Supply Chain Management at Burberry

This assignment delves into the supply chain management practices employed by luxury fashion brand Burberry. It examines various aspects of their operations, including sourcing, manufacturing, distribution, and logistics. The analysis considers Burberry's commitment to sustainability and the role of technology in their supply chain. The provided resources include academic articles, company reports, and online sources that offer insights into best practices and industry trends within supply chain management.

Supply Chain
Management

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Overview of Burberry......................................................................................................................3
a. The companies decision making can be justified by using their
recent financial performance.......................................................................................................4
b. How can the company’s improved supply chain configuration be
utilized to satisfy green and CSR requirements..........................................................................6
c. Analyzing the companies approach to Supply chain planning
in comparison to Ikea’s planning process...................................................................................8
d. Depicting how the technological changes can improve supply chains of organization in
future .........................................................................................................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
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INTRODUCTION
Supply chain management is a process in which material, information flows to the
customer with a motive to provide the highest degree of customer satisfaction, at the lowest
possible cost. The information and the material flows from supplier to the manufacture, from
manufacture to whole seller, to whole seller to the retailer and at last from retailer to the
consumers (Rouse, 2016). The activities covered in the supply chain management is to maximize
the customer value and also to gain a competitive advantage in the market place. The present
report is based on the scenario of Burberry company, a fashion retailer. This explains that the
companies decision making can be justified by using of their financial performance. It also
explains the different ways' by which company’s can improved supply chain configuration by
utilizing of satisfy green and CSR requirements. Furthermore, it analysis the companies approach
to Supply chain planning in comparison to Ikea’s planning process. The different technological
changes that organization make to their supply chains to aid their turnaround/future performance,
are covered in this report.
OVERVIEW OF BURBERRY
Burberry company is a British luxury Fashion house, headquartered in London. The
fashion house distributes ready to wear outerwear, fashion accessories, fragrances, sunglasses
and cosmetics (Burberry. About us, 2016). The mentioned company focus on development of
outdoors attire and the fashion house. By moving to pattern based scarves, trench coats and other
fashion accessories the company moved to top in high fashion market. Burberry is most famous
for its trench coat and has branded stores and franchises around the world and also sell through
concessions in third party stores (Burberry Group PLC BRBY, 2016). The present scenario is
based on company's decision to expand its business by using different supply chain component.
The revenue of the cited company on 31st March 2014 was £2330M which reaches to £2523M in
2015 and the net cash which is available with the Burberry is £552M in 2015 more than from
2014, that is £403M (ANNUAL REPORT 2014/15, 2016.). With this available of cash and
increase in revenue, the mentioned company is capable in expanding its business.
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a. The companies decision making can be justified by using their
recent financial performance
Strong decision making processes helps the company in making good decision. For
expansion of Burberry, the development of financial planning process is an important process for
them (Strategic supply chain management, 2013). During the planning and operational stages for
the expansion of business they can utilize and require the development of numerous financial
document. As this will help the cited company in planning, managing and expanding their
business (Lin and Tseng, 2016). From expanding of the new product or services to maintain the
infrastructure, for this, more than 10 years of investment were aimed at. The revenue growth and
the decision related to the human resource is to be evaluated with a motive to improve efficiency
and productivity. With this increase in the efficiency in the productivity, it will help the company
in easily expanding of its business.
