velOzity × The Iconic

Agenda

Four Conversations

Speed to Live

Shelf-ready product arrives at The Iconic's Sydney FC faster — processed, tagged and sorted offshore so putaway is same-day with no rework on arrival.

Cost Reduction

VAS executed offshore at a structural discount to Sydney labour rates, storage held in bonded facilities at a fraction of DC cost, and freight maximised through consolidated FCL.

Quality at Origin

Defects caught and returned at source — before they enter the Australian supply chain. Supplier accountability built through live scorecards and AQL data, not after-the-fact returns.

01 — Onboarding

Non-Branded

Extending the consolidation model to non-branded lines — unlocking freight savings, MOQ protection, and shared infrastructure cost.

Cost Reduction Speed to Live

02 — Quality

AQL Scope

Quality inspection at origin eliminates return costs, prevents DC delays, and builds a supplier accountability framework at scale.

Cost Reduction Speed to Live Quality at Origin

03 — Cost

VAS Cost Reduction

Offshore execution of value-added services at half the domestic cost — driving direct margin improvement and faster inventory readiness.

Cost Reduction Speed to Live

04 — Logistics

JIT & Offshore Storage

Bonded offshore buffering enables JIT release — cutting holding costs, protecting working capital, and putting product on sale faster.

Cost Reduction Speed to Live Quality at Origin

TheIconic

VelOzity

Topic 01

Onboarding Non-Branded

Cost Reduction Speed to Live

The branded model is already proven and running. Non-branded onboarding isn't a new investment — it's absorbing available capacity into an operation already delivering at precision. The fixed cost is absorbed. velOzity owns supplier management, documentation, and door-to-door execution end-to-end. The Iconic's team carries none of it. With ~60K units per day of combined Shenzhen & Shanghai capacity and a minimal error rate already in market, the case for waiting doesn't hold.

Minimal Error Rate

Near-zero defects in live branded operations — precision processing as the baseline, not the exception

Shenzhen & Shanghai (~60K units/day)

Combined hub capacity available now — no new infrastructure required

Automated & Digitized

Internal TIC overhead — velOzity manages all supplier documentation, compliance and door-to-door execution

Rolling Intake — Outtake

Continuous throughput — product processed the moment it arrives, no batch queuing, fastest path out

Getting Started — Vendor Journey

Non-DDP Vendor

Vendor ships DDP — TIC carries freight & customs risk

Higher Product Mismatches

No origin QC — defects arrive undetected at Sydney FC

Higher LCLs

Fragmented shipments at premium freight rates

DDP Vendor

Terms aligned — velOzity consolidates, QCs, delivers shelf-ready

Commercial Alignment — DDP › EXW / FOB

TheIconic

VelOzity

Topic 02

AQL Scope

Cost Reduction Speed to Live Quality at Origin

velOzity's QC framework is already live and layered. AQL isn't a new system — it's the natural next step in a quality architecture that's been running from day one. The foundation is built. Adding AQL to The Iconic is simply activating what the model was always designed to support.

A Natural Progression — Bottom to Top

Risk-Based Escalation QC

New suppliers · New SKUs · High error triggers · 100% checks

Live

Data & System Integrity QC

UID uniqueness · Plan vs actual · Zero tolerance for data errors

Live

Post-Processing Physical QC

Weight · Label presence · Carton condition · Dispatch approval

Live

AQL

Acceptance Quality Limit

Statistical sampling · Defect classification · Supplier accountability

← The Iconic Activates This

In-Process Live QC

UID control · Supplier label match · Application discipline · Real-time floor QC

Live

Why AQL Is the Natural Next Step

velOzity's QC model doesn't start at inspection — it starts the moment a product enters the facility. Layer 1 validates every unit in real time, on the floor, before anything is packed. By the time goods reach Layer 3, physical compliance has already been confirmed and data integrity locked. This is a mature, running operation.

