Leading retailer signs biggest ever contract
TK Maxx signs five-year £100 million deal with DHLLondon, 10/23/2007, 11:30 AM CEST
The contract extends TK Maxx's activities with DHL's specialist Department Stores and Fashion team beyond its existing operations into a partnership that will support the retailer's key growth strategy in the UK and Europe through a continually enhanced transport network.
Alan Porte, Senior Vice President, Distribution Services at TK Maxx explains: "This is the biggest and longest contract TK Maxx has ever signed. The decision was made to enable us to guarantee a reliable partner with specialist industry knowledge to manage the transition of our network into a new and improved supply chain, where product flows better and quicker into stores."
Paul Richardson, Managing Director at DHL's Department Stores and Fashion UK and Europe adds: "TK Maxx has a unique business model, which relies on the flow of a huge quantity of different brands and labels to stores on a daily basis. DHL continues to work with its partner of 12 years to develop transport, warehouse and network solutions that will meet current needs and grow with the company. The UK Fashion Network is designed to do just that with our retail customers, and it has formed the backbone of our newly extended operations with TK Maxx. DHL's European Fashion Network is set to provide the same support for expansion plans in Germany by fulfilling distribution to new stores set to open in the coming weeks."
The "green" challenge has played a fundamental role in the contract, which contains a specific clause stipulating both companies must work together to achieve key environmental and social responsibility goals. TK Maxx and DHL will be working in partnership to deliver an efficient operation, whilst reducing vehicle movement, fuel consumption and carbon emissions.
"The fashion industry is now aware of the consumer's need for retailers to act responsibly and we take this very seriously. The new clause makes it clear that both DHL and TK Maxx are committed to working toward reducing the supply chain's impact on the environment and continually evaluating their social responsibility standards," continues Alan Porte.
DHL has managed a dedicated transport operation for TK Maxx in the UK since 1994, and during that time has seen the number of stores increase from the original two to 213. Since May 1, 2007, as part of the expansion plans, DHL has begun operating two Cross Dock Centers (CDCs) at Hatfield and Rochdale on behalf of TK Maxx. The number of CDCs is set to increase to nine, in order to support new store openings over the next five years, and transport operations will continue to deliver TK Maxx fashion apparel, home wares and accessories to all stores in the UK and Ireland.
Department Stores and Fashion, a specialist team within DHL Exel Supply Chain, operates a Fashion Network within the UK, which will be strategically managed to provide more rapid and cost-effective operations to meet the specific logistics growth requirements of TK Maxx. The CDCs will be tactically used to increase proximity to the stores, thereby reducing transport costs and increasing delivery frequency. The DHL shared user facilities within the UK Fashion Network will be utilized where possible to consolidate operations into fewer sites. Domestic inbound collections will now be managed within the Fashion Network, whereby a large proportion of stock is transported directly from manufacturers and delivered to processing centers, thus utilizing space capacity.