Supply Chain Optimization at Hugo Boss
Supply Chain Optimization at Hugo Boss
Nicole DeHoratius University of Portland dehorati@up.edu
• BECOME A MEMBER OF THE INDUSTRY STUDIES ASSOCIATION BY VISITING • http://www.industrystudies.org
Supply Chain Optimization at Hugo Boss by Nicole DeHoratius University of Portland
Relationship between Product Availability and Sales
Product Availability and Sales
Costs of Poor Availability systematic under-stocking of items in high demand
(Agrawal & Smith, 1996)
Product Availability and Sales
Consumer behavior
Abandon purchase, shop elsewhere, substitute
(McKinnon et al. 2007, Fitzsimmons 2000, Emmelhaiz et al. 1991)
Theory Predicts….
• Demand depends on inventory levels • Greater availability leads to greater sales
• little empirical evidence, substantial anecdotal evidence)
reduced customer satisfaction and brand loyalty
(Sloot et al. 2003)
Impacts current & future orders
(Anderson et al. 2006)
Sales
1.09% of retail sales, 3.34% of gross profit
(DeHoratius & Raman, 2008)
Improved Availability generates more sales
Improving product availability from 9698% yields a 2% increase in sales
Product Availability
Customer Loyalty (repeat purchase behavior) generates sales
Execution = product availability, timeliness of delivery, ease of return (Heim & Sinha 2001)
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Research Context and Methodology
Research Setting: Hugo Boss
European Fashion Manufacturer
Business wear, Leisurewear, Shoes & Accessories
Supply Chain Optimization Project
Natural Experiment
SC Change Better In-Stock Retail Sales Financials Stock Mrkt. Perfm.
Supply Chain Change – What Happened?
Original Order Frequency
Monthly for Treatment Group Monthly for Control Group
New Order Frequency
Weekly for Treatment Group Monthly for Control Group
Entailed changing the order frequency for 45 SKUs (representing 17% of sales) in body wear category monthly to weekly
Advantages of Weekly Ordering
Lower Inventory Levels Improved
Nicole DeHoratius University of Portland dehorati@up.edu
• BECOME A MEMBER OF THE INDUSTRY STUDIES ASSOCIATION BY VISITING • http://www.industrystudies.org
Supply Chain Optimization at Hugo Boss by Nicole DeHoratius University of Portland
Relationship between Product Availability and Sales
Product Availability and Sales
Costs of Poor Availability systematic under-stocking of items in high demand
(Agrawal & Smith, 1996)
Product Availability and Sales
Consumer behavior
Abandon purchase, shop elsewhere, substitute
(McKinnon et al. 2007, Fitzsimmons 2000, Emmelhaiz et al. 1991)
Theory Predicts….
• Demand depends on inventory levels • Greater availability leads to greater sales
• little empirical evidence, substantial anecdotal evidence)
reduced customer satisfaction and brand loyalty
(Sloot et al. 2003)
Impacts current & future orders
(Anderson et al. 2006)
Sales
1.09% of retail sales, 3.34% of gross profit
(DeHoratius & Raman, 2008)
Improved Availability generates more sales
Improving product availability from 9698% yields a 2% increase in sales
Product Availability
Customer Loyalty (repeat purchase behavior) generates sales
Execution = product availability, timeliness of delivery, ease of return (Heim & Sinha 2001)
1
2
3
Research Context and Methodology
Research Setting: Hugo Boss
European Fashion Manufacturer
Business wear, Leisurewear, Shoes & Accessories
Supply Chain Optimization Project
Natural Experiment
SC Change Better In-Stock Retail Sales Financials Stock Mrkt. Perfm.
Supply Chain Change – What Happened?
Original Order Frequency
Monthly for Treatment Group Monthly for Control Group
New Order Frequency
Weekly for Treatment Group Monthly for Control Group
Entailed changing the order frequency for 45 SKUs (representing 17% of sales) in body wear category monthly to weekly
Advantages of Weekly Ordering
Lower Inventory Levels Improved