AQL sits between L4 and L3 because it doesn't replace what's already working — it adds a formal, statistically grounded acceptance framework on top of it. Where L3 ensures data is clean and L4 escalates on risk, AQL brings the independent lot-level verdict: accept or reject, documented, before goods leave origin.

For The Iconic, this means defects are resolved at source — not at the DC, not after the customer has opened the parcel. The existing QC architecture makes AQL not just possible but easy to activate. The infrastructure is already there. The data is already flowing. AQL is the layer that turns it into accountability.

The foundation is built and running. Adding AQL to The Iconic is simply activating what this model was always designed to support.

What AQL Adds to The Iconic

Statistical Confidence

ISO 2859-1 sampling — accept/reject decisions without 100% inspection overhead.

Severity Classification

Critical · Major · Minor — apparel-specific thresholds, not generic pass/fail.

Supplier Accountability

Failed lots trigger CAPA before reinspection. Performance history informs sourcing.

Digital Reports

Photo evidence, defect log, pass/fail — delivered to The Iconic before goods ship.

TheIconic

VelOzity

Topic 02 — Deep Dive

AQL Apparel — Modern Process

Best-in-class apparel AQL draws from ISO 2859-1, McKinsey's supplier performance frameworks, and Gartner's digital quality management playbook. The result: a process that is faster, data-driven, and supplier-building — not just a gate.

Pre-Shipment Spec Lock

AQL level, defect criteria, and sampling plan agreed with supplier before production begins. No surprises at inspection.

Statistical Sample Selection

ISO 2859-1 random sampling from sealed cartons. Sample size by lot size and AQL level — not arbitrary percentages.

Defect Classification

Critical (AQL 1.5) · Major (AQL 2.5) · Minor (AQL 4.0) — apparel-specific criteria per category.

Digital Inspection Report

Photo evidence per defect, SKU-level breakdown, pass/fail — generated in-field and shared in real time.

Accept / Reject Decision

Rejected lots quarantined at origin — not shipped. The Iconic never receives a failed lot.

Supplier CAPA Loop

Mandatory corrective action report before reinspection. Repeat failures escalate to sourcing review.

Return at Origin — Zero Freight

Defectives handed back at origin. No Sydney shipment, no return freight, no DC handling cost.

Apparel Defect Classification — velOzity Standard

Critical — AQL 1.5

Sharp edges or exposed hardware
Incorrect size label — size mismatch
Missing care or compliance label
Structural failure (seam, zip, button)
Wrong colour shipped vs PO

Major — AQL 2.5

Visible stains, marks, or soiling
Broken stitching or skipped seams
Significant print misalignment
Measurement out of tolerance (>2cm)
Packaging damage affecting presentation

Minor — AQL 4.0

Loose threads (<2cm, non-structural)
Minor pilling on folded areas
Slight shade variation within tolerance
Minor label placement offset
Light crease from packing

TheIconic

VelOzity

Topic 03

VAS Cost Reduction

Cost Reduction Speed to Live

Processing ~300K units over 8 weeks, velOzity sees clear cost reduction opportunities for The Iconic — from supplier-driven efficiencies at origin through to volume-compounded savings as the relationship scales.

Supplier Driven

5–7%

Cartonization

Correct carton selection by the supplier at origin avoids downstream carton replacement costs — a direct, recoverable saving that starts with supplier compliance.

TIC Driven

~10%

Volume Driven

As consolidated volume scales, per-unit cost curves down — shared infrastructure and higher container utilisation compound into real savings.

VelOzity Driven

Productivity Gain

velOzity generates automated files and reports — Advanced POs, Discrepancy Reports, Zendesk Updates, Declaration Documents and more — which are currently manually fed into TIC systems. Integrating these frees up significant resource time at The Iconic, while live shipment tracking via velOzity Pinpoint eliminates status-chasing across teams.

