Supply Chain Management

Victoria’s Secret Supply Chain (Limited Brands) start from raw materials which is chosen by the designer and gets shipped from China that is cheaper for the company, but their raw material is high quality which satisfies the customer. Victoria’s Secret care about the customer satisfaction, they always look for the best quality in their raw material, to make the best out of it. Then the raw material gets processed at the factories which uses special equipments for Victoria’s Secret products, these equipments are highly qualified for specific uses to process the material. After the raw material gets process it becomes a product, the product is made in batches in different colors, sizes, designs, and cuts depending on the product design. Then the finished product gets retailed at Victoria’s Secret stores.

Their performance is determined depending on delivery, quality, time and cost of their products. Unfortunately, due to certain trademark, labeling, product content and embargo restrictions, Victoria’s Secret currently do not ship all products to all countries. If you have a restricted item in your bag you will receive a message during checkout that lists the restricted item along with specific instructions to remove the item from your shopping bag or change the shipping method or address if applicable. Shipping and handling charges are determined by the merchandise dollar amount of your order before any deductions. Not subject to special offers. Charges are calculated before taxes. All orders are subject to verification. If items are backordered, the total shipping and handling charges will be. Allocated proportionally and charged as the merchandise is shipped. Please note that the total shipping and handling charge will not increase. All backordered items ship out via Standard Delivery. Quality and cost of their products are usually at reasonable prices, they’re fairly descent and their quality is considered to be excellent depending on other retail stores. The Time of the delivery is usually 4-7 business days, which is fair.

The critical processes that make up the Victoria's Secret's supply chain are:1) Product Design and Product Launch; 2) Merchandise Planning, Allocation and Forecasting; 3) Production & Sourcing; 4) Logistics; and 5) Store Operations.

On holidays like Black-Friday, the day after Thanksgiving, when many consumers begin Christmas shopping, the corporate head-office has to deal with huge volumes of hourly phone calls from individual stores for updates on sales figures. Another supply chain challenge from the merchandise planning viewpoint, is that the decision gates in Victoria's Secret's concept-to-market calendar are only planned for dropping styles out of line plan, and do not allow the flexibility of adding new styles closer to the selling season. When a style is dropped from the line plan, volume drops with it. And, at that point, the only alternative for the company is to produce another pre-existing category to fill the gap, if possible.

Victoria’s Secret’s supply chain management is well managed. They could; however, start supplying their stores with clothes which are offered through Internet and catalogues. Since manufactory is in Sri Lanka, it would be good if all stores could place an order and the products would be sent directly to the store from the manufactory. Victoria's Secret should keep using the same manufacturing process which is being used in present.

Project Scheduling

One example of a project is Victoria’s Secret Annual Fashion Show. The Victoria’s Secret Fashion Show is a centerpiece for the brand’s intricately designed and elegantly functioning advertising machine. With this event, Victoria’s Secret reaches an audience of over 1 billion people, including news coverage.2 Televised annually, the Victoria’s Secret Fashion Show Extravaganza has an exclusive contract with nationwide broadcasting station CBS. A symbiotic relationship exists between the two firms. Victoria’s Secret obtains one hour of nationwide advertising, while CBS holds the exclusive right to one of the most popular programs on TV. For one full hour, beautiful supermodels parade about in Victoria’s new-line of beautiful lingerie with chic special effects and music that heightens the fashion show to the level of a Broadway production. Women are persuaded that Victoria’s Secret lingerie will win the enthusiasm they see plainly in their male colleagues.

Project Tasks: Budget preparationContract negotiation with venues, caterers, event personnelHiring of speakersVideo Still photographyPublicity/media relationsPreparation of promotional materialsInvitationsInternet presenceHandling of RSVPsNon-profit event fund-raisingAll aspects of production from lighting to sound to staging and backstage.

Victoria’s secret new line collections are produced each year, and they’re introduced in these shows through their designer. But these shows are considered projects because of their humongous preparations. When customers see these fashion shows they get an idea of Victoria’s Secret new product collection which benefits the company a lot. Victoria’s Secret customers increase sales after each fashion show.Victoria’s Secret Definitely uses the Gantt chart which is a table with time across the top and a scarce resource, such as machines, people, or machine hours, along the side. After a Gantt chart has been constructed, it should be evaluated with respect to both job and machine performance. One way to evaluate machine performance is on the basis of the time it takes to complete all work, which is called the makespan. Victoria’s Secret uses the batch process to produce their products in the factory; they always need to evaluate their machines performance in order to get the work done in a certain amount of time. Because there’s always a high demand on the products, these products need to be finished, packed, and ready to be retailed and taken to the stores as soon as they’re ready to be marked down.

