APRIL 27, 2009
ANANTH RAMAN NICOLE DEHORATIUS ZAHRA KANJI
Supply Chain Optimization at Hugo Boss (A)
Katja Ruth and Constantine Moros sat facing each other in the empty conference room. Covering the table between them were the latest operational and financial figures from the supply chain optimization pilot Hugo Boss had been running in its global bodywear and hosiery Division.1 Ruth, the director of the division, agreed with Moros, the division’s head of operations and procurement, that the pilot had been a success—better product availability and lower inventory to sales ratios had been observed for the stock-keeping-units (SKUs) involved in it—but was not convinced that expansion of the initiative beyond those SKUs would enjoy the same success. With Hugo Boss’s chief operations officer expecting her assessment in a few days, she and Moros had a lot of work to do. They needed not only to precisely quantify the pilot’s financial impact, but also to determine whether the initiative should be rolled out to other products and, if so, which ones.
Founded in 1923 in the German town of Metzingen, Hugo Boss became known for its high-quality men’s and women’s fashion apparel, shoes, and accessories. Begun as a brand focused exclusively on men’s business wear, over time it came to offer a wide variety of lifestyle clothing for both genders (Exhibit 1). Business wear and casual wear accounted for nearly equal proportions of Hugo Boss’s 2006 total sales (44% and 46%, respectively; see Exhibit 2). Shoes and accessories accounted for the remaining 10%. Europe was Hugo Boss’s principal consumer market, accounting for 69% of 2006 total sales (the Americas accounted for 18%, Asia and the rest of the world for 10%).2 The company’s global brand spanned more than 100 countries with more than 5,500 retail points of sale (Exhibit 3), sufficient reach to assure it a market leadership position in men’s fashion around the world.3
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