TheIconic

VelOzity

Topic 04

Just In Time with Offshore Storage

Cost Reduction Speed to Live Quality at Origin

Rather than holding inventory in expensive Sydney storage, buffer at origin at a fraction of the cost and release in JIT tranches — protecting MOQ, improving working capital, and putting product on sale faster.

End-to-End Model — Supplier to The Iconic Sydney FC

Step 01

Supplier

Origin shipment

Multiple suppliers ship to the velOzity Offshore Facility at port. Mixed-brand pallets are built to maximise container fill from day one.

1 day to hub

The Engine

velOzity Offshore Facility

QC · VAS · Buffer · JIT Release

Everything happens at origin in one place. AQL inspection and UID/RFID tagging on inbound. All VAS executed offshore at half the Sydney cost. Defects returned to supplier — no Sydney freight on returns. Inventory then rests in a customs bonded facility until a live demand signal triggers JIT release. Up to 90 days of buffer. FCL containers loaded to 80%+ utilisation before shipping.

QC at inbound

VAS offshore

Demand-driven release

3–5 days processing · 14–21 days transit to Sydney

Destination

The Iconic

Sydney FC · Shelf-ready

Goods arrive fully processed, tagged, and shelf-ready at The Iconic's Sydney FC. Ready for putaway same day — no rework, no delays at destination.

Fulfilment Centre (FC)

or future

Direct to Consumer

Ready for putaway

Why This Model Works for The Iconic

30–45 days

Working Capital Freed

Customs duty and landed cost are deferred until inventory is released from the Offshore Facility — not paid upfront on arrival in Sydney. Releasing 30–45 days of duty liability later materially improves cash flow at scale across a 2M+ unit program.

MOQ protected

Order Full, Ship in Tranches

Place supplier orders at full MOQ to secure best pricing, then release inventory in JIT tranches against live demand — reducing overstock risk, avoiding markdowns, and protecting margin at The Iconic's FC.

~5–10× cheaper

Offshore vs. Sydney DC Storage

Shanghai bonded storage runs at a structural discount to Sydney DC rates. The exact multiplier depends on The Iconic's current per-CBM cost — but the gap is material and consistent, and compounds across every day of the buffer window.

80%+ FCL

Container Efficiency

Mixed-brand palletisation across suppliers fills containers to 80%+ utilisation. Each additional percentage point of fill is direct freight saving — compounded across every container in the program.

TheIconic

VelOzity

Topic 04 — continued

Trade-offs & Critical Questions

The model is structurally sound — but four decision levers need to be resolved with operational data before a full-scale go-forward call.

Visibility & Control

GainRisk

Moving inventory offshore extends the pipeline and adds hub-level complexity. The gain is lower holding cost and faster FCL build; the risk is reduced real-time visibility unless ASN and UID scanning are integrated. VelOzity's existing tech stack with The Iconic already mitigates much of this — ASN and UID scanning are live and validated.

Critical question Is The Iconic's SAP/Xcart integration ready to ingest ASN updates and UID tracking events from an offshore hub in real time — or does this need a phased build before scale-up?

ABN & Customs Compliance

Cost saveCompliance

The Offshore Facility model must be designed so ownership transfer is clean and compliant at every node — supplier to hub, hub to The Iconic's Sydney FC. This is solvable but requires explicit SLA design and documented ownership flowcharts before any scale-up.

Critical question Who holds title at each node in the chain, and at what point does customs duty liability transfer? Getting this wrong creates compliance exposure and re-clearance delays at the Sydney FC.

Storage Duration vs. Demand Signal

MOQ protectionObsolescence risk

JIT only works if release is demand-driven, not schedule-driven. For fashion SKUs, holding too long creates markdown exposure offshore. On 5M units at $20/unit avg, a 10% overstock that doesn't ship on time represents $1M+ at risk of markdown — the buffer window must be actively managed against live demand signals, not a fixed calendar.

Critical question What is The Iconic's average SKU velocity and seasonal cliff per category? That data sets the right buffer window per product type and prevents slow-moving stock from sitting offshore past its sell-by window.