The income statement of the company summarizes the revenue and the expense of the
company. Revenue can be estimated by the help of the mentioned company's sales, and the other
source of income (Jabbour and de Sousa Jabbour, 2016). Expenses will measure the cost of good
sold, taxes and the interest paid by the company. It is important for the Burberry to get
information from the financial statement. From the last 10 year profits and expense, it is easy for
the company to estimate the performance of the company (Meixell and Luoma, 2015). From the
last 10 years the revenue which is sales of the Burberry is continuously increasing in 2006, the
revenue was £743 Million, which increased to £850 M in 2007. In 2008, the revenue was £995
M, in 2008 £1202 M, in 2013 it reaches to 1999 M and in 2015 the revenue of the Burberry
reaches to highest of 2523 M (Burberry Group PLC BRBY. 2016). As from this 10 years profit,
the revenue of the profit is continuously increasing, with these profits they can easily estimate
the performance of the company and it also helps the company in making decisions. As the
Burberry have sufficient funds, which will help in making expansion of the business. The
expanses of the Burberry, that includes cost of goods sold is continuously decreasing, this is a
positive impact on the business while expanding their business. In the year 2007, the COGS was
38.69%, which goes down to 37.94% in 2008. In 2012, it declines to 30.06%, which goes on
declining and it 2015, it lasts reaches to 30.03%. Hence, with a continuous decrease in the
expanses that is cost of good sold will result in increase in the gross profit of the Burberry
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(Marshall and et.al., 2015). If the operational cost of the company will decrease, the profit will
increase, with these profits, the mentioned company can easily make decision regarding the
expansion or product or services (Gattorna, 2015).
For the business expansion it is important for the company to identify the opportunities
for expansion, as it is the priority to ensure the enterprise's sustainability (Ross, 2015).
Measurement of growth is necessary for the Burberry while expanding their business. The recent
financial performance which helps the company in making decisions are the calculation of the
turnover ratio, analyzing of the market share in the market, from the last 10 years profit, as well
as the sales of the company and the total staff members which are working in an organization.
These different calculations, delivers the most accurate picture of the mentioned company's
performance (Fahimnia, Sarkis and Davarzani, 2015).
The turnover ratios is the efficiency ratio, it helps the company in measuring the
company's ability to generate sales from its assets. The assets turnover ratio of the Burberry in
2006 was 1.09%, which is continuously increasing in every next years. In 2011, the turnover
increase to 1.20% and it reaches to 1.22% in 2015. Increase or decrease in the turnover ratio,
affects the performance of the company. From the above figure, it shows that Burberry's turnover
ratio is continuously increasing, which result in increase in the performance of the company. As,
the company is generating more revenue from their products. With these increases in the
turnover ratio, it will help the company in making decision for expanding of business. The net
cash available in the year 2015 was £552 M. as its allows the Burberry to expand its business. At
present the number of staff working in the Burberry will also affect in making decision of the
company. Employees make many efforts in increasing the performance of the company, by
working effectively and efficiently, they increase the production level. At present the number of
employees working in the mentioned company are 10851.
The market shares help the company in judging the effectiveness of the market
campaigns as well as the performance of the company in the present environment (Wang and
et.al., 2016). It is important for the company to determine the profit impact of market strategies,
while making decision. Market share is the main determinant of business profitability. Analysis
of the 10 years profit is also important, for the company, through this it will help the company in
making proper decision regarding the expansion of the business. The profits from the 10 year
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average are fluctuating every year, in 2010, the net income of the company was 18.12%, which
decrease to 14.37% in 2011. In 2012, it increases to 16.64% again in 2014, it falls down to
13.24%. At presently the net income of the Burberry in 2015 was 11.63% (Annual report
2014/15, 2016). With an increase and decrease in the net income results in proper decision.
While expanding the business, it is necessary for the company to make proper market analysis.
Hence, it is very important for the company to measure the financial performance while making
decision related to the business.
b. How can the company’s improved supply chain configuration be
utilized to satisfy green and CSR requirements
An effective supply chain management support the organization in improving their profit
margins through reducing the intermediaries as the ultimate product will be directly reach to the
target customers (Sustainability, 2014). As the consumer is continuously increasing the
awareness of environment, for this sustainability is important for the Burberry. At the time of
promoting the sustainability by the mentioned company, to is necessary to develop sustainable
supply chain.
