Supply Chain Optimization at Hugo Boss – Reaching a Decision

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Hugo Boss is a company that deals with men’s and women’s wear. It initially started selling men’s wear, but later sold women’s clothes and shoes. Its goods have been sold all over the world, with Europe being the leading consumer, while America, Asia, and others follow. A group of managers and designers designed their fashionable wears, and their products were at the competitive edge because they produced them according to customer needs (Raman, Dehoratius, & Kanji, 2009).

Hugo and Boss are brands with many products that have a brand name Boss, which includes Boss Black, Orange, Green and Selection. In 2006, body wear had the highest percent of sales followed by hosiery, swimming costume, terry wear, and relax wear. Body wear and hosiery were never out of stock, this was to discourage customers from getting alternative items from competitors such as Tommy Hilfiger.

These products changed after three years. Some of the items, such as swimwear changed seasonally, and were categorized as fashion products because they were out of stock after some time. Ruth and Moros thought of how efficiency and effectiveness of supply chain could improve on the company’s productivity. Moros concern was about the Never Out of Stock (NOS) items.

He thought that retail customers would replace the company’s items, especially in months like December when the products were in high demand. He also observed that when NOS were out of stock, it led to low profitability and that is why he decided to Consult Ruth about the issue (Raman, Dehoratius, & Kanji, 2009).

Ruth and Moros focused on how to improve the supply chain to increase revenue. This means that they had to assess the cost of inventory and accessibility of products to the customers while reducing the operating costs which includes transportation of goods, stock maintenance and production. Their main challenges were on manufacturing cycles, inventories, and demand estimate.

In manufacturing cycles, Wood (2009) recommends that it is important to assess the rate of production of goods after a certain period. This will help in determining the time taken by each machine to produce goods and the workforce involved in the production per hour or per day, for example, time taken to cut and sew a garment. This will enable the managing team to identify the number of devices that are required to complete a production and the time it takes to produce a unit of production.

The team’s aim is to reduce the production time and keep the company at a competitive edge, and at the same time, ensuring that the goods produced reaches the market at the best time possible. This will increase revenue because of the time saved. Managing of inventory was another major concern because stock expenses were going up for inventory items, which were classified as never out of stock.

The management should come up with a balance of inventories because if there is more, its expenses increases and if it is less, it will not meet customer’s demands. Hugo Boss team should come up with proper inventory refilling techniques, while at the same time recognizing inventory requirements, reporting, and analyzing its status. Fashion items, which are kept out of stock after some time, should be retained.

This is because customers might still need them and may substitute the products in other competitive companies. It is the managing team’s duty to make sure that there is stock left in the fashion item inventory even if there are new brands. According to Wood (2009), assessing the demand of products is another concern of optimizing the chain of supply. Focusing and timely conforming of demand is very important.

Demand can be estimated depending on history of sale of a product. The company should also invest on ways of improving plan on demand because it will promote cooperation with customer and supply management team. Demand is determined by inventory level, when the level of is high there will be greater sales. Ruth and Moros have to come up with a marketing strategy to dominate the market and improve on sales and profitability.

They should understand that the demand on clothes is dynamic because new fashion wears comes in the market. This will involve careful analysis of both internal and external surrounding markets. Hugo Boss has been known to be at the competitive edge, especially in Europe, as indicated in the map (Raman, Dehoratius, & Kanji, 2009), and should seek to sustain its competitive advantage.

The changing nature of the environment will determine frequency of introducing new brands to the market with comparison to the new brands from other competitors. Furthermore, performance measurement is a key issue in Hugo Boss because it will demonstrate the progress of organizations goals and at the same time identify the deviation of the set objectives.

It will indicate whether the company’s operations are efficient and use the required resources to meet customer’s demands. This process ensures that inputs in form of labor are properly utilized to give the best output in form of goods. In order for Hugo Boss’s products such as body wear whose sales are high to stay as a leading product, the company should put great effort on offering innovative products that consumers consider as of better quality.

In conclusion, outstanding operations, market closeness and item leadership as well as production methods, inventory management and demand focus will increase Hugo Boss revenues and increase its competitive advantage. The company should strive to improve on quality, such as color and fabrics, as well as improving on fashion styles to compete with other competitors while also increasing supply channels and improving on the growth of revenue.

References

Raman, A., Dehoratius, N., & Kanji, Z. (2009, April 27). Supply Chain Optimization at Hugo Boss (A). Boston, MA: Harvard Business School.

Wood, J. (2009). Business Transformation: Strategies to Reconfigure your Business. San Francisco: Wiley.

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Supply Chain Optimization at Hugo Boss – Reaching a Decision

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