Management of the Upstream SCM-luxe (Part 1 of 3)

Design

The upstream supply chain processes in SCM-luxe is defined by “Design” and is the overriding factor in the success of the supply chain.  Design is often regarded the core competency of a firm and most luxury goods boutiques tend to retain this in house with well established design teams lead by a “Star Designer” who is often the face behind a brand and is widely communicated in most advertising and brand communications.  Co Design is often used by luxury firms when they collaborate with external designers but retain the translation of the external designer’s vision within the internal in-house design team.  At times if the individual luxury boutiques happen to be licensees of a brand, design might involve co-design with the brand owner’s design team. It is important to note that in whichever case the design function is treated as a core competency and sufficient investment and importance is accorded to it. The last design strategy of outsourcing design to specialized third party vendors is almost never exercised in the luxury goods industry (atleast should not be!)

Supply

Supply indicates the location of suppliers and sourcing of material for manufacture as well as consumables.  Here Local might not always signify premium as in regular supply chains. For instance, diamonds and other gemstones will need to be obtained from mines in Africa/Australia and not from local markets in Italy/France.  Consumables (say packaging for perfumes) on the other hand can be kept local due to lower costs in transportation and reliable supply. Low Cost supply on the other hand indicates sourcing of both raw materials and consumables from global suppliers with costs being the major criteria – this involves taking benefits from economies of scale such as mass production of fashion items – again a strategy normally not resorted to by luxury firms

Production

Earlier blog posts both regarding origin and manufacture have discussed this topic in detail: SCOR for SCM-luxe and Forms of Luxury

Essentially Local manufacture is considered true luxury whereas keeping assembly local and outsourcing manufacture is an option used by some firms keen to take on the benefits of mass customization

In the next part we will look at the downstream function of distribution and point of sale strategy…