Hub Configuration

Cost efficiencyLead time

1-hub (Shanghai) maximises consolidation efficiency and FCL fill — mixed-brand pallets from multiple suppliers fill containers faster. 2-hub adds coverage for inland suppliers but splits volume, reducing per-hub container fill rates. On 5M units, a 5% drop in FCL utilisation from hub-splitting adds ~$150K–$250K in annual freight cost — hub count must be justified by supplier geography, not convenience.

Critical question Where are The Iconic's top suppliers geographically clustered? 12–18 months of PO and ASN data by supplier location answers whether 1-hub is sufficient or a 2-hub model is warranted.

Legal Entity & Stock Ownership

The Iconic holds stockvelOzity holds stock

Model A — The Iconic Holds Stock

Vendor payment The Iconic pays suppliers on normal payment terms (e.g. 60–90 days from shipment). Inventory is on The Iconic's balance sheet from the moment it leaves the supplier.

Duty & customs The Iconic is the importer of record. Duty is paid on The Iconic's ABN at Sydney clearance — velOzity acts purely as a logistics and processing agent at the hub.

Risk profile Inventory risk sits entirely with The Iconic offshore. If a shipment is delayed, damaged, or held in customs, it's The Iconic's asset at risk — insurance and liability must be structured accordingly.

Working capital Capital is tied up from the point of supplier payment — the Offshore Facility deferral benefit is on duty only, not on the cost of goods.

Model B — velOzity Holds Stock

Vendor payment velOzity purchases from suppliers directly and holds title at the hub. The Iconic does not pay until goods are released and ownership transfers — effectively converting a purchase order into a consignment-style arrangement.

Duty & customs velOzity is the importer of record into the bonded zone. The Iconic's duty liability only triggers at the point of JIT release into Australia — maximising the working capital benefit and deferring the full landed cost.

Risk profile velOzity carries inventory risk while stock sits at the hub. This requires robust SLA agreements, insurance at hub level, and clear contractual triggers for what constitutes a valid release event and who bears loss in transit.

Working capital Maximum benefit — The Iconic's cash is not deployed until goods are en route to Sydney FC. On 5M units at $20/unit, that's ~$100M of stock value that isn't on The Iconic's balance sheet until the release trigger fires.

Critical question Which model does The Iconic's finance and legal team prefer — and what supplier payment terms are currently in place? The answer determines whether Model B is commercially viable or whether Model A with bonded duty deferral is the pragmatic path. Both work operationally; the difference is who holds balance sheet risk between PO and FC arrival.

TheIconic

VelOzity

Assuming alignment today

Four Next Steps

Speed to Live

Cost Reduction

Quality at Origin

01 — Onboarding

Non-Branded

Confirm non-branded supplier list and first 2–3 pilots for onboarding
VelOzity delivers onboarding SOP and documentation pack
Set go-live date and agree 8-week success KPIs

Cost Reduction Speed to Live

02 — Quality

AQL Scope

Agree AQL level, defect criteria and sampling plan per SKU category
Select 2–3 pilot suppliers for AQL activation using VelOzity infrastructure
Lock CAPA escalation process and repeat-failure consequences

Cost Reduction Speed to Live Quality at Origin

03 — Cost

VAS Cost Reduction

Share invoice data for cartonization audit — quantify the 5–7% saving
Model non-branded VAS volume vs branded baseline, confirm 2× projection
Formalise offshore labor arbitrage scope and savings realisation timeline

Cost Reduction Speed to Live

04 — Logistics

JIT & Offshore Storage

Share PO/ASN data (12–18 months) and supplier geolocations for hub modelling
Confirm ABN ownership rules, customs flow and legal entity structure
Agree 6-week analysis scope — $30K shared investment, refundable on contract award

Cost Reduction Speed to Live Quality at Origin

TheIconic

VelOzity