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Club Monaco, one of Canada's fastest-growing and most innovative fashion retailers, decided in January 1998 to relaunch its cosmetics business to an international audience. It wanted to sell the product line not only in its 125 Club Monaco stores, but also in a select and expanding number of department and specialty stores in Canada, the U.S., Europe and Asia.
"We restarted the business from scratch," said Ron Lagace, vice president and general manager of the Club Monaco cosmetics business. "At that time, we didn't have any inventory or even a single piece of paper." In addition to ramping up manufacturing and getting material suppliers on board, Lagace also began a search for a logistics company "that could fulfill our needs not only in the short term, but on a long-term basis."
The Club Monaco cosmetics business needed an efficient distribution center and a management company with international expertise, since it already had an agreement to distribute product in the U.K. and plans for expanding to many more countries. "But the really critical thing for us was automation," Lagace said. "In dealing with Canadian and, especially, with U.S. department stores, if you are not compliant with their systems you are continually penalized, which is extremely costly. We were really looking for a turnkey operation."
An extensive search was conducted, "and I can tell you there were not a lot of companies that fulfilled our criteria," he said. "Not only did we need a facility with worldwide distribution capabilities and automation, but we needed one with reasonable charges because we were just getting started. There are a lot of highly automated providers out there, but not many are willing to take on a small company. If you don't yet have a critical mass or sufficient volume, the charges can be horriffic and it simply is not cost efficient. What we needed was a partner that could see the future opportunity and that was prepared to grow with us."
Enter PBB Global Logistics, a 52-year old company based in Fort Erie, Ontario, that evolved from a freight forwarding and customs brokerage business into a full-service, international logistics provider. Importantly, PBB has focused extensively on developing its systems infrastructure. "We have 40 to 45 programmers on staff all dedicated to developing automated solutions and customizing those solutions to specifically fit clients' needs," said John Ferguson, PBB marketing manager. In Club Monaco's case, he said, vendor compliance solutions already had been developed for other customers. "We had the basic systems in house and we were able to offer the advantage of amortizing the cost over multiple clients."
In addition to a variety of logistics execution packages, PBB provides full EDI capabilities for its clients, including the advance ship notices and other information required by major retail stores. It also offers a range of information over the internet, such as shipment tracking and daily currency exchange rates.
"When we came across PBB we were impressed by their management, their portfolio of experience and, of course, their automation capabilities," said Lagace.
PBB subsequently was named sole logistics provider for the Club Monaco cosmetics unit. It manges all inbound shipments, pick and pack operations, and outbound shipments, using a partially dedicated PBB facility in Toronto for centralized global distribution. More than 4,000 SKUs are stocked at the facility for shipment to numerous locations in Canada, the U.S., the U.K., Hong Kong, Japan, Korea, Saudi Arabia, Israel, Sweden, Switzerland and Australia, with more countries being added all the time.
Most stock items move quickly with some "turning very rapidly," according to Ron Mazurek, PBB distribution manager. "We have many items that turn 10 to 20 times a year," he said.
All stock items are delivered loose and put away in labeled bins. Orders are individually picked and packed the same day they are received and shipped within 24 hours. On a recent typical day, PBB picked and packed approximately 18,000 items to fill about 60 orders, Mazurek said.
The Club Monaco stock is arranged sequentially by item number and divided into picking zones, he explained. Orders flow on conveyors from zone to zone and at the end are checked for accuracy prior to packing. Shipments typically consist of one to two pallets, each weighing anywhere from 200 to 250 pounds, though many smaller orders also are part of the mix. Trucking and air carriers are used for transport and PBB works closely with a number of providers, including Purolator Courier, ATS, Day and Ross Maritime Ontario, Lufthansa, KLM, Air Canada and USAir. For international shipments, PBB handles all customs clearance and documentation. Since the company has a U.S. division based in Buffalo, N.Y., and 42 U.S. locations, goods destined for the United States are routed through that division.
In addition to standard pick-and-pack services, PBB also provides a range of value-added services for Club Monaco. For example, some orders require specialized packing treatment because they include items like nail polish, which is classified as hazardous, Mazurek explained. PBB also performs kitting on site, such as combining items into special gift packages. It manufacturers packaging, prints inserts and attaches price tickets to certain items as well.
