Stocking Shelves: Exel & Selfridges

The nature of Selfridges’ business creates major supply chain challenges which it needs to overcome to operate efficiently – and keep its customers happy. Its logistics network has to cope with a huge range of products, a complex pattern of peaks and troughs and a wide supplier base spread throughout the world. The fashion area has two main peaks in the year: Spring/Summer and Autumn/Winter. These do not coincide with those of the other main trading categories – food, health and beauty and non-fashion – whose main peaks are at Christmas. Then there are major in-store promotions at different times of the year, the most recent of which has a Brazilian theme. Ed Kuzemko, general manager of Selfridges’ supply chain partner Exel, says: “The operation is dynamic in terms of peaks and it is critical that we get product in store to match the requirements, particularly on the fashion side. We have to provide a responsive and reactive supply chain.” The scale of the inbound logistics operation for Selfridges, which Exel manages along with distribution to the stores, is enormous. Selfridges has around one million different stock-keeping units (SKUs) – although it does not stock all goods at all times – and sells more than 2,500 brands. There are 5,000 suppliers spread out across Europe, the Asia-Pacific rim, the Middle East and the Americas. The majority of the suppliers send their product on a “landed” basis, in which case they are responsible for arranging for it to be transported to Exel’s distribution centre at Hams Hall near Birmingham which is used for the Selfridges contract. The remainder is sent ex-works, which means that Selfridges is responsible for arranging transport. In the case of ex-works movements Exel uses its local offices and nominated carriers to make the collections which are then sent through the most appropriate means of transport, whether that is land, sea or air. Some of the products are consolidated in the country of origin, which reduces the cost of sea freight. But for most of the lines, particularly fashion items, products are sent via air transport without being consolidated so that they can reach the shop floor as quickly as possible. “Fashion often involves smaller consignments bought for one season only rather than as continuity merchandise,” Kuzemko explains. One of the main advantages of using the ex-works model is that it allows Exel to control transport costs directly, rather than their being included as part of the supplier’s overall price. It also creates opportunities to make savings, and Exel carries out a benchmarking exercise every six months to check it is getting the best value possible for freight. Operating ex-works also enables Exel to provide Selfridges with better visibility of exactly where the stock has reached in the supply chain. It is responsible for authorising shipments from the suppliers and ensuring that the quantities being sent match the original purchase order, and can provide management information about the consignments.

Smoothly Exel is responsible for making sure the products get through customs smoothly and informing Selfridges of any problems, so that appropriate action can be taken to deal with the situation – for example, recent strikes in Rio de Janeiro affected products being sent by sea freight for the Brazil promotion. To make the system work effectively the Exel team has to work closely with Selfridges’ buyers and there are two members of staff at the retailer’s head office in Oxford Street, one full-time and one part-time. Their role includes offering logistics advice to help the buyer decide where they should source products. “Before they make their decision buyers need to know the cost of freight from a country, the likely lead times and potential problems with customs. It is critical that we have a close relationship with them,” Kuzemko says. Once they reach Hams Hall, which operates on a six-day double-shift basis, products undergo a range of pre-retail a