Wednesday, February 17, 2016

REVERSE OUTSOURCING. CUTTING OUT THE MIDDLE MAN. RALPH LAUREN.

Ralph Lauren to Bring Management of Distribution Site In-House

The clothing retailer’s action will shutter an operation run by the supply chain unit of XPO Logistics in North Carolina


Ralph Lauren says the move is part of a long-planned action that it has coordinated with XPO.  ENLARGE
Ralph Lauren says the move is part of a long-planned action that it has coordinated with XPO. Photo: Bloomberg News
Ralph Lauren Corp. RL 0.51 % is bringing a piece of its supply-chain operations in-house as the company reviews broader operations and management of its distribution.
The shift, part of what Ralph Lauren says is a long-planned action, will move warehousing and inventory management service from a North Carolina distribution center run by XPO Logistics Supply Chain Inc.—an arm of XPO Logistics Inc.—into a new, far larger distribution center that the fashion retailer will operate.
XPO Logistics Supply Chain notified state officials last week that it would close the facility it runs for Ralph Lauren in Whitsett, N.C., in April. The announcement came in a required notice that the company would lay off 108 workers.
The Whitsett distribution center was announced in 2013 to support Ralph Lauren’s Chaps brand. Ryan Lally, a spokesman for Ralph Lauren, said the workers in the XPO facility would transition to a larger distribution center in nearby Greensboro, N.C.

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“As part of a long-term strategy, Ralph Lauren entered into a short-term contract with XPO Logistics to assist in transitioning the operations of a formerly-licensed brand while completing a new larger facility,” Mr. Lally said. “Ralph Lauren continues to engage 3PL operators in specific markets that have local market expertise, knowledge of employment laws, and the ability to increase scale in market.”
Ralph Lauren’s new chief executive, Stefan Larsson, said after disappointing financial results this month that he was undertaking a review of operations, including its inventory management. Mr. Larsson said the company could do a better job of aligning its inventory to demand so that goods wouldn't have to be marked down.
In a statement, XPO, which has been trying to grow rapidly by expanding the suite of services it offers to customers, including warehousing and distribution, said that the Ralph Lauren had decided to bring the facility’s distribution services in-house, and that many of the former XPO employees would now perform similar functions directly for Ralph Lauren.
“Facility openings and closings are a normal part of the contract logistics business,” XPO said in a statement. “We’re very adept at managing changes within our network. In this case, we’re working closely with Ralph Lauren to ensure a seamless transition.”
Kevin O’Marah, head of research for SCM World, a supply-chain industry association, said it is becoming more common for retailers to insource their distribution networks, especially as they contend with the demands of online shoppers. Retailers including Macy’s Inc. M 1.28 % and Amazon.com Inc. AMZN 1.40 % have taken steps in recent years to take closer control of their distribution operations, he said.
In so-called omnichannel operations, in which orders are fulfilled both from stores and warehouses, many retailers prefer to handle their own distribution so they have better grip on inventory at any given time.
“Retailers are thinking more vertically integrated. If you are dealing with omnichannel, you might think about doing this out of your own distribution centers,” he said. “The handoff between yourself and a third-party logistics partner means there’s more room for error…You could think you have something available from a distribution center, that might not be the most accurate information.”