Eco material preparation- The main material used by the company for apparel
production is the cotton, a renewable resource. There are different chemical and pesticides are
used to grow the cotton in a traditional way. For the production of the cotton, a large amount of
pesticides are used (Stadtler, 2015). The another type is organic cotton, which reduces the
negative impact on the environment as it is grown without use of pesticides. With an increasing
awareness of environmental sustainability, from many years there is use of organic cotton, as
there is no use of pesticides at the time of production. To increase awareness, a great deal of
money is invested on sustainable cotton production. In order to produce real organic cotton, they
guarantee that the farmer will produce better cotton, by providing them better farming techniques
(Agrawal and Smith, 2015). They eliminate the use of the chemicals as they have a negative
impact on the environment. Burberry used fruit and vegetable to dye their cloths, as this dyes
does not impact the environment. They also adopt the strategy to save the water, as this helps the
mentioned company in managing the water resources throughout the production cycle. Their aim
is to send no waste from the organization, for this they use recycled materials within the
company. The use of the recycled materials helps the company in saving energy and water, as
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well as it also includes green house gap emission. Bruberry reduce the energy use by 25% and
reduce their water consumption by 20% (ANNUAL REPORT 2014/15, 2016).
Sustainable manufacturing- In UK, apparel manufacturing take place with low labor
cost. In UK, the awareness of environment and human rights are more developed. The
importance of fair working condition and environmental performance is promoted by the
Burberry. To bring safety in the garment factories, many initiatives were taken by the Burberry
so to reduce the negative impact on the manufacturing. Some of them are monitoring of factory
compliance and also providing training to their worker, who are working in their garment
factories (Monczka and et.al., 2015).
Green distribution- In distribution, producing of the carbon emission is inevitable. It
was estimated that half of the carbon emission is because of transportation from factories to
stores. To reduce the negative impact on the mentioned company, efficient and clean mode of
transport are used. Ferry and train are the clean mode of transportation. By this In transport the
Burberry, reduced the carbon emission products by 10%. The main mode of transport used by
the mentioned company is the ship or the train, from the supplier to the different distribution
centres. In distribution centres they reduced the use of energy in distribution centres by 10%.
They build an intelligent transportation system for direct shipment, so to reduce the associated
emissions. Burberry also implement an energy and resource management software system, with a
motive to reduce the waste in the environment (Wisner, Tan and Leong, 2015). This system
helps the company in enabling advance in environmental data collection.
Green retailing- Burberry promotes the concept of sustainable in ethical consumer in
retailing. Under this, customers can return the old cloths and products to the retail shops of
Burberry. After returning the cloths, in return the customers can get the 15%-20% off coupon for
their next purchases (Sustainability, 2014). From this reward, customers are encouraged to return
the old cloths like new jeans made of recycled fibers. It gives guarantees that all the cloths will
optimally recycle according to their condition (John, 2012). From this concept, the customers not
only receive the discount reward but also save natural resources and they also contribute to
reduced environmental impact by avoiding the textile waste. All the money which mentioned
company earned from this initiative, is used by them to fund the customers coupons also to
reinvest in the sustainability initiatives taken by the Burberry. This concept which they adopted,
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results in win-win-win strategy for the cited company, environment as well as for the customers.
All of them receive benefits by using of this concept. Retailers can buy and sell the products
which are Eco-friendly . Customers appreciate the products which are environment-friendly.
They have become more conscious and particular about the products manufactured by company .
This will bring a positive impact on the goodwill of the company and will also the help them to
increase the revenues outcomes.
Burberry underpins its commitment to drive positive environmental and social change
globally. Burberry also wants to achieve sustainable change by collaborating with its peer in the
luxury goods' industry. To achieve both operational excellence and sustainable and responsible
supply chain, mentioned company is committed in making meaningful and long lasting
improvement both in the workers' employment and work place condition (Cucchiella and Koh,
2015). Through a number of engagement activities, Burberry's ethical programme drove different
improvements in its supply chain. The ethical trading program is conducted in different ways
like, announced and unannounced audits, monitoring, improvement programmes in their local
language. These programs were designed with an aim to address specific challenges like
reducing the working hours of the workers and also to build human resource management
system. They focus into the company's supply chain as to enable their activities to reach more
workers.
