Addressing Supply Chain Challenges

Addressing suppkyThis short case study presentation on supply chain solutions at ReTechCon 2013 by Bhargava Huchurao, Country Director (India), Columbia Sportswear, profiled how Columbia Sportswear had used GT Nexus’s solutions in order to automate supply chain in a “multi” context:  i.e. multi-country, multi-category, multi-channel.

Some of the salient features of Columbia’s implementation of GT Nexus solutions:

  • To solve its Multi country, multi category, multi channel supply chain requirement – Columbia decided to transform from end to end – i.e. from chain to the front facing brand (including operations, retail, and product)
  • They started the process by signing up for GT Nexuss solution Procure to pay in 2003.  It took 2 years to convince internal stakeholders to get supplies to move from banks to GT Nexus . In order to convince suppliers to make the shift they were guaranteed financial performance; with a back-to-back arrangement with GTN.
  • GTN walked the walk with a road show which involved visiting, discussing and convincing each supplier.  Once they got a beta site for implementation they used benchmarks, data from the early adopters to convert the other suppliers.
  • One of the first advantages was the reduction in the cost of managing the supply chain cycle manifest in reduced payment cycle to supplier. This had a knock on effect of increasing credibility with suppliers.
  • The second advantage was product visibility to customers.  In stage 1 of the implementation, Columbia used GTNs Factory Express product which provided product visibility from the factory gate.  When the product is produced / packaged the suppliers scans it and gets inventory as well as production details online.  Facilities such as packing lists are automated for the supplier to view.
  • The system also ensured that these lists are compliant with local regulations across 105 countries, this produces significant efficiency and reduces error rates. 
  • The last module to be implemented was the supplier collaboration module. This module extends visibility previously Columbia suppliers were able to view inventory and packing lists at the factory gate now that visibility improved to the point of production.
  •  The journey to complete end to end implementation has taken time 8 years to be precise. But the benefits realized have also been manifold:
    • Team size has shrunk as supply chain has moved to a paperless platform. Processing is via a negative list for payments to suppliers major debottlenecking of suppliers finances because the system only flags exceptions to the payment cycle normal payments are automatically processed.
    • Payment cycles have shrunk as a result.
    • Columbia is able to manage Insurance and offer early payment options / shipment credits to suppliers to help them manage their business and cash flow more efficiently .
    • Document verification and approvals has been decentralized for process and centralized for control
    • In a knock on effect the suppliers (i.e. Manufacturers) supply chain  has also become efficient
    • Specifically in India, Columbias financing packages are are based on LIBOR rates as compared to Banks in India which offer funding RBIs reference rate which is much higher.  This represents a significant improvement to suppliers finances (at current interest spreads this translates to a 4 to 5% reduction in the cost of working capital at a MINIMUM).

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