When London-based AllSaints began the process of looking to improve its processes, operations and finances upon the appointment of Burberry veteran William Kim as chief executive officer two years ago, the wish list was long and the budget was limited.
Much of the available capital was spent when it decided to buy its own distribution centers, one in the U.K. and the other in the U.S. That allowed it to provide next-day delivery to customers on its Web site, allsaints.com, rather than the previous five- to seven-day wait for fulfillment, and it also allowed the company to cut its processing costs in half, Peter Wood, AllSaint’s chief financial officer, told the WWD Global Sourcing forum.
The company didn’t have the capital for a sophisticated enterprise resource planning, or ERP, system, so it brought in two experts who produced “fresh thinking and speedy solutions.”
AllSaints, which markets women’s and men’s sportswear on both sides of the Atlantic and now in South Korea, needed a better Web site and, availing itself of a “passionate, committed” work force with an average age of 24, did that in-house, as well. “Other brands have spent millions of dollars doing that sort of thing,” Wood said. “We bought millions of pizzas.”
The company, with revenues of $350 million primarily generated from the U.K., also sought to simplify its supply chain and reduced its supplier count to today’s roster of 65 from more than 300 in 2012, all of them located in China, India, Turkey and Portugal. The bottom-line result, the cfo said, was a five-point improvement in initial mark-up and a consequential near doubling of its run rate for earnings before interest, taxes, depreciation and amortization.
But with 2,500 employees and 3,000 styles every year, AllSaints sought a method of tieing all aspects of the organizations together, a platform that would allow not only for better communication with its suppliers and within individual departments but also among the various departments. AllSaints turned to Google for Work, a cloud-based commercial version of Google Docs.
“What’s amazing is that they did it in 90 days,” said Rhonda Stites, head of industry solutions at Google for Work. Since so many employees were already familiar with the various protocols of Google Docs, the company provided no training and, despite some reservations, easily adapted to the heightened transparency inherent in the system.
“Pete struggled moving spreadsheets, but he’s got it now,” Stites said of the cfo, noting that GFW has been incorporated in “all collaboration systems used internally and with suppliers,” including video conferencing and file sharing. The company pays a subscription fee for the service, where virtually all corporate literature, such as store training manuals, can be found.
Also at the summit, Samir Moorjani, vice president and senior regional trade sales manager for HSBC Bank USA, outlined financing options available to importers and their suppliers to help build a “sustainable supply chain” in financial terms.
In one of several scenarios he shared, a supplier holding a $1 million order from a retailer could save $3,400 in financing costs on an order with 30-day terms and almost $6,100 on an order with 60-day terms by engaging in an HSBC program in which he received a discounted payment from HSBC following the retailer’s receipt of an order, with HSBC collecting from the retailer later. This is possible because the cost of capital for the supplier in a market like Sri Lanka or Vietnam — currently between 6 and 14 percent, depending on the creditworthiness of the contractor — is likely to be higher than it is in the U.S.
“This takes into account the interest rate differential and the time value of money,” he added.