The data compare the energy and global gas emission from 2013 to 2015. In 2013, the
data of combustion of fuel and operations of facilities was 1734580, which reduces to 1661533
in 2015. This data considered that the Burberry have the ability to influence the energy
management (Prajogo and Sohal, 2013). They use green house gas protocol to estimate emission
and also used to apply factors from DEFRA and IEA guidance.
c. Analysing the companies approach to Supply chain planning
in comparison to Ikea’s planning process
Ikea group is a global retailer of Scandinavian designed furniture and accessories. Both in
sales and purchasing, Ikea's supply chain has a global spread in all regions of the world. There
are 33 distribution centres and 11 customers distribution centres which the company operates and
supply goods to their retail stores (Kumar and et.al., 2016).
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According to Jonsson, Rudberg & Holmberg 2013, over the last few years, the growth of
the Ikea has been tremendous and the sales of the company is still growing. Currently they are
planning to open some new stores every year with a motive to increase their sales (Strategic
supply chain management, 2013). The stores have strong power in term of planning. The supply
chain planning of Ikea, start with corporate sales planning then it moves to tactical demand
planning activities. After that the need of planning process is forecast, then it moves to supplier
capacity planning process, it also covers the planning of distribution supply chain. The supply
chain planning is done on the basis of purchasing of the product, suppliers, distribution and retail
store coordination.
The sales planning made by the group management at Ikea on the basis of the overall
sales forecast. This is made in term of total sales volume in monetary units. The expected sales
are expressed in percentages. In a year, the corporate sales plan is updated by three times by the
company. The next supply chain planning process is demand planning. There are 32 demand
planners, for the tactical demand planning process. This tactical planning is carried out on a
rolling 84 week planning horizons (Rouse, 2016). The operational forecast amanagementnd the
tactical forecast are combined at a retail store level with a motive to create a final forecast for
each article. The next process in this step is the need planning, it follows traditional distribution
requirement planning principles. For each article, forecast is provided by the retail stores, in
relation to the coming three weeks. For 4 to 84 weeks, it is the responsibility of the demand
planner to forecast the articles. On the basis of the requirement of the retail stores, current stock
level and safety stock are forecasted. After forecasting the planning need, there is need of
calculation by the suppliers so to plan the capacity requirement. It is a general agreement
between the Ikea and its suppliers (Burberry Group PLC BRBY, 2016). In which Ikea provide
certain volume to their suppliers, so that the supplier willingly to invest in plant and equipment
so to produce the desired products. This is the supply chain planning process which is owned by
the central function at Ikea of Sweden.
By adopting the Ikea's supply chain planning process, Burberry can analyse the
prerequisites and effects of centralized supply chain planning in their organization. It leads to
improvement in the several operational performance (Burberry. About us, 2016). As the Ikea
takes 84 weeks planning horizon to carried out the tactical planning, and to improve the supply
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chain management by the Burberry, they have to take time while making planning horizons. By
using of Ikea's planning process, Burberry can enhance the performance in terms of delivery of
services and costs (Jabbour and de Sousa Jabbour, 2016).
d. Depicting how the technological changes can improve supply chains of organization in future
Technology can help Burberry organization in improving it's supply chain in the future.
With the help of various technologies the chosen retail sector Company and its various suppliers
in improving their supply chains by following ways.:
 Use cloud-based software that can track and manage inventory in real time- In order
to align supply and demand of the company the Burberry can develop cloud based
software that will help it in maintaining the inventories. The organization can implement
supply chain technology which will help in tracking the inventory and the damages. It
also allows Burberry organization to responds to the latest demand signals in near real
time. This technology will help the owners of Burberry in adopting the seasonal trend and
fluctuations in the demand of its customers for its cloth (John, 2012).
 Use source tagging and RFID to keep track of inventory and stock levels- This
technology will help in improving the supply chain management of the chosen fashion
organization. It will help suppliers from the moment when the products are moved out of
the warehouse to the retail merchant for point of purchases (Prajogo and Sohal, 2013). At
that time the retailer can deploy a source tagging solution that will increase in the
awareness of location and volume of the merchandises available through the various
channels. The technology of source tagging will lead to inform inventory management
and supply chains of Burberry which will help in making better business decisions.