PBB's automation capabilities, which are so important in keeping Club Monaco's customers informed about incoming shipments, also facilitate communication between Club Monaco and PBB. Club Monaco sends orders electronically to the PBB system and has access to all order information so it can see which orders are being picked or packed, which have been shipped and which have been delivered.
If there are any day-to-day issues to be communicated, that is done through electronic email, said Mazurek. Of course, the partners also meet regularly to discuss more long-term or thorny issues.
There have been a number of these. "We have gone through some growing pains with PBB," said Lagace. "It hasn't all been perfect and rosy, but I think the positive thing is that they always have been there to say, 'OK, there is a problem here, how do we fix it.' The important thing is that the partner on the other side of the table is acting like a partner and is committed to constant improvement."
One example, he said, was PBB's quick response when Club Monaco introduced a line of skin-care products to supplement its core cosmetics line. These products are controlled in Canada by government regulations and must adhere to strict standards in terms of storage, including temperature control. "PBB came to the table ready to do what was needed and they built a facility within a facility for us," said Lagace. "It's an attitude of 'how can we help you grow this business going forward.'"
Another example is the recent recognition by both parties that Club Monaco is outgrowing the current pick-and-pack environment and needs a scanning system based on RF technology. "We want to work toward a zero error rate," said Lagace. "We are in a very competitive business where we need to be 100 percent compliant, 100 percent accurate and where we also want to make sure that our inventory balances and shrinkage are kept to a bare minimum. But we are growing very quickly and errors tend to occur when you are bringing on new employees who have a learning curve. So what we need is a scanning-based system that automates verification."
A lot of companies may have balked at this request and said they were not yet prepared to provide the technology because no other customers needed it, said Lagace. "But PBB saw that this change would be very good for our business and saw that it could possibly create some efficienies for other customers as well."
The two companies currently are working together to decide on a system that fits both their needs.
PBB's commitment to the partnership also was tested by a recent public relations bonanza that gave Club Monaco's business an unexpected surge. When Monica Lewinsky was interviewed by Barbara Walters on national television in the U.S., her "new look" was based on Club Monaco cosmetics products chosen for her by a makeup artist. The neutral-toned lipstick, lipliner, blush and eye shadow that she wore quickly became hot items throughout North America. "Our business exploded on us so much that we did six months' worth of volume in two months," said Lagace. "We had a hard time trying to keep these items in stock and this put a lot of pressure on the logistics facility, which had been accustomed to handling a certain number of orders. Literally overnight those numbers quadrupled and that increases your exposure to possible errors. PBB worked very hard to rise to the challenge and get the orders out on a timely basis. They have been very diligent in trying to help us capitalize on this great opportunity."
The key to this partnership's success has been the emphasis on working toward constant improvement, Lagace stressed. "We think of PBB as being part of Club Monaco and they have to think the same way and have that same mentality. That's when you create a real strategic alliance."
Mazurek agreed. "As far as we are concerned, we are Club Monaco," he said. "We are distributing all this product on their behalf, and our goal is to satisfy their customer, to get the end product to their customer efficiently and accurately. Then, we both realize additional business."
|Club Monaco is an innovative retailer that designs and markets apparel, accessories, jewelry, eyewear and cosmetics under its own brand name and a number of associated trademarks. It operates and franchises a total of 125 stores worldwide, and also markets products through select, high-end retail and department stores.|
For the first nine months of last year, the company increased year-over-year revenue 13.4 percent to a record $87.7m, despite a drop in sales at its stores in Asia. Gross profit increased 24.4 percent to $47.2m.
The company was acquired by Polo Ralph Lauren in March for $79m and is being operated as a stand-alone subsidiary. "Club Monaco is a dynamic, innovative concept with a unique product direction in the marketplace," Ralph Lauren, chairman and CEO of Polo Ralph Lauren,said at the time of the purchase. "Working along with Club Monaco's experienced management, we believe we can accelerate their own growth plans."
PBB is a 52-year old logistics provider with a worldwide network of facilities that offers a variety of services, including international freight forwarding, customs brokerage, warehousing and distribution, transborder shipping, international mail-order systems, international trade solutions and corporate travel services. PBB has approximately 1,000 employees, 70 locations in North America and alliances with forwarders around the world. Last year, the company generated more than $80m in revenue.
PBB's strong presence in the U.S. is reflected in its ranking as the country's 9th-largest customs broker. Major clients include Sears Canada, Airborne Express, Purolator Courier and McCain Foods.
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