A monthly column of technology rambling, rumination and reality

By: Jud Early, Corporate Vice President, Research, [TC]²

Technology, Strategy, or Business Practice?

Speed to Market is one of the phrases now making the rounds of the soft-goods industry. Just what does this mean, and how to does your business regard speed to market? This was the theme of a symposium sponsored by AAFA and hosted at the Los Angeles campus of FIDM, the Fashion Institute of Design and Merchandising. After a welcome from Barbara Bundy, Vice President of FIDM, the program began.

In a highly collaborative effort, the day was filled with speakers from industry. Walter Wilhelm of Walter Wilhelm & Associates, along with Warren Hartenstine of Tower Associates opened the first session. Walter had recruited many of the speakers and had purposely avoided vendors from the speaker's lineup, although vendors to our industry were in attendance, with several providing tabletop displays of product offerings. In less than forty-five minutes, Walter and Warren spoke on a multitude of topics that were for the most part, technology related. As a prelude to the technology discussion, the following were stated to position the need for technology solutions. According to Walter Wilhelm, the industry has been asking for:

Also according to Walter and Warren, there are disconnects in the value chain. Using a slide adapted from a marketing presentation provided by New Generation Computing, the presenters illustrated the barriers that are often in place that impede internal and external collaboration. The slide showed silos within an enterprise where the PDM systems are isolated from the sourcing systems. Other information systems needed for business decisions are also lacking in integration. Factors inhibiting speed to market are New Product Development, Production, which by extension, includes sourcing, and Product Life Cycle Management. The insulation of each from its peers prevents smooth information flow and a common view of all information for those with a need to know.

Fortunately, several vendors are addressing the need for integrated systems. AS mentioned, New Generation Computing has a comprehensive suite for management of all aspects of an apparel enterprise. 7 th On-Line provides a collaborative assortment planner that is an on-line tool currently in use at Macy's. Mention was made of the use of 3D tools for design visualization. Several vendors have solutions that allow interactive design in both 3D and 2D environments, while at the same time, allowing realistic virtual rendering of the finished garment on a virtual body. Lectra, Optitex and Gerber all offer products in this arena. PTC has developed a calendar management solution as well as a performance dashboard for aggregation of disparate bits of information that are needed for decisions in various stages of a product's life. These dashboards, also referred to as business intelligence applications are available from multiple sources, and in varying degrees of user friendliness and usability. Web based work flow is another area that is available from multiple vendors, taking advantage of broadband connections where available, and bringing production that may be in production half way around the world into an information rich environment where time shifting is a significant benefit. Product management applications such as the offering from SalesAware allow product managers to make decisions based on forecasts that contain variables that are specific to your products and customers. The above were mentioned in addition to the use of CAD, CAM , CRM , PDM and PLM applications from major vendors. If you are not up to speed on each of these acronyms, I suggest some research be done.

Closing the technology review, Walter and Warren stated that new solutions “Must be faster and better, not faster or better”.

RFID was presented by Charlie Gilbert of Charles Gilbert & Associates, and Marshall Gordon of SAP . The comprehensive slides that Charlie presented were rushed to stay on time, requiring a presentation of about an hour to be condensed into twenty-five minutes. Others who have heard the presentation in other venues report that it is very good, and it was disappointing to have to miss much of the valuable content. Marshall Gordon showed two short movies. One describes the benefits of RFID in product tracking and movement along the supply chain, while the other movie showed scenes from the pilot store of Metro AG in Germany which is being used as a test-bed for RFID technologies in product identification for grocery and sundry items. In the movie, a customer, upon arriving at the store is presented with a data device that attaches to the shopping cart. It may be loaded with the customer's shopping list from an on-line session, or can be sent a shopping list from a wireless PDA or palm device. As the customer traverses the store, a map is presented on the screen of the shopping cart data device, showing where all of the desired items can be found. As the customer passes different monitors located about the store, ads are displayed, generated from the shopping list items, or from ad hoc purchases made after arrival at the store, reminding the customer that a certain item is usually purchased in concert with an item already in the shopping cart. This technology has been in development for the past couple of years, and was rolled out just prior to the SAP Sapphire event last year. Comments overheard from the audience include “that's creepy” and “I don't want anything telling me what to buy”. It seems that some folks will be slow to adopt the technology, all the while clinging to the false belief that they are somehow anonymous in this age of information flow and data gathering at every point in our daily life.

