Stepping Up the Pace

K nown for its quality as well as its enlightened philosophy, Birkenstock Footprint Sandals, is the 100 percent employee-owned, Novato, California-based importer and distributor of Birkenstock Footwear of Germany. Historically, the Birkenstock Footprint Sandal's business-to-business model had been structured so that the company ordered shoes directly from Germany, then shipped products to the U.S. distribution center for dissemination. Typically, this meant the shoes would have to be repackaged at the distribution center before being sent to one of its 3,000 retail business partners nationwide. Not a bad system, but the company's rapid growth (up 20 percent in fiscal 2002) and customer-driven values prompted the United States and German companies to team up and improve delivery, increase the worldwide product offering and basically get shoes on retailers' shelves faster.

According to Susan Mansfield, chief information officer at Birkenstock Footprints U.S.A., the initiative started with finding ways to partner with Birkenstock Germany in order to boost efficiency.

"We had retailers who would not ship unless it was a complete order," says Mansfield.

The Order Outlook

This complete order outlook is not uncommon with midsize businesses or those serving niche markets such as Birkenstock. Retailers may hold orders at the factory until enough orders arrive to fill a shipping container. This scenario can potentially be a lengthy and not exactly customer-friendly process. Depending upon the time of year, this process can take months, potentially detering customers from ordering. Shoes, like most other ordered consumer goods, are forecasted well in advance but are still affected by seasonal peaks such as back-to-school, gift-giving holidays and special orders. During peak times, the seasonal spikes take their toll on the most well run distribution centers, requiring increased overhead to fulfill orders. Additionally, styles that are available in Europe may not be available in the U.S. market, and what is advertised in the United States may also not be available within the international market.

Having evaluated several different supply chain solutions, both Birkenstock companies agreed upon utilizing the UPS Trade Direct Air program to pilot the new business procedures in 10 of its retail outlets. The implementation was completely seamless to its retail partners, save the exception of much improved customer service due to faster delivery time and increased product range. Using the solution, Birkenstock found that UPS could facilitate the delivery process by consolidating its orders for overseas shipment with other less-than-full container shipments. The orders could be packed "store ready" in Germany so that when the shipment reached the United States, the containers could be processed by UPS Trade Direct Air allowing orders to bypass distribution and reach retailers faster.

The Retail Experience

The new business collaboration between UPS, Birkenstock Germany and Birkenstock Footprints U.S.A. eliminated redundant repackaging in the U.S. distribution centers, reduced long waits on short orders and streamlined delivery to the retailer once the shoes reached the United States. Birkenstock was so pleased with the results that they extended the UPS solution to all of its 3,000 U.S. retailers.

The collaborative efforts between Birkenstock Germany, Birkenstock Footprints U.S.A. and UPS have paid off by improving the overall retail experience. To check order status, a retailer simply logs into the UPS Small Package System via its Internet browser, keys in its order tracking number and instantly relays order status information to the customer, thus eliminating customer service phone calls to the factory. Faster delivery speeds the cash flow for selling parties, retailers have more options available to customers and the customer is satisfied due to more selections and faster delivery on out-of-stock items.

Saved Overhead

Return on investment (ROI) is realized by the overhead saved through the ability to circumvent the distribution centers whenever possible, especially in the case of under-forecasted or custom orders. Packaging the product just once instead of twice, plus the ability to facilitate better planning through the consolidation of shipments can avoid seasonal burdens that are commonly found within consumer goods businesses.

"UPS Supply Chain will help bring additional new styles, colors and sizes of Birkenstock footwear to American consumers much faster than we have been able to do in the past," says Gene Kunde, chief operating officer, Birkenstock.

Future Collaboration

Moving forward, Birkenstock Germany and Birkenstock Footprints U.S.A. will collaborate to launch the UPS Trade Direct Ocean solution in early 2004, just in time for the new line of spring Birkenstock shoes and sandals to hit the market.