork, or the need for a third-party auditing firm. By intercepting duplicate billings and incorrect charges, a significant percent of shipping costs will be recovered.
In addition, carrier comparison and assignment allows for instant access to a database containing the latest rates, discounts, and allowances for most major carriers, thus eliminating the need for unwieldy charts and tables. * Shipping Documentation and Labeling: This creates fewer need for manual intervention because standard bills of lading, shipping labels, and carrier manifests will be automatically produced; this includes the specialized export documentation required for overseas shipments. * Online Shipping Inquiry: This gives instant shipping information access to anyone in the company, from any location.
Burberry strives to achieve the highest quality standards in all components and stages of its supply chain process. The company has been working to address issues deeper in the supply chain including raw materials like leather, fur and cotton.
Supply Chain Achievements:
* Factory visits: 634 factory visits; a 30% increase on last year * Stakeholder engagement: Actively participated in the BLC Leather Working Group and the Responsible Cotton Network * Capacity building: Developed Corporate Responsibility Handbook for vendors * Worker hotline: Expanded confidential worker hotline to Japan and Italy * Raw Materials Traceability: Agreed and signed contract to launch a 2010 traceability project
Monitoring the supply chain
Burberry believes that its products should only be made in factories that comply with local labour and environmental laws and by workers who work fair but not excessive hours; are provided with a safe and hygienic work environment; and who can exercise their right to freedom of association and collective bargaining. All Burberry suppliers are governed by its Ethical Trading Policy that sets clear expectations regarding issues like living wage, child labour and regular employment. Seven Burberry team members are charged with ensuring the implementation of the policy throughout the supply chain as their sole responsibility. This policy is based upon internationally accepted codes, International Labour Organisation conventions and is published in full in the Corporate Responsibility section of www.burberryplc.com. With periodic assistance from third-party auditors the team regularly visits factories to assess their performance related to Burberry’s Ethical Trading Policy and develops factory improvement plans based on their findings.
Follow-up visits are conducted to ensure that the plans have been implemented. The majority of Burberry’s products are manufactured in Europe through third-party suppliers. All new Burberry suppliers, regardless of location, must be approved by the Corporate Responsibility team prior to production taking place. Burberry understands that it cannot solve supply chain issues on its own and that a participative and collaborative approach is needed. Burberry will continue to maintain an open dialogue with its suppliers, peer companies, other brands, NGOs and trade unions to bring collective action to bear across the supply chain. As part of Burberry’s ongoing desire to reduce duplicative audits, we have developed partnerships with companies that produce in the same factories. Using the Fair Factories Clearing House (FFC) database tool, Burberry is now able to share and access credible information on factory social compliance which replaces the need for additional audits and allows for further investments in capacity building and training. Burberry is a founding member of the BSR Sustainable Luxury Working Group.
The group was established to explore common approaches to collectively address material Corporate Responsibility issues specific to the luxury sector like the use of exotic skins. The Group is currently developing an animal welfare policy for working group members. Supplier ownership
Working closely with Burberry teams, suppliers are demonstrating their increasing commitment to compliance by actively participating in capacity building programs such as management system development, productivity enhancement and worker rights training. These programs improve worker-management relationships, improve production processes and empower workers and management to resolve problems jointly. In 2009, the Company launched its Corporate Responsibility Handbook. The Handbook, distributed to all suppliers by the Burberry Chief Operations Officer, provides additional detail and guidance to assist suppliers with integrating our policies into their management systems.