Integration between Supply Chain and Last Mile Logistics: M2Log Business Case

In the recent years, companies' attention towards the last phase of the distribution chain (the so-called last mile) has exponentially grown given the great economic impact that this phase entails on the entire chain. On the other side, the service offered to the final consumers, new delivery methods and business models especially connected to online channels has been arising more and more frequently enabled by ICT technologies and digitalization of processes. The new trends of same day delivery and the general reduction in waiting times are representing huge challenges that today's companies are facing and try to solve in order to possibly obtain new competitive advantages. These two elements together are consequently requiring a greater support in order to reach the set targets from the entire supply chain. In order to effectively offer new services to the final consumers, a strong integration of all levels of the supply chain in fact is required, and a particular attention to the last part of the supply chain must be devoted, adapting the entire chain operations to a last mile perspective. Furthermore, the increasing attention to environmental sustainability by the final consumers introduces new elements of complexity that often require companies to adapt their operational structure consequently. The adoption of lean manufacturing techniques not only at production level allows companies to achieve a substantial reduction in waste, which means less capital invested and greater brand visibility with respect to their competitors. In this challenging context, the fast fashion industry distinguishes for its peculiarities, such as shortened lead times, faster inventory turnovers and high order fulfillment rates for customer demand at its peak points. The industry is highly competitive and is intensively oriented to costs, besides the ability to offer the newest possible trends. The project of the DIGEP department of Politecnico di Torino was born in collaboration with the Miroglio Group, an Italian company that produces and distributes ready-to-wear clothing and fabrics. In particular, the Fashion division includes the fast fashion segment, with 1,100 branded stores (Fiorella Rubino, Motivi, Oltre) all over the world. The logistic service of Miroglio Group is managed by the subsidiary M2Log in order to optimize the current supply chain operations. The aim of the project was to find and analyze several solutions that could improve the overall inventory management performance of the company in Italy with a focus on the final section of the supply chain, evaluating the impacts on the adopted forecasting models as well. In order to design the alternatives, after an initial analysis on the current Miroglio Fashion's situation to clearly fix a reliable starting point used then as benchmark, some interviews were organized and conducted with the main stakeholders within the fashion industry supply chain to identify the main needs to be converted in the subsequent design requirements to structure viable alternatives in line with the requests of the market. These identified needs, merged with a meticulous literature review, led to the generation of four different alternatives, of which the most promising one, in accordance with the company, was analyzed from an economic point of view in order to understand the real effectiveness of the solution itself. Finally, some conclusive remarks, limits and possible future steps of work are discussed.