The sector is based the main following distribution

The term luxury is strongly linked to
the notion of a high added value products, high production costs and high
handling charges. (Muller-Stewens & Berghaus,
2014)

 

Moreover, handling expensive product
requires a specific distribution strategy to allow the customer to receive his
product according to the good quality criteria of the industry and the heritage
of the brand, also a specific relationship with the suppliers, where the
question is how to give a customer a unique and a memorable experience.

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The distribution in the luxury sector
is based the main following distribution channels:

·      Wholesales: from the main stock /
boutique to travel retails

·      Boutiques: these branded stores can
belong and owned by the brand itself or franchised

·      E-commerce: booming recently with its
dynamism, this distribution root requires a certain expertise and knowhow

·      Direct Sales: exclusive sales made
during fashion shows or road shows.

 

As shown below, the supply chain
(including the supply chain) requires a certain knowledge of the product value
but also the techniques and proper transport equipment (including the procedure
of the customs clearance) in order to manage such complex flows. To that, we
conclude that the outsourcing process plays an important role. (Chevalier & Gutsatz, 2012)

 

As much as it is complex for the
company to focus on its core competences and the transport at the same time,
it’s up to the third party logistics to facilitate the movements and make them
smooth considering the main following factors:

 

·      Transport equipment

·      Warehousing materials

·      Collaboration and communication skills

·      Reactivity and efficiency

 

 

Chapter 3: Literature Review

1.    Introduction

 

This section will resume the
empirical framework and theoretical findings about the third party logistics. Starting
with a brief definition of the supply chain management, its tremendous link with
the logistics activities and finally the importance and the role of the third
party logistics. These notions will represent the fundamental basis of this
research where it will investigate the nature of relationship a company should
have with the third party logistics. The whole research focuses on the
logistics outsourcing activities in the luxury sector particularly.

The literature demonstrates the purposes
for companies behind outsourcing the logistics services, but also the main
pitfalls of this strategy and the perks of not outsourcing for some others
businesses.

(MGCM, 2009)

In this context, this research will
also have a look to the current status and the proficiency of the
implementation of delegating the logistics services to another company as well
as an insight to the future tendencies worldwide in general and in France in
particular.

 

1.1.  Supply Chain management

 

To the extent of a sharpened
understanding of the role of the third party logistics concept from the
customers perspective, the notion of supply chain should be defined.

 

“The supply chain encompasses all
activities associated with the flow and transformation of goods from the raw
materials stage (extraction), through to the end user, as well as the
associated information flows” (Handfield & Nichols Jr., 1999)

 

Figure 1 Typical
Supply Chain Flows  (Supply Chain Council, 2009; MGCM, 2009)

 

The Figure 1
represents the general flows of the supply chain management, including
different actors as the supplier, the manufacturer, DC, retailers and final
customers. Moreover, different flows are being running between the different
tiers of the model involving physical, informational and financial flows,
adding value to every step of the exchanging process.

On the first
hand, the normal process makes that purchasing department is in charge of
acquiring the raw materials, that will be transformed internally. Then on the
second hand, once the production completed, the products are shipped and stored
in the different warehouses, from where they will be shipped to the retailers
or the final customer once the order is placed.

According to (Ross , 2003), the main link
between every actor and step of the supply chain process is based on two
important factors which are the “Supply” and “Demand”, where the main goal is
to satisfy the customers needs. However, an actor of one supply chain can also
be part of another organisation’s supply chain, running operations within one
same supply network.

 

From the explanation,
above, we can actually emphasize the basis key of a flawless and smooth
collaboration:

 

·     
The aim of possessing a good supply chain
strategy is not only to satisfy the customer’s needs, but also to lead the
company in an efficient and effective development  throughout a sustainable supply chain
development and creating a distinctive competitive advantage.

Furthermore,
the supply chain of a company can also be, somehow, part of inter
organizational actions, and have as a purpose to increase the profitability of
every member of the supply chain.

As
well as the profitability of the supply chain can only be measured by taking
into consideration the profitability of every actor as a whole or the final
customer satisfaction /  service level,
the optimization of the processes and cost reduction strategy can only be
effective if we consider the supply chain of an organization a group of actors
and flows that function simultaneously together and not by subdivising the
chain on sub fragments. The global supply chain optimization includes the
process of raw materials, WIP to inventories of raw materials, transportation,
storage and distribution.

 

·     
The organization of the supply chain comports
three important type of flows interrelated as shown in the Figure 2,
including the management of the products, the information and the circulating
funds without also neglecting the relationship between every actor of the
chain. The physical flow is related to the circulation of the goods from the
supplier to the final consumer, or the other way around when it concerns the reserve
logistics (in case of a return or complementary services). The informational
flows concerns the information transmission between two actors or more. This
type of information includes the current / projected inventory level, the
orders, the forecast adjustments, the delivery status and any last changes that
concerns the product.

Finally,
the financial flow implicates all terms related tp the credit, payment and
ownership.

 

·     
Besides, the process of supply chain contains
other internal services on the upstream and downstream level, as shown in the
figure below.

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