Regardless of a company's size or where it sits along the apparel supply chain, there are now advanced information technology systems and internet tools available to help improve operations and expand business horizons. Here's how some players are leveraging the options.
Increasingly, apparel manufacturers, vertical companies and retailers are turning to information technology (IT) and Internet tools to improve supply chain management operations, add value to products and services, and grow their businesses. Today, regardless of a company's size, there's certainly to dearth of either IT or Web service organizations to choose from: It's just a matter of finding the right fit.
In this report, Bobbin takes a first-hand look at three different firms that are successfully integrating new technologies to improve performance and expand their operations. Maidenform Inc., Gymboree Corp. and Harbor Isle Apparel. From upgrading mainframe systems to building online infrastructures, each of these companies has opted to reengineer processes and shore up IT infrastructures.
Maidenform Leaves Legacy Behind
Maidenform Inc., a 75-year-old privately held intimate apparel company, experienced a rough ride in the mid-90s. Following a Chapter 11 filing in July 1997, the internationally recognized company emerged from bankruptcy protection last July with new ownership and a focused IT strategy.
In fact, part of the reason for Maidenform's decline was a reliance on poor information systems. This became eminently clear to Chuck Codling, vice president of information services and chief information officer (CIO), who initially came to the company as a consultant when it was in the midst of its troubles. He recognized it was past time for the firm to come out of the IT dark ages.
Codling's advice to modernize was heeded, and the company went live with Essentus' (formerly Richter Systems) Sourcing and Demand Management systems on Jan. 2, 2000. Maidenform is now using the package to process sales orders, allocate inventories to orders, ship, invoice and create a daily sales journal. "The end result," stresses Essentus chairman and CEO Paul Butare, "is streamlined order management and order fulfillment, which maximizes opportunities and eliminates wasted effort."
When Maidenform went live with Essentus at the beginning of the year, it cut the apron strings to its old legacy systems. However, the conversion process actually started in 1999, and all of the company's customers were up on the demand side of the new system prior to the end of the year. Additionally, the software was running parallel with Maidenform's shop floor system in November and December of 1999.
Codling explains that prior to the changeover, the company had an antiquated Cobol-based mainframe with a batch file exchange architecture. He strongly argues that in this environment, 30 seconds-after the exchange of a transaction, the system is out of synch. He asserts: "We're now in a client-server environment. The inventory is synchronized on an ongoing basis with transactions. Now we're looking at near real-time data, as opposed to information that is eight to 12 hours old."
As a result, Codling states, "We track our raw materials at actual consumption [rates]. We know exactly what's on a roll when they finish cutting it, and we can report back precisely what's left."
The Sourcing Side
Codling explains that the ERP system is interfaced on the sourcing side with Maidenform's shop floor and warehousing management systems. As an example, he amplifies, "The materials resource planning (MRP) components look at the inventory we have in our facility and determine if we have what is needed to produce [an order]. ... If we're lacking the materials, purchase orders get issued, and we'll get a notification on the shop floor system when those goods have been shipped and when we can expect them."
When the goods are received, they are scanned into inventory and that notification triggers and releases orders to start the manufacturing process. The shop floor will then track the orders through work-in-process (WIP) and into the distribution center. Keeping tabs on the materials flow isn't easy in the bra category. As Codling emphasizes: "In some cases, there are foundation garments that have literally 200 different components in them. Shoes are probably the only other apparel-related product that is as complex."
The Demand Side
On the demand side, Maidenform receives orders on the Essentus system via electronic data interchange (EDI) and manually, and fulfills them against allocations that are based on the required ship dates for various customers. "We'll even look into the shop floor to see when something is going to leave WIP and be shipped to our distribution center [DCI, so we can anticipate when we can have it in stock to ship," says Codling. "It's a very nice tie-in that our systems communicate with each other and let us look at a finished product.... We can also look at the demand side against our fulfillment rate, [and we are now] able to pick aged inventory in the DC."
In fact, the CIO notes that the system has enabled Maidenform to eliminate different raw material codes for identical goods that were going into the company's multiple brands. "We no longer have 600 yards sitting on a shelf dedicated to make foundation garments, while we wait for 600 yards of the same material to come in to use in a bra," Codling relays. "With this transparency, we order and schedule goods to arrive very close to when we're able to use them. That's a marvelous improvement."
While Codling observes that there are a number of data-related issues yet to be resolved, he reports that the company is already seeing payback in terms of reduced time to manufacture and reduced inventories. He adds: "We're looking forward to moving into an environment where we can receive much of our materials via EDI, just as we receive finished goods orders from our customers. It's exciting to see the progress we're making."
The Rebirth of Gymboree
In the year 1998, $457-million Gymboree Corp., a vertical apparel and accessories retailer with more than 600 stores that cater to children from birth to age seven, experienced store overstocking that led to an 82 percent drop in profits and a slide in stock prices. At that point, Gymboree's management determined that information technology must be an integral part of the strategy for solving its problems and engineering what the company terms Gymboree's "rebirth."
As a part of the restructuring, the company has embarked on two IT efforts. First, Gymboree implemented mathematical modeling technology to strategically plan its markdowns and, second, the company adopted new software tools to make its Web site more user-friendly and leverage data mining to define product mixes.
The Pricing Piece
Faced with stiff and escalating competition from other specialists like baby-Gap and The Children's Place, as well as more value-driven consumers, Gymboree -- which offers 10 to 12 collections annually, each made up of 400 SKUs -- was forced to increase markdowns and promotions to drive sales of its short cycle fashion merchandise. To address this problem and improve margins, the firm decided to adopt an analytical approach to price reductions and their timing through the use of Technology Strategies Inc.'s (TSI) Markdown Optimization package.
Gymboree implemented TSI's complex system in the fourth quarter of 1998. The first steps included extracting 18 months of the stores' actual and planned sales, inventory behavior and consumer responses to markdowns. From there, a mathematical model was developed of each item's intrinsic consumer demand and its response to markdowns, promotions, seasonality and other factors.
The program is paying off. As Ed Wong, Gymboree's senior vice president, supply chain and technology, puts it: "The knowledge we've gained has already been responsible for increasing gross profits by as much as 10 percent in some categories of merchandise. This tool provides incredible value and insight that was unavailable in our previous planning process, which was subjectively based on some very simple retail metrics like turnover and sell through."
Wong expands: "The package is an extremely good fit relative to the business model that we use for the stores. After several weeks of regular price selling, collections are going to be marked down at a predetermined time to make space for the new ones that are en route. As we go through this scheduled markdown process, we need some help to determine when we should take the reductions for the first, second and third markdowns. Also, we need to know the appropriate percentage off."
