MANGO

A Study on Logistics & Supply Chain

Submitted by: Ella & Varun MFT II

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Contents

1. Company Profile.3 2. Facts and Figures.3 3. Franchising Strategy4 4. Sourcing Model4 5. Zero Manufacturing.4 6. Logistics and Supply chain..5 7. Case Studies.6 8. References6

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Company Profile: Mango is a Spain based retailer founded in the year 1984 , with its headquarters in Spain. The products offered by the company include clothing and accessories . It has around 12,200 employees worldwide and a net income of 113,447,000 Euros. With a modern philosophy and an avant-garde spirit, the brands designs personify the latest trends in the world of fashion. In addition to the Woman line, MANGO has H.E. by MANGO, MANGO KIDS, Sport & Intimates and Violeta by MANGO.

Facts & Figures: Two years ago, in 2012, the company was getting about 70 percent of its revenue from party and event clothing and 30 percent from casual wear. This has been reversed now. Sales at Mango grew 22 percent, beating competitor Inditexs 16 percent growth but failing to meet the companys own expectation of 30 percent. Prediction is that the revenue will almost double between 2011 and 2015, to 2.75 billion euros. The brand purports to offer higher quality offerings, and it still offers more party ready clothes than its competitiors. In addition, the company is adding a teen line, mens brands, and more accessories. This, combined with a more upscale e-commerce presence, has proven to be a successful combination for many companies. Accessories in particular offer a low cost way to get customers in the store, where they then make other purchases and can showroom new lines. Description Net Turnover Net Profit Stores Countries Sales(%) Employees 2007 1,020,356 129,139 1,094 89 76 6,973 2008 1,100,705 143,258 1,228 90 77 7,865 2009 1,145,156 148,016 1,390 97 78 8,132 2010 1,269,523 101,164 1,757 102 81 8,690

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Franchising Strategy: The franchising strategy allows Mango to achieve worldwide presence without baring the costs of store ownership. The international expansion started in 1992 with the opening of two stores in Portugal. In 1997, already half of the revenue came from out-of-Spain stores. This figure reached 77% in 2008 . Today, the brands has over 1700 points of sale in 100 countries. . Franchise stores make up around half of its worldwide business, with 90% of these run on a consignment basis. It also uses the web to enter some new markets or support existing operations, and it has travel retail stores in places including San Francisco, Miami and London. Shop-in-shops have proved an effective way to gain a presence in difficult markets in the US, for instance, Mango launched an exclusive collaboration with JC Penney in 2008. Sourcing Model: Off the shop floor, the company is also trying to copy Zaras tried-and-true fast fashion sourcing model. Theyre emphasizing quicker turn times and a split production cycle that creates a more complex and versatile sourcing matrix. They hope to avoid steady discounting and minimize markdowns, along with keeping apparel fresh to attract younger customers. The company is looking to source more goods from higher cost countries closer to Europe in order to achieve this. Zero manufacturing: Unlike Zara, Mango does not manufacture any of its pieces of clothes. The company relies on more than 140 suppliers around the world, and each region specializes in one type of clothing that it can manufacture at a competitive price.With such a range of suppliers and sales in 90 countries, we can imagine that Mangos supply chain and information system are powerful and well-designed to support current success and future expansion. Logistics & Supply chain: MANGO has its own logistics and Supply Chain Management System which allows it to manage, direct and take decisions throughout the complete process of design , supply , manufacture , sales and after sales in a completely automatic way. Some of the key considerations are : 1. 2. 3. 4. 5. Reduce delivery times and streamline distribution of the product Manage Orders Control Quality Reduce Infrastructure costs Be Flexible and adaptable at all levels

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Logistics is an integral factor in the story of Mango; logistics is viewed as a relay race in which each department passes the baton to the next so that things arrive on time. For the system to work correctly, there are three keys: velocity, information and technology. Technology is essential, especially in a logistics chain that is as complicated as any multinationals. The company designs and distributes the garments but they do not manufacture them. The company counts on more than 140 suppliers around the world, and each region specializes in one type of clothing that it can manufacture at a competitive price. Logistics management pays off for the company because its shops, unlike those of its competitors (including Zara) are managed through a franchising system. That has enabled Mango to expand rapidly in international markets as well as personalize each of its shops. Mangos shops have avoided an image of uniformity. Whenever there is a new supplier, the company gives them orders little by little, checking out their quality. The product is the property of Mango, and it is shipped to franchisee-owned shops, which pay the company according to how much they sell. The logistics system replenishes its stock every day in its European shops, and twice a week in its shops elsewhere around the world. The companys main logistics center is in Barcelona, site of its corporate headquarters. Logistical support is provided in three other locations New Jersey, Hong Kong, and Shanghai. Geographical Distribution of MANGOs Textile Suppliers

The key is to minimize time and costs . Without the Internet, it would have been impossible to make a profit from a chain that has a traditional structure , nor to grow at such a rapid rate. Mango took about four years to develop a computer platform to manage its supply chain. It connects all its agents and partners [on one network], along with its suppliers. This integration is one of the things that has cost the most but the brand can monitor everything and make

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decisions by using information about, for example, the sorts of designs that are most popular in each region or the daily sales of each outlet. Because of this system, Mango can manage its more than 7,000 direct employees as well as the additional 22,000 people who work for Mango indirectly. Differentiation strategy: which is based on the way the brand segments its brand to the public. The company specializes not only in targeting women as a whole but on a very specific sort of woman. What differentiates Mango from its competition is that it has done a very good job of identifying its core business (designing and distributing garments), and that it has outsourced everything that it is not interested in doing (manufacturing). This enables the company to be more efficient since the manufacturing part [of the supply chain] is one of the areas that uses the most manual labor. Thanks to this system, Mango is also the sort of company that can ride out any type of crisis. Its business model enables it to be more flexible whenever there is a change in the pattern of demand. It can increase or reduce the number of its suppliers without incurring the cost of extra personnel or by increasing its inventory. Case Studies

Case Study - 1

Case Study - 2

Case Study - 3

References
1. https://www.sourcingjournalonline.com/new-mango-strategy-looks-more-like-zara/ 2. http://www.wharton.universia.net/index.cfm?fa=viewfeature&id=1532&language=english 3. http://www.retail-week.com/topics/international/analysis-how-spanish-retailer-mangoexpanded-internationally/5044813.article 4. http://www.slideshare.net/KaranArora15/mango-globalization 5. http://upcommons.upc.edu/eprints/bitstream/2117/10505/1/jedee201011_rodriguez_casi_carbonell.pdf

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