The next session, moderated by Lenore Heckler, was titled Why Speed To Market Is Critical – Real World Applications. Three speakers were planned, but one was unable to attend.

Leading off was Jonathan Spier, President/CEO of Apparel Holdings Group, who told of resuscitating a company that was on a fast track to doom, losing nine million dollars on sales of fifty million, and with no systems for effectively managing the company. What a difference a new perspective makes! The company now produces in twenty-four overseas countries, sells into every tier of distribution from K-Mart to Federated and May Company stores. Producing their own labels such as Caribbean Joe and Periscope, as well as private missy labels for several customers, sales are now expected to reach $600 to $700 million in 2004. How did they do it? Obviously decisions to do things differently drove the direction taken. From an investment banking background, the advantages of technology were well know to the investor group. In the last three years the company has implemented sales force automation by Computer Generated Solutions, Groupware using Lotus Domino and Notes, to eliminate lab dips and the delays in color approvals, spectophotometers are used to speed color values around the world, obtaining approvals in as little as one day where previously it was not unusual to lose six weeks in color approvals. The company distributes from three warehouses in Florida , New Jersey and California , with three offices in Manhattan .

Stephen Pearson, Executive Vice President, J.Jill Group spoke about aligning organizational values to succeed at speed to market. Formerly with GAP , Stephen spent three years with start-up Freeboarders before joining J.Jill. Currently in transition from a catalog and e-merchant to retailer, sales will be close to $400 million for 2003, while sales for 1999 were at $28 Million. Stressing the need to align cultural values in order to succeed, Stephen shared some candid thoughts. “How can this company adopt a new business model when we are so bad with the one we have?” Poking fun a the term “Healthy friction”, he said that the term was used by a former GAP executive, and that friction does not often yield a positive result, instead causing heat and slowing things down. Another gem that was shared was a comparison of two organizations and how they approached the adoption of a new business model. Citing the ill-fated Woolco effort by F.W. Woolworth & Company, and the successful change of the S.S. Kresge Company into K-Mart, the point made was this: “You cannot do two things well at once. Success depends on choosing one model” From the estimates of 2003 revenue, it appears that J.Jill has made a good choice.

Lunchtime speaker, Marilyn Tam told of her experiences at Reebok and the serendipitous events that helped in her successes there. Sharing these stories with the group during lunch provided background for the book she has written titled “How To Use What You Have To Get What You Want”

Barbara Bundy Moderated the after lunch panel of speakers. Usually regarded as a “lost” time slot, there was no nap taking with the speakers that presented.

Kathy Van Ness told of Authentic Fitness' business and how they had only ninety days in which to have a successful season. Part of the challenge is that their factory produces 250,000 units per week, no matter what happens. The retail deliveries begin with merchandise on the floor on January 1, and with peak selling season, the markdowns begin March 30, and product must be gone by June 30. Someone asked the question: “What do you do with your factory during the months you are not delivering?” “Keep it running full bore replied Kathy. They must make the best decisions possible with regard to what should be produced, and in what order, but much of the success of the coming season is determined six months before the product is seen in stores. The sell to more than 3,000 doors, must fill orders at a 99.9% fill rate, and have 15% of the market. Selling at all levels from Wal-Mart to Barney's, retailers want all product off the shelf by June 30. They are implementing Demand Solutions , a database product that allows forecasting by door and style, based on POS input.

Larry Miller, President of Nike Michael Jordan Division, spoke of the challenges facing the Michael Jordan Division, while also illustrating their ability to respond almost instantly to change. Describing Nike as a battleship, and the MJ division as a PT boat that can maneuver fast. Discussing the strategy around keeping the brand in demand, and sometimes in short supply, it is apparent that a company division based on a single athlete or celebrity is at peril when the celebrity nears retirement, the means to keep on top are not so much technology based as they are savvy merchandising and staying in constant touch with your customers.

