Case Study

Global Fashion Accessories Manufacturer And Retailer Improves And Streamlines Collaboration Among Suppliers

collaborate-puzzle

From its start in 1941, the company’s brand has represented authenticity, innovation, and relevance to its customer’s everyday lives. The high-end products range from handbags, wallets, and other accessories. In 2013, the brand expanded into apparel and footwear, simultaneously shifting its outsourced sourcing operation in-house at that time.

Today, its heavily-branded products are available on five continents in over 1,000 directly-operated stores worldwide and many more under agreements with global wholesale and distributor partners. A recent competitor company acquisition is positioning the company for more growth and expansion.

THE CHALLENGE

During a period when the company was in the process of diversifying its China-centric sourcing base to other Asian countries (Vietnam, Thailand, Philippines, India, and Korea, etc.), its leadership set objectives to meet growth targets while containing costs and reducing risk. Amber Road was selected to address both of those objectives.

During the multiple phases of implementing Amber Road modules for each area of functionality, one key business value came into focus - reducing material liabilities. This company typically incurred up to $17 million per year in material liabilities with its suppliers. To address this substantial cost, it was critical to implement a material management program that enabled internal and external teams to have visibility into the processes involved, key to managing material commitments and usage.

THE SOLUTION

Amber Road’s solution enabled the company to centralize and automate their material management processes. The solution facilitates an efficient means to collaborate with Tier One and Tier Two suppliers and provides visibility into the capacity, demand, allocation and consumption processes. Using existing data integrated from their ERP and PDM systems, they could identify the amount of raw material needed and consumed. In turn, this resolves the disparities before a financial commitment is made to raw material suppliers by finished goods manufacturers, thus making the brand liable to the manufacturer.

With the Amber Road platform, each of these functional processes are made available in the cloud-based solution:

  • Creation of a material reservation based on demand forecasts and raw material supplier (RMS) capacity information
  • Record the RMS electronic commitment to fulfill the reservation in the platform
  • Finished goods manufacturers are provided with RMS information so they can purchase the raw materials from these approved suppliers
  • Raw material purchase orders between the RMS and finished goods manufacturers are recorded and tracked in the platform
  • Purchase orders reconciled against material commitments and actual consumption
  • Visibility into the exchanges between the RMS and the production facility
  • The internal teams and all suppliers are able to view the same information – one version of the truth

THE BENEFITS

Amber Road’s solution streamlined and improved collaboration among the brand, raw material suppliers and finished goods manufacturers in areas of raw materials development, planning and management.

  • Centralizing all of the data in a single solution, enabling efficient raw material development and ordering processes
  • Digital collaboration with supply chain partners at multiple levels; driving a reduction of costs and an increase in customer satisfaction
  • The ability to closely manage the demand forecast, actual orders, raw material reservations, and material usage resulted in two areas of improvement:
    • This collaboration allows the company to shift a lot of the responsibility of day-to-day data maintenance to third parties; leaving only the checks and balances to verify, modify and approve the many transactions maintained by the third parties.
    • The solutions enabled the company to reduce material liability costs by 32% in the first three years. But more importantly, optimizing and managing material commitments at both the raw material and finished goods supplier echelon increased overall efficiency by 50%.