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TRUWORTHS

SUPPLY
CHAIN
Truworths' supply chain strategy is based on receiving product in the most efficient manner and delivering to stores and customers as effectively as possible to meet consumer demand. Local and international channels are used and there is constant focus on managing costs and shortening lead times. Local apparel manufacturing maximises speed-to-market opportunities and contributes positively to the sustainability of the domestic apparel manufacturing sector.

The Truworths supply chain was severely impacted by global and local shipping challenges during the reporting period. The international shipping crisis resulted in container shortages in China as vessels faced extended shipping times and routings around Africa to European and US markets, with a resultant significant increase in shipping freight rates.
Truworths responded with a mitigation plan by establishing a shipping task team to monitor the import programme, extending order lead times and utilising alternative ports and shipping routes.
Local manufacture was also impacted by the shipping crisis due to the reliance on imported fabric. Strategic fabric stocks held by the business and fabrics sourced from SADC countries were used to substitute delayed imported fabric, where possible.
These global supply chain challenges were compounded by the disruption at local ports due to infrastructure failure and operational inefficiencies. These factors resulted in delays in the berthing and unloading of container vessels which were already experiencing extended delays.
ADVANTAGES OF LOCAL MANUFACTURE
Speed to market is critical for a fashion retailer. Local supply offers shorter lead times than imported product as suppliers can respond quickly to replenishing popular selling styles during a season. Local manufacturing is therefore a critical component of Truworths' supply chain, with approximately 45% of apparel units being produced in South Africa.
Truworths has applied the quick response and fast fashion model with key local manufacturers and suppliers for many years. Merchandise buyers are able to respond more rapidly to customer-buying patterns and can make styling changes as late as four weeks prior to delivery, ensuring that the ranges reflect the latest fashion trends.
Truworths uses several factories and cut-make-trim manufacturers (CMTs) across the country. Many of these are exclusive to Truworths or have Truworths as their largest customer, with financial and other support being provided to protect the local supply base. These CMTs produce a wide range of product, including highly specialised and unique-to-Truworths garments that ensure speedy, flexible delivery across most product categories. Truworths owns a factory in Darling, Western Cape, which produces ladies' formal product.
Refer to Material issues, risks and opportunities for more detail.
TRUWORTHS AFRICA DESIGN DIVISION
Integration of Truworths' in-house Barrie Cline and Bonwit design centres into the Truworths Africa Design Division was completed during the reporting period, creating a combined internal ladies', men's and kids' design division.
The integrated design division has enabled Truworths to control a significant portion of its local procurement and enhance the existing quick response and fast fashion models. Initial efficiency gains are being realised from the integration, although to some degree speed to market improvements were hampered by delays in the delivery of imported fabric during the period and some resource constraints.
The design division, which includes design, pattern making and sample manufacture, is housed in the same building as the product buyers, enabling creative development and faster communication of product requirements to improve speed to market.
The in-house design capability enhances Truworths' ability to design and create unique ranges for customers, while realising economies of scale in fabric purchasing, production planning and logistics.
SUSTAINING THE LOCAL SUPPLIER BASE
The sustainability of the local apparel manufacturing sector remains under threat as suppliers face mounting financial pressures. Truworths has provided financial support to certain of the strategic CMT partners to install generators, which has reduced downtime during load shedding, ensuring that product is not delayed and staff continue to be paid. Truworths has also provided plant and equipment on loan to certain CMTs to extend manufacturing capabilities and improve production efficiencies.
As a signatory to the Department of Trade, Industry and Competition's Masterplan for the Retail, Clothing, Textile, Footwear and Leather value chain, Truworths is committed to ensuring the sustainability of its local supply base. The executive and merchandise teams have continued to work closely with suppliers, particularly the exclusive design centres and CMT partners, to identify opportunities to develop a broader range of product locally to drive more consistent volumes and improve efficiencies.
The support from Truworths has ensured the sustainability of many of these key partners, resulting in limited attrition in the supplier base and the preservation of employment, while capitalising on the quick response capability of the local industry to react to consumer demands.
REASONS FOR IMPORTING PRODUCT
Imported product accounts for approximately 55% of Truworths' total apparel units. Merchandise is typically imported in categories where local suppliers are not as price competitive as their offshore counterparts or do not have the manufacturing capabilities to meet the required production and quality standards. Categories with a higher import component include shoes, fashion accessories, lingerie, fine gauge knitwear, winter outdoor jackets and denim.
While China is the major source of international supply, Truworths has diversified its dependency on China in recent years to mitigate supply chain risk. Countries of origin have been diversified to include Bangladesh, Pakistan and India, and SADC countries, namely Lesotho, eSwatini, Madagascar and Mauritius. New countries of origin are evaluated on an ongoing basis to capitalise on product opportunities.
MANAGING SUPPLIER RELATIONSHIPS
Truworths has established long-term, sustainable relationships with local, regional and international suppliers, resulting in a well-diversified and sometimes exclusive supplier base across a wide range of product types.
A supplier scorecard measures the performance of key suppliers to promote high standards of quality and delivery. The B-BBEE status of South African suppliers has been incorporated as a selection criteria in the scorecard.
The scorecard informs the decisions of the merchandise-buying teams in their selection of suppliers, with volume growth being prioritised with better-performing suppliers. The scorecard also identifies areas for improvement in underperforming suppliers and these development areas are addressed through collaboration and targeted support. The scorecard encourages suppliers to improve their performance and this ultimately contributes to a more efficient supply chain.
The Truworths Supplier Code of Conduct and Good Business Practice is incorporated into all supplier agreements and commits local and international manufacturers to comply with ethical business standards, labour legislation (particularly relating to child labour and minimum wage levels), international health and safety standards, and environmental legislation and treaties to which South Africa is a signatory. Legislative compliance audits are conducted by Truworths during the course of the new supplier enrolment process.
NEW DISTRIBUTION CENTRE
Following the completion of the construction of Truworths' new 52 000m² distribution centre (DC) in Cape Town, the materials handling equipment is being installed and thereafter progressive implementation at the facility will take place. The DC is planned to be fully operational by March 2025.
Sophisticated retrieval and storage solutions as well as enhanced picking technology will enable greater volumes of replenishment and part allocation of merchandise to stores. Part allocation of merchandise, with the remainder being pushed to stores based on sales rates, is a key capability of the new DC and is expected to improve the accuracy of product allocation to stores.
The new facility, which will be completed at a cost of around R1 billion, will allow the four existing DCs to be consolidated into a single facility and accommodate growth in the business for at least the next 10 years.
Central to the design and construction of the distribution centre is the focus on sustainability. The new DC was awarded EDGE (Excellence in Design for Greater Efficiencies) Advanced green building certification in July 2024. EDGE certification is aimed at increasing energy, water and materials efficiency and is managed by the Green Building Council of South Africa, which partners with the International Finance Corporation to facilitate certification in Africa.
The DC will include a water-harvesting and purification system and energy-efficient light-emitting diode lighting throughout the facility. A further environmental benefit of the centralised DC is that outbound volumes will be consolidated through better utilisation of cartons and more merchandise transported per load through more efficient packaging, which will reduce carbon emissions.