Edcon builds a foundation for retail growth in southern Africa on the Eqos platform
Already southern Africa's leading clothing, footwear and textiles retail group, Edcon has aggressive plans for continued business growth. As part of the group's Sourcing Excellence initiative, Edcon has kicked off a wave of business process improvements designed to establish a set of harmonized best practices for global sourcing and supplier management across the multi-channel group. Working in partnership with Eqos and Accenture, Edcon has implemented the Eqos Global Sourcing and Supplier Management solution to target divisions and categories. The Eqos technology platform is helping Edcon optimize its sourcing processes by embedding best practices and proactively managing critical path activities from initial product design, right through the sourcing process to product delivery.
Since opening its first store in 1929, Edgars Consolidated Stores Limited (Edcon) has grown to become the leading clothing, footwear and textiles (CFT) retailing group in southern Africa. Employing more than 20,000 people, the group incorporates ten retail brands trading in 1000 stores across the region. In 2006 group revenue topped more than 16.3 billion rand (USD $2.3 billion). The group incorporates ten retail brands which target a broad demographic, including middle and upper income markets through department stores, such as Edgars, and the middle to lower income markets via its discount brands, such as Jet.
Like many other retailers, Edcon operates in a dynamic and challenging business environment. Edcon sources some 40 percent of its goods internationally from 25 countries, shipping via 55 ports of lading. It offers a mix of private label and branded lines, sourced through agents and direct from the manufacturer. During the past few years the retailing giant has added top stationery, houseware and other general merchandise brands to its CFT portfolio. The company recently embarked on an ambitious growth plan targeted at opening one new or revamped store every four days, bringing the current total number of stores to just over 1000 in 2007.
The difficulties of operating such a complex sourcing and distribution network hasn't been Edcon's only challenge, with the rising cost of low-cost country sourcing proving to be a significant factor. The South African government has levied tariffs on goods imported from countries such as China and India, resulting in a 40 percent import duty on apparel, 30 percent on footwear, and 25 percent on textiles. On top of challenges with manufacturing visibility in local markets, the need to cut costs through more effective shipping strategies and the ability to plug in alternative sources of supply quickly and easily was high on Edcon's wish list.
"We selected Eqos to help us better meet market demand and achieve competitive advantage by better managing our supplier network."
A proliferation of disconnected internal, manual processes and no single cohesive supplier management strategy meant there was plenty of room for improvement in the company's sourcing processes. To better support the company's goals of double digit percentage year-on-year growth, Edcon's buying team realized it needed a single system to both integrate with other merchandising, QA, manufacturing and logistics processes, as well as synchronizing the entire sourcing process across its multiple retail channels. The system would need to be scaleable and highly configurable to support continued organic growth, as well as allowing the integration of future retail brand acquisitions into its sourcing processes quickly and easily.
In 2006 Eqos teamed up with Accenture to provide a solution to support Edcon's sourcing business requirements. The initial deployment focused on improving the private label merchandise buying process for apparel lines offered by Edgars and Jet. The result was a single front-end system that manages the entire sourcing process from design initiation, product brief development, quality testing, packaging development, quoting, and ordering. The Eqos solution provides a window into the entire critical path from start to finish by integrating with other Edcon systems, including Oracle (Retek), its in-house design and quality systems as well as with external logistics providers. The pilot system went live in July 2007.
Accessed via a Web-based interface, the Eqos sourcing system is automating previously labor-intensive manual and paper-based processes, reducing the burden of work placed not only on the Edcon team, but also on its suppliers and agents who no longer need to wade through multiple spreadsheets and emails.
Using the critical path management functionality, Edcon has a single view of all its sourcing activities, enabling it to track the exact status of a product throughout the sourcing process. Instead of manually tracking all orders, Edcon's buyers receive alerts advising them about changes in the critical path process requiring their attention. As a result the team is working more efficiently, bringing products to market faster and at a lower cost.
"This solution is helping us to proactively manage critical path activities from initial product design, through supplier collaboration and purchase order processes."
The Benefits
Working closely with Eqos and Accenture, Edcon has put in place a consistent yet flexible foundation for sourcing and supplier management.
The Eqos system will help Edcon to:
- Establish and enforce best practices across the business to ensure consistency and high standards of quality throughout the product design and sourcing process;
- Provide the buying teams with a single view of the business by integrating with other applications such as ERP, design, QA, and logistics;
- Proactively manage the movement of private label products throughout the design and sourcing lifecycle;
- Provide a more effective and responsive link between merchandising demands and manufacturing capacities through better business performance data and analysis;
- Continue to improve the performance of its supplier base through better collaboration, integrated quality auditing, and regular reviews based on quality assessment and KPI reports;
- Onboard new suppliers, sourcing offices, agents and service providers more easily and;
- Integrate new retail acquisitions quickly into the sourcing process and configure best practice templates for new categories of products.
"The Eqos global sourcing solution is introducing a harmonized set of best practice business processes for our buyers, QA, agents and suppliers to support the rigorous demands of global sourcing."
The Future
Over the coming weeks and months Edcon will continue to roll out the Eqos system to additional apparel and general merchandise categories. In phase two of its Sourcing Excellence program Edcon plans to expand its in-house design capabilities, taking advantage of the Eqos Product Lifecycle Management and product design functionality.
With the foundation now in place, Edcon now has a system it can rely on to support it through future acquisitions and brand/product diversification, enabling it to respond more flexibly and proactively to the demands of its growing customer base and changes in its operating environment.