Quality Control

The "best fashion brands" are those customers can trust for fashion, value, availability, and of course, quality. Victoria’s Secret customers want it, and we expect it. The Quality Assurance team at Limited Brands is responsible for building quality into every facet of the production and sourcing process and for protecting the integrity of our brands.

We do that by:

•Assessing and assuring capabilities of raw material suppliers•Evaluating vendor compliance with Victoria’s Secret sourcing agreements

•Inspecting and testing product quality from pre-production to post-production, including issues related to product color, construction, labeling, packaging, and pricing

•Fixing — not just finding — noncompliance issues with vendors and manufacturers — through active problem-solving and analysis

•Raising quality across the board by checking new products, monitoring existing ones and working with our partners in the Raw Materials, Technical, Sourcing and Product Development areas in product innovation.

Victoria’s Secret uses the attribute measurements for larger sample sizes, that help the company test all their products efficiently. For an attribute control chart, samples should be fairly large, frequently in the range of 50 to 300 observations. As a general rule, the sample must be at least large enough to allow for the detection of one defective unit. If the process being controlled produces 1 percent defective units.

Victoria's Secret uses continuous improvement in its quality control and within the company. They use cost reduction in their production - cost reduction is used in reducing the amount of paper that the company uses for catalogues. Victoria’s Secret takes steps to protect forests and also use recycled paper or forest-friendly paper in its catalogue. Victoria’s Secret has been improving and changing ways to improve in the policy around continuous improvement. The company uses also technical, investigative and quality control work on fabrics to make sure that everything is met for specifications. There is continuous improvement used also for current products and improving qualities of the products.

Victoria’s Secret uses Pareto analysis to eliminate the problems in quality control. Since Victoria’s Secret is well-known brand and it offers higher quality products, it is very important to investigate problem areas and correct the problems.

The company practices Six Sigma program like many other industries and manufacturers have started to use the program today. Victoria’s Secret has manufacturing company Brandix Group which is the biggest exporter in apparel sector in Sri Lanka. Brandix Group has already 7 Black Belt employees and there will be numerous Black Belt employees by the end of this year. Six Sigma is also used in the parent company of Victoria’s Secret – The Limited Brands. Six Sigma helps the company shorten lead times, cut development and manufacturing costs, and improve the quality of the products. It also improves in structural, organizational, and technical use of DFSS within the apparel industry.

Service Process Design

Explicit service is availability of delivery service, which Victoria’s Secret uses to deliver the product, also the time it takes for delivery (fast or regular shipping). Explicit service is also in Victoria’s Secret stores where there is an interaction between the customer and employee. Visual experience is also a big part of it because the layout in the store is divided into lingerie and clothing on one side and perfumes, lotions, and makeup on the other side. Victoria’s Secret also offers a credit card (Victoria’s Secret Angel) and gift cards for its customers. Implicit service in Victoria’s Secret includes customer’s feelings - likes and dislikes about products and from services provided by Victoria’s Secret. For example, trying on clothes can give customers either a positive or negative feeling about the product. Also, the store provides testers, which are set up for customers to test the scents (perfumes, lotions, lipsticks, etc). Looking at fun and feminine lingerie on mannequin’s also give some women a positive attitude to try on the same clothing. Facilitating goods are the products, such as; clothing, footwear, lingerie, fragrances, lotions and makeup.

The service matrix Victoria’s Secret uses is co-routed service matrix. In Victoria’s Secret customer base, most of the customers already know the brand. Even though customer’s needs and wants are different, Victoria’s Secret’s customer base have the same interests and wants. The products are sold in stores (1000 stores in the U.S.), through Internet and a catalogue. Victoria’s Secret offers a moderate number of choices that satisfy many different customers. In the mean time, many customers’ interests are also the same. Therefore, customers have high power in the decision-making process.

Victoria's secret encounters customer contact in many ways. In stores, customers interact with associates to help them find what they are looking for, and to further assist customers. In order to give customers the best overall experience Victoria's Secrets put a lot into training their associates. They support employees to make sure they have the proper training, and are well educated about their products, which makes Victoria secret stores a high contact service that requires employees who are flexible, personable, and that are willing to work with customers. As for the catalog and the Internet, which is low contact service, this focuses on technology. Technology helps them as a company to reach more of an audience and reach customers that do not make it into their stores.

