Penske

A strategic solution for Penske

Background

In 2018, Deane Apparel began supplying custom-designed industrial workwear uniforms to Penske Australia. These bespoke uniforms, featuring specific orange and navy colours, included a wide size range and two different weighted materials to accommodate both male and female diesel mechanics working in various Australian climates. However, over the years, this extensive range led to challenges such as high inventory levels and financial risks due to minimum order quantities and fluctuating demands.

By the start of 2023, it became clear that the existing system was no longer efficient. Deane Apparel was holding excess stock, and Penske faced financial risks related to slow-moving inventory.

Problem

The key issues that needed to be addressed included:

• Excess stock due to high minimum order quantities for custom garments.
• The need to accommodate a large size range across two styles (lightweight and standard weight) for each type of garment.
• Financial risk for Penske due to slow-moving stock and potential stock handling fees.

Proposed Solution

Deane Apparel proposed a transition from Penske's custom uniform range to Deane’s stock garments. This transition involved:

• Switching to Deane's standard stock range in orange and navy.
• Reducing the range by eliminating the lightweight (tropical) option and focusing on standard weight garments to simplify inventory management.
• Developing a phased plan to work through existing stock while avoiding stock handling fees for slow-moving items.

Implementation

The new contract, signed in September 2023, set out a plan for Penske to transition fully to Deane stock uniforms over 12 months. The strategy involved the following key initiatives:

1. Stock Clearance Promotions:

• From January to July 2024, Penske branches received a 50% discount on existing stock, with Deane invoicing the head office for the difference.
• In July, the discount was increased to 75%, significantly reducing stock levels.
• By September, Penske head office implemented a $0 promo sale, allowing branches to order discontinued items for free.

This process resulted in the clearance of the majority of the excess stock, reducing thousands of garments to just a few hundred units by the end of the transition period.

2. Seamless Transition to Stock Garments:

• As existing sizes ran out in the old range, Deane made the corresponding sizes available in the new stock garments. This ensured that branches could continue placing orders without disruption.
• Despite moving to standard stock items, Penske’s uniform specifications, including embroidery, were met with no delays in lead times. Previously, lead times were around ten days for bespoke garments with multiple logos, but the transition to stock garments maintained this timeline, even with five logos now embroidered locally.

3. Clear Communication and Engagement:

• Deane provided Penske branches with regular updates on stock levels and promotions. Weekly communications included detailed information on remaining units and order tracking, ensuring branches had full visibility into the transition.
• Clear online banners indicated which items were being discontinued and directed customers to the new stock codes, ensuring a smooth transition to the new range.

Results

By the end of September 2024, Penske successfully transitioned from a financially risky, custom uniform system to a streamlined stock program with minimal disruption to operations. Key outcomes included:

• A 40% reduction in stock by mid-year and almost a complete clearance of excess inventory by the end of the promotion.
• No increase in lead times for orders despite the switch to stock garments.
• Positive collaboration between Deane Apparel and Penske, ensuring the success of the transition through clear communication, strategic promotions, and a focus on mutual benefit.

The collaboration with the Penske Procurement team played a crucial role in the success of this transition, proving that a strong partnership between procurement and account management can drive positive outcomes for both supplier and customer. Penske now benefits from a simplified, cost-effective uniform program, while Deane Apparel has strengthened its relationship with the customer through this successful project.

Conclusion

The successful transition from a bespoke uniform range to a standardised stock solution showcases how effective collaboration and strategic planning can solve long-standing operational challenges. Both Deane Apparel and Penske Australia were able to mitigate financial risks, streamline their processes, and improve overall efficiency through this carefully executed transition plan.