A Warehouse for luxury

An important component of SCM-luxe is the warehouse. A luxury goods warehouse has certain unique requirements which tend to increase costs:

·         Security – typically high value luxury brands will require warehouses to be as secure as bank vaults with round the clock security, fire proof systems etc

·         Ultra clean environments – luxury goods are fragile and require to be kept in very clean and spotless work areas. Fragrances, wines  etc need to be climate controlled and dust free

·         Large space requirements – packaging is of prime importance to the end user and for the brands appeal which limits ability to have stacked on space saving packaging design

·         All inbound and outbound vehicles to have similar security, climate control and space facilities

·         RFID complaint systems – newer identification and tracking devices will become more important in high value (jewellery) or perishable(caviar)  luxury products

·         Warehouse Management Systems (WMS)  - top of the line WMS systems which addresses needs for the particular set of products being managed

Some factors to consider while selecting WMS are:

·         Integration with existing ERP systems – this is very important since without a seamless flow between the two systems, a efficient logistics solution cannot be achieved

·         Ability for WMS to scale up  to grow with the business (additional product lines added, regions covered etc) and ease with which it can integrate with supply chain partner’s systems - logistics providers, 3PLs, Distributors or even different business lines within the company which typically might work on differing systems. For eg. Richemont’s different “maisons” do not have one standardized system but work on different applications due to legacy issues

·         Ability to track KPIs – the WMS should have a customizable dashboard to track key metrics such as order accuracy levels, fill rates, delivery lead times, inventory ageing reports etc

Hamburg, Speicherstadt Warehouse District

We see that with increasing rents and expenses involved in maintaining stores at major international high streets, the retail outlet is growing smaller with lesser inventory which increases the importance of warehouse management systems and the ability to deliver supplies in smaller lots to outlets but with increased frequency. Does this mean an increased scope for implementing network planning systems as well? Or is that an overkill given the limited scale of the luxury goods industry? Your comments?