95% of the orders at Hallmark Business Connections are processed online, CEO Tressa Angell says.
Neiman Marcus relies on a web-enabled supply chain to keep up with the hot trends.
Many Neiman Marcus shoppers frequent the tony retailer’s stores, web site and catalogs because of the fashion-forward display of apparel, jewelry and other merchandise. As such, they’re accustomed to regularly seeing something new and different. Apparel is not a category for commodities-it’s for something that stands out.
But few patrons likely know about the work that goes into maintaining inbound flow of fashionable merchandise, a process that involves a small army of domestic and foreign suppliers, carriers, and intermediaries, along with a slew of government and international customs and rules.
“The specialty retail fashion business of Neiman Marcus is heavily reliant on the timely movement of merchandise through our supply chain,” David Wortman, vice president of international operations and government compliance at The Neiman Marcus Group Inc., says in a decidedly understated manner.
Indeed, managing the retailer’s international supply chain has grown more complicated in recent years as government rules regarding imported goods have forced retailers to prepare product and supplier data sooner in the shipment cycle. Without that information, retailers face potentially lengthy delays in processing imports through U.S. Customs and Border Protection-a problem that can turn the fashion-forward selling model of Neiman Marcus on its head.
But getting that information in a timely fashion has been difficult, Wortman says. It’s always a challenge for retailers to manage exceptions and disruptions to expected shipments, but it can be nearly impossible to get previews of shipment and product data from a large number of suppliers based in the Far East and other markets.
However, Neiman Marcus has not only found a way to expedite shipments through customs, it also has trimmed an average of one to two days off overall shipment times-a significant savings for a retailer that relies heavily on air shipments to get much of its merchandise into selling channels while it’s still hot.
Using a web-hosted supply chain management system from TradeBeam Inc., Neiman Marcus now is able to comply with import regulations, such as classifying products for the country of origin, calculate cross-border duties, process international bank letters of credit to pay for shipments, and share order and shipment information with suppliers, carriers and freight consolidators to ensure the steady flow of goods.
“It provides visibility into order status, shipment and settlement events that occur throughout our global supply chain while reducing costs and ensuring effective trade compliance,” says Jimmy Howell, the retailer’s vice president of transportation and logistics.
Cutting cycle times
In addition, Neiman Marcus can drill down to see details such as country sources for products with multiple suppliers-garments with fabric from one country and buttons from another, for example-so it can prepare country-of-origin reports ahead of time to expedite processing through customs. “This enables us to pre-classify goods and clear customs more efficiently to reduce trade cycle times,” Howell says.
Retailers sourcing goods from abroad also must deal with rules on product content, which can change frequently for individual countries. The rules determine, for example, the duties each country applies to particular content like cotton or other textiles, so the retailer/importer needs the latest rules information to quickly process shipments across borders.
To keep up to date with content rules for more than 60 countries, TradeBeam dedicates 15 staff members and uses about 30 consultants throughout the world to monitor rule changes, explains John Vincze, executive vice president of field operations at TradeBeam. It guarantees rules are updated in its global trade management system within 24 hours of their change by the host country, he adds.
The system also enables Neiman to better monitor the performance of suppliers, carriers, freight forwarders and consolidators to check any events that may be preventing products from arriving at its warehouses and stores before they go out of style. If a shipment of designer dresses is delayed at an overseas airport because of inclement weather, for instance, the overseas freight forwarder would enter that information into the TradeBeam online application, which forwards an alert to a Neiman manager’s e-mail or mobile phone.
“TradeBeam functions as an eye on our international logistics business, giving us the ability to better manage our shipments through exception reporting and alert messaging,” Wortman says.
For retailers that rely more on ocean freight, the time savings of using an application like TradeBeam can save several days in a shipment cycle. Liz Claiborne, for example, pulled an average of five to seven days out of overseas shipments, Vincze says.
TradeBeam charges for its application on a per-transaction basis, which runs from $250,000 to $400,000 per year for most large retailers, plus a one-time implementation fee starting at about $100,000, Vincze says.
For retailers looking for another supply chain option, one where they don’t have to directly finance goods in transit, Fidelitone Logistics provides another alternative for bringing in goods from overseas as well as from domestic suppliers, which it does for major retailers like Best Buy Co. Inc. and Sears, Roebuck and Co., and manufacturers like Black & Decker.
The third-party logistics provider integrates with clients’ order processing systems and point-of-sale data, then forecasts client demand and handles the acquisition, financing and inbound shipment of products to its staging facility. “Our customers want us to forecast, so if we blow it, it’s our problem,” says executive vice president Tom Giovingo. For Best Buy, Fidelitone’s national parts unit works with 34 shipping partners to bring consumer electronics parts from the Pacific Rim and other regions to hold in Fidelitone’s warehouse until Best Buy needs them.
Fidelitone takes ownership of its clients’ inventory until a client orders products shipped to its retail or wholesale customers, after which it bills the clients for final shipments. It also guarantees outbound shipments from its warehouse to clients’ customers go out within 48 hours, though it ships more than 90% within a day, Giovingo says. “It’s not uncommon in the online retailing world to allow three to five days for shipping, but our customers have found any delay in shipment kicks up buyer cancellation rate, so it behooves us to turn orders the same day or next day,” he adds.