Event Report: Apparel Executive Forum 2005: Forum Explores Supply Chain's Future

Apparel's Executive Forum presentations provided real-world examples and leading-edge research.

Speakers at the 2005 Apparel Executive Forum focused on key issues ranging from multichannel retailing to product lifecycle management to the future of the apparel supply chain.

Here is an overview of just a few of the insights shared by some of the event's 13 speakers. They offered presentations before the forum's audience of about 100 senior-level executives this past Oct. 9-11 in Naples, FL.

Visions of the future
James B. Rice Jr., director of MIT's Integrated Supply Chain Management Program, focused much attention on risk management in his forum keynote presentation on the "Supply Chain of the Future."

Because there is greater interdependence in today's supply chains, apparel companies often are at risk if one link goes down in their supply pipelines. Rice challenged attendees to answer the question: "How vulnerable is your supply chain?"

He reviewed the supply chain impact of some major disasters of recent years, from 9/11 to last year's tsunami to the foot-and-mouth disease that swept across the U.K and parts of Europe. He defined events like this as "high consequence-low probability" disruptions, but said apparel companies should try to have contingency plans to prepare for the worst.

To help bring the many different risks of a global supply chain into perspective, Rice said there are only six modes of failure to anticipate and analyze in forging a risk management plan:
- Lost of capacity (plant is down, inventory theft)
- Loss of transportation (mode, infrastructure failure)
- Loss of supply (bankruptcy, quality failure)
- Loss of human resources (strike, deaths, unavailable work force)
- Loss of communication (telephone lines down)
- Loss of demand (customer bankruptcy, quality failure)

Focusing on the big picture, Rice told forum participants to watch six key factors that have the potential to have a major impact on business, industry and the supply chain. These factors include:
- Energy/oil (the volatility of $200 to $400/barrel oil)
- Economics (power shifts to China, India)
- Globalization of trade (a limited number of closely aligned trading blocs)
- Technology (a decentralized future of work enabled by IT; virtual knowledge-based workers; supply chain transparency)
- Environment (green laws that take root globally)
- Consumer demographics (shifts toward service industries, the pharmaceutical market and an aging community)
In summary, Rice advised forum attendees to get very familiar with their supply chains, including on-the-ground knowledge of every link in the chain. "You don't want to be playing ‚¬Ëœan away game,' " he concluded.

Multichannel success strategies
In his presentation on multichannel retailing, Gary Merry, senior vice president and CIO of Jos. A. Bank Clothiers, said the company's catalog and Internet sales have grown from $2 million to $50 million in just a few years. Of the firm's catalog orders, 37 percent originate from its brick-and-mortar retail stores, Merry said.

He encouraged forum attendees to avoid holding back on multichannel commerce because of fears of cannibalizing one channel over another. "You're not robbing from one to pay the other," he said. "You're paying them all."

Merry stressed that each of Jos. A. Bank's channels has continued to experience strong growth. The 100-year-old firm had plans to add 20 stores to its 298-store portfolio this past October, and is working toward a goal of up to 500 stores. And whereas it got started in the catalog business by shipping about 300,000 catalogs, today its catalogs reach 14 million. Its web site receives 500,000 visitors a month.

Merry said Jos. A. Bank customers who shop across its three channel