A turn up for the boots (Published August 2007)
A year ago we featured Kishore Nagrani, M&M Footwear mandmftwr@btinternet.com. M&M need funding for
footwear presold to quality customers - theoretically quite
straightforward. There has been a lot of progress in that year.
Kishore was a client first 11 years ago. He knows everything
about shoes, their manufacture, the evolving market, and the
customers. Kishore's designs are made in seven factories in China;
his China organisation ensures high quality manufacture
Many years ago Kishore left us seeking cheaper funding and
tried several competitors; in consequence he nearly
went out of business in early 2006. His product
and customer quality was good but delays by the
trade financiers created late customer deliveries with
the result that:
- some key customers were lost
- others made deductions from payment for
late deliveries.
The losses and dilution gave concern to
Eurofactor, their factoring company, who
nevertheless remained brilliantly supportive as we
sorted out funding when Target Trade Finance failed.
M&M's former trade financiers opened letters of credit before
shipment as requested by the suppliers, but we had better ideas. LCs are
greedy of facility size, cumbersome and expensive. When dealing with
us suppliers agreed "DP", that is paying for the documents before the
goods arrive. That reduces the funded period by four-five weeks..
"DP" is much cheaper for M&M than LCs. Supplier confidence
is building and we are about to get 60-day credit from China, which
will cut funding costs further. We always try to solve the problem at
lowest cost, not just offer what was
requested – in this case, LCs.
"We always try to solve the problem at
lowest cost, not just offer what was
requested"
Some months we buy $700,000
of shoes. The cost saving for M&M is
substantial.
The shoe market is changing as
supermarkets "commoditise" part of the
retail sector so M&M ranges now feature
leisure and safety shoes. They have quality
products and funders, Eurofactor working
closely with us. These qualities have recently
enabled M&M to recover one major lost
customer and add several large new ones.
Wrangler is moving towards single
sourcing from M&M for all their EU purchases.
Safety boots require EN0345 certification which
is not easily or quickly achieved. M&M and their
supplier factories deliver.
Macro normally buy in China direct but they
value M&M's designs and supplier quality. They
now buy shoes from M&M.
Shoefayre currently receive containers and then divide the contents
for their 300 outlets. M&M is arranging for the stock for each shop to
be split in China, saving cost and hastening UK distribution
After several years of M&M chasing theoretically cheaper funding,
they now have an efficient economical supply machine of factory,
delivery, and funding. They have doubled their sales and may double
again next year - success in a competitive marketplace.
Quite a turn up for the boots!!!
Written by David Ross Director
Download
the Article 'A turn up for the boots' at www.fairfaxgerrard.co.uk/docs/BusMon 0807 A turn up for the boots.pdf
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