Process Selection

Victoria’s Secret product flow is the Batch flow which produces medium variety and medium volume depending on the customer’s needs. The products are produced in batches according to their characteristics and sold in batches. Each batch of the product flows from one operation to another. A batch process executes different production runs for different products. The disadvantage is the setup time required to change from one product to the other, but the advantage is that some flexibility in product mix can be achieved. A batch process is similar to a job shop, except that the sequence of activities tends to be in a line and is less flexible. In a batch process, dominant flows can be identified. The activities, while in-line, are disconnected from one another. Products are produced in batches, for example, to fill specific customer orders.

Victoria’s Secret customer order process is Make to stock (MTS) which provides faster service to customers from available stock and lower costs than a make to order process. It has higher flexibility for product customization. Most of Victoria’s Secret products are customized in different colors, sizes, and designs. In addition, the MTS gives you a strong competitive advantage through more efficient production planning, on-time deliveries, and higher product quality. The MTS process has a standard product line specified by the producer, not by the customer. The products are carried in inventory to immediately fulfill customer demand. Before customer demands the product, it is all ready in stock. If the product is not available, a back order can be placed. The MTS process is measured by service level and efficiency in replenishing inventory.

Victoria’s Secret fall into the process of low volume multiple products characteristics matrix were the product is produced in low volume with multiple variety. The life cycle of the product is medium it doesn’t last short and it doesn’t have a long life either. Firms utilizing batch processes provide similar items on a repeat basis, usually in larger volumes than that associated with job shops. Products are sometimes accumulated until a lot can be processed together. When the most effective manufacturing route has been determined, the higher volume and repetition of requirements can make more efficient use of capacity and result in significantly lower costs. Since the volume is higher than that of the job shop, many processes can be utilized in repetition, creating a much smoother flow of work-in-process throughout the shop. While the flow is smoother, the work-in-process still moves around to the various machine groupings throughout the shop in a somewhat jumbled fashion. This is described as a disconnected line flow or intermittent flow.

Victoria’s Secret process selection is influenced by various factors, labor supply and cost, customization, competition in the market, and state of technology. There is also competition with other department stores that sell similar products like Fruit of the Loom, Hanes, Calvin Klein, and Betsy Johnson. However, everybody knows Victoria’s Secret brand and that is beneficial for Victoria’s Secret.

Victoria’s Secret cannot adopt a mass customization method because it does not have standardized products with few options. With Victoria’s Secret process selection they do not customize their products for their customers. However their beauty products have different scents to give customers a variety. With Victoria’s Secrets other lines such as its intimate wear, it cannot be customized. However, it is distributed with different sizes and different colors to meet different customer’s wants and needs.

Inventory

Victoria's Secret is a retail brand of lingerie and beauty products, owned and run by the Limited Brands company. Victoria's Secret generates more than $4 billion in sales a year. It is the fastest subsidiary of Limited Brands and contributes 42% of corporate profits. More than 1000 Victoria's Secret retail stores are open in the United States. Products are also available through the catalogue and online business, Victoria's Secret Direct, with sales of approximately $870 million.

In the past decade, Victoria's Secret has incorporated software for data mining and analysis to further advance sales. Specifically, employees use a data warehouse that tracks the sales of every piece of merchandise by store in order to make decisions on the allocation of products. Applying this comprehensive tool, the company has significantly improved over its former system, which pieced together information from several databases that give questionable results.

This company uses a joint data warehouse and intranet application system. The result is based on MicroStrategy's DSS Server, a relational On-Line Analytical Processing (OLAP) server optimized for very large database (VLDB) analysis. MicroStrategy's DSS Web has access to the database and helps communication between the data warehouse and the browser. About 20 million rows of data are loaded into the system weekly. Over 1,000 queries are run each week, with the most frequently-executed queries coming from intranet users. The data warehouse that drives the application contains detailed information about the sales and inventory levels for each item in each store. The application enables associates to make decisions to improve their in-stock position and create individualized color/size models for each store.

Access to facts, on which to base allocation decisions, is especially significant in the initimate apparel business because merchandise normally comes in a dozen different sizes, in addition to many styles and colors. To maximize revenue, Victoria's Secret must recognize geographical variations in purchasing so that the distribution of merchandise adapts to serve the size and tastes of customers who regularly shop at the same store. Otherwise, sales opportunities are missed on unstocked items or poor sellers are left to be discounted.

Victoria’s Secret has about 20 percent growth rate per month in users. When a user queries the data warehouse and receives an answer, guided walk-throughs, tutorials, and customized help screens gives instructions for what actions to take based on the results of those analyses. The new intranet application program also lets associates access detailed information and take action based on the information they receive from the data. This definately makes it a lot easier to adjust to reorder products based on store's selling patterns and inventory.