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5 trends disrupting the traditional wholesale distribution model

Multichannel Distribution Specialists

Integrating Wholesale Distribution alongside In-Store, Online and Machine-to-Machine to let today's multichannel businesses increase efficiency and reduce costs while achieving flexible and agile control of the supply chain.

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Archive for October 2012

KPMG partner suggests cloud technology solution to ‘fast fashion’ pressure on supply chain

23rd October 2012

Retail sales down 0.4% YOY to August

In a recent news release from KPMG, partner Andrew Underwood provided some interesting advice for those operating wholesale distribution supply chains. With retail sales values down 0.4% YOY to August 2012, the pressure on the High Street is relentless. Fashion has always been highly seasonal, but as we continue to experience very difficult trading conditions the advent of ‘fast fashion’ has raised the stakes, especially for those with fashion retail as the end point.

Real-time monitoring and cloud technology

Andrew Underwood said, “For far too long lip service is the most that has been paid to the importance of real-time monitoring, but if anything is clear, it is that the retailers who make use of cloud technology to instantly bring together information from every corner of the supply chain, will be in a better position to manage demand.”

In step with BlueBridege One and NetSuite

With KPMG a global provider of Audit, Tax and Advisory services, Andrew Underwood’s opinion is hard to ignore. His assertion is also completely in step with the core benefits of NetSuite ERP. NetSuite is cloud-based and wraps in the cost and efficiency benefits inherent in the SaaS business model of software delivery. It provides real-time information gathering and reporting capabilities. This helps those operating wholesale distribution supply chains to achieve greater agility, better efficiency and more rapid adaptability to changing market conditions and trends such as ‘fast fashion’. Unlike off the peg solutions, NetSuite is custom fitted by BlueBridge One so that the benefits are optimised to meet the needs of each customer. Why not find out for yourself? Click here to register for BlueBridge One’s FREE 14 day trial.

Click here to take a look at the news release on KPMG’s website.

Foxconn iPhone 5 worker disputes shine a light on unsustainable low cost labour strategies

16th October 2012

Foxconn and iPhone 5 dates and numbers

Some 3 weeks after the launch of Apple iPhone 5 the dust is settling, even as worker discontent is kicking up a storm. Tracking the story’s key dates throws up some huge numbers that reveal the scale of Apple manufacturing partner Foxconn’s operations:

  • Friday 21 September - the global launch of iPhone 5, with 5 million units moved in 3 days
  • Sunday 23 September, at around 11PM - a 4 hour riot at the Foxconn plant in Taiyuan by 2,000 out of the workforce of 78,000, which makes small quantities of iPhone 5 cases
  • Friday 05 October - up to 4,000 out of 120,000 workers walked out on strike at the Zhengzhou Technology Park ‘factory city’, after uplifted iPhone 5 quality control standards provoked worker unrest which management ignored

These events had relatively little or no impact on iPhone 5 production. Foxconn’s China operations are truly resilient, spread over 13 plants and employing a total of around 1.2 million workers.

Upsurge of worker unrest in China

These events highlight an upsurge of labour disputes across China since May; without the launch of iPhone 5, this may have gone largely unnoticed by many in the developed world. The underlying issue is one of low-cost labour; ramping up for iPhone 5 production is alleged to have led to excessive demands to work overtime and students being used as ‘interns’. Around 5% of the retail price of electronics and other consumer goods produced in China are believed to be labour costs.

Reports at the FT.com say: “Analysts said the violence demonstrated that Apple and Foxconn’s reliance on low-cost labour was unsustainable, despite production changes made after a series of suicides in 2009.” Escalations in poor labour relations and the resulting disruptions to manufacturing schedules and targets may disrupt the supply chain; however, the commentary from those looking at the social and political significance for China believe it is a good thing - ultimately China’s workers will gain better pay and conditions.

Prepare and keep in step with change with NetSuite

Rising labour costs present problems for supply chain managers, as does disrupted manufacturing. Foxconn, which assembles around 40% of all consumer electronic products in the world, has operations in 9 countries on 3 continents. It has just announced a £300 million investment in Brazil, creating 10,000 jobs. Although this is dwarfed by its capacity in China, it shows that it is preparing for change by increasing capacity elsewhere, even if labour costs in Brazil are 7x higher.

Where ever the far end of your supply chain is anchored, worker unrest that puts upward pressure on labour costs inevitably impacts the TLC (Total Landed Cost) and lead times of wholesale goods. In order to keep in step with change, supply chain managers need access to real time information to make timely decisions. How quickly could your business assess the impact of a 7x increase in labour costs?

NetSuite cloud-based ERP enables you to assess the different variables that impact your profitability and optimise your wholesale distribution business. BlueBridge One is one of only two UK service providers to win a NetSuite 3 Star Award. Click here to see some of the source reportage for this blog from FT.com. Click here to register with us now for a 14 day FREE trial.

Click here to see some of the source reportage for this blog from FT.com.