Kent Grimes, Former COO of Product Development for Nordstrom told of a $1.38 billion business with 500 people involved in new product development, a captive development team, whose customer was not required to purchase the “house brand”. There were twelve different divisions, with no central coordination among them. A staff of five hundred people was reduced to four hundred after implementing several changes, including new systems and a process map/calendar. Fit blocks were established to provide better consistency of sizing across all labels. They have four to six seasons a year. Supplier relationships were also improved. Kent made this statement: ”Every improvement is a result of change. Not every change is an improvement”.

Mike Todaro moderated the last speaker session. The speakers were all lively and had a strong message.

Leading off was Lance Ruttenberg, Executive Vice President, American Textile. This presentation showed that change can keep a company alive. This company has an eighty percent share of the market it serves, but found margins slipping and faced an uncertain future. Originally a manufacturing company, the decision was made to gradually ease into offshore production. Eventually phasing out domestic manufacturing, the partnership with their contractor in El Salvador shows how a good business marriage can be the key to not only survival, but greater success. The company transitioned from 10,000 SKU's to 850. Using case packs, they do not warehouse large quantities of product, relying instead on the deliveries from El Salvador to be properly packed, labeled and floor ready for each of American Textile's customers. They now deliver in one-half day from the US and in two to three weeks from El Salvador . They have multiplied sales four times, and enjoy four times the profit as compared to the earlier model which manufactured domestically. Some of the gems shared by Lance were: “You can never over communicate”, “Success relies on trust”, “Study and understand non-production related costs”, “Be deliberate and grow the business over time”.

Salvador Llort, Executive Vice President, Confecciones del Valle is the contractor partner with Lance Ruttenberg of American Textile. Showing an easy grace with his customer, and speaking with English that was easily understood by all, he described the business as varied, with factories producing product for Lands End, Sara Lee, Polo, and Royal Park Uniform, the American Textile manufacturing operations are in a modern building, with American Textiles name over the door, and a work force of 200 sewing operators. They keep 1,000,000 yards of fabric in stock at all times, and after getting an order from American Textile on Friday, they organize the production, starting immediately, with product in the first container going out on Monday. Having this dynamic duo present together is a real eye opener for those who may have notions of adversary relationships with contractors. This partnership seems to present the most positive aspects of how offshore sourcing should work.

Representing Li& Fung, Rick Darling told of a company that sources product from around the globe. Last year $456 million in sewn products were sourced from Central America . Operating new product development centers in New York City , Europe and Hong Kong , Li & Fung is positioned to do as much as a brand owner would like. With sixty-eight offices in forty countries, they are uniquely positioned to locate, contact, and monitor production of almost any type of item. Making the point that speed to market was not generally for commodity items, but is instead, a process for those high margin items to enjoy earlier and longer market exposure. Citing as an example, Limited with margins of 68% to 75%, flying 70% of product from the far east to the US allows an additional thirty days for callout of colors before committing to production. Illustrating that there are several value chains, Rick advises that you assess your tolerance for risk. You can have a “speed” value chain with delivery of 150 days from concept to landed product or a “price” value chain where the time may be 210 days. Mention was made of a “Supply Change” tool for decision on waiting to make decisions, saying it kicks out a model. There are three areas necessary for what Rick calls “The Cultural Shift”- Understanding total cost vs. first cost, vendor vs. partner, and discipline to the calendar.

So, after a day of lively, stimulating presentations by top-notch speakers, the answer to the lead-off question is “It depends”. Some companies will embrace technology as an aid to speed to market, others will adopt it as a strategy to get a leg up on the competition, while others will see the improved service levels and lower cost of asset based business as a logical business practice. Some will adopt required technology because Wal-Mart says to do so. Whatever your perspective, there is sure to be something for you in speed to market. Think it over, and take the appropriate action.

Thanks for your loyalty to this column. I saw a number of folks while at the symposium, with several stating how much they enjoy the column, or the down-to-earth manner in which it is written. Your comments are appreciated.

Next month: A report on the National Textile Center Forum from Hilton Head South Carolina.

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