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Hugo Boss Case Analysis Essay

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Hugo Boss has become known as an industry trend setter for its high quality men’s and women’s fashion apparel, shoes, and accessories. Product leadership, intimate knowledge of their market and customers, and operational excellence are what distinguish the company from others in the luxury fashion goods industry. From an operational perspective, the variability that exists as a result of designing and manufacturing short run fashion products is high. This perpetual shifting of demands and preferences makes it difficult to maintain accurate industry forecasts that result in high risk actions as manufacturing products with no guarantee of sale leading to large scale inventory systems.

The CEO had to walk a fine line between supplying …show more content…

Next figure shows the concept to postpone final product configuration that can help to improve operation performance.

4. Inventory Strategy: Generate high turns and minimize inventory throughout the chain.
• The WIP at the supplier factory was reduced.
• The on-hand inventory at Hugo Boss’ warehouse was reduced to two months of forecasted demand.
• Warehouse reported fewer inventory obsolescence and less billable hours for staff due to smaller, more frequent and more predictable deliveries.
• Forecast was readjusted on a weekly basis ensuring that current production schedules accurately reflected observed changes in demand. The result was that NOS service level increased to 99.9%. Objective achieved through the SCO initiative: YES
5. Lead-time focus: Shorten lead times as long as it doesn’t increase cost.
• The change in order frequency was accompanied by a four week reduction in total lead time.
Objective achieved through the SCO initiative: YES
Some other important facts to be considered as results of the SCO initiative are:
There was a reduction of transportation cost of 9% to € 0.29 per item. With a demand of 4065 units per week, they have a cost reduction of €6,062.65 per year.
Service level improved from 97.9% to 99.9 %. In addition it is important to notice that this was possible with increasing the safety stock. Then, we concluded that the safety stock did not increased because the

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