 Deploying Commercial Global Supply Chain Technology- Burberry can opt global
supply chain technology in house this will further help the company in delivering designs
products globally. The company is required to upgrade multiple factors of global supply
chains technologies. This will help the fashion organization while investing in various
technology investment plans for its future growth. Also the company is required to seek
the global supply chain technology from its ERP vendors. That are specialized in global
supply chains technologies. ERP vendors can also be termed as hosted application
providers and software as a service. This technology also ensure various pros and corns
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of source of global supply chains technologies. For example- With the implementation of
ERP technology the Burberry may develop a strong cross- functional work flows. Also
while on demand can deliver pre conducted communities of logistics and suppliers on
investment times to get faster returns (Ashish, 2016.).
ERP vendor technology will help the Burberry company in accessing the success in
future time. It will lead to increase in demand at global trading platforms which offer
functionality on transaction and subscription basis.
 Product Availability- In this the Burberry organization is required to refine and review it
current process. To improve various issues occurring while completing the process. One
of the major issue that occur at the time of supply process is availability of product.
Considering the competitive environment of the organization has importance of each and
every sales unavailability of product may lead to losses. So to improve product
availability retailer organization as to opt a inventory management technology This
technology will help the Company in availability of products (Cucchiella and Koh,
2015). Also proper distribution channels are to be managed by the company to improve
its supply chain in the future. Inventory management technology will help the Burberry
fashion retail organization in maintaining the availability of products to fulfill demands.
 Go Digital- For keeping the accurate track records the organization is required to fill its
transaction into spreadsheets. By the use of technology it will help in less time
consumption as well by using analog the manager ca keep eye on each operation of
Burberry fashion Company. With the help of this the partners can take advantages of EDI
that electronic data interchanges. It can also compute cloud technologies into there office
premises which will further help in improving the production and will lead to accuracy
and efficiency (Kumar and et.al., 2016). So the the company is required to turn its system
of recordings track records into spreadsheets. This will help in maintain the accurate
record which can be used in future by supply chains while making business decisions.
Following transformations will help the Burberry organizations in improving its supply
chains in for future with the help of various technologies.
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CONCLUSION
The aforementioned report explained the supply chain management of the Burberry. It
concludes that strong decision making processes helps the company in making good decision.
The development of financial planning process is an important process for the Burberry.
Furthermore, it concludes that the recent financial performance like calculation of the turnover
ratio, analysing of the market share, last 10 years profit, the sales of the company helps the
company in making decision. Assets turnover ratios also helps the company in measuring the
company's ability to generate sales from its asset. Therefore, it is very important for the company
to measure the financial performance while making decision related to the expansion of business.
Moreover, an effective supply chain management helps the company in supporting the
organization along with this they can improve their profit margins by reducing the
intermediaries. Hence, different initiatives like monitoring of factory compliance and training to
their workers were taken by the Burberry so to reduce the negative impact on the manufacturing.
From this report it concludes that Burberry implement an energy and resource management
software system, to reduce the waste in the environment. It examined that by adopting the Ikea's
supply chain planning process, Burberry can analyse the prerequisites and effects of centralized
supply chain planning in their organization.
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REFERENCES
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Ashish, W., 2016. Innovative Solutions for Implementing Global Supply Chains in Emerging
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Cucchiella, F. and Koh, L., 2015. Sustainable Future Energy Technology and Supply Chains: A
Multi-perspective Analysis. Springer
Agrawal, N. and Smith, S. A. eds., 2015. Retail supply chain management: Quantitative models
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Gattorna, J., 2015. Dynamic supply chains. Pearson Education Limited.
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Lin, Y. H. and Tseng, M. L., 2016. Assessing the competitive priorities within sustainable
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Prajogo, D. and Sohal, A., 2013. Supply chain professionals: A study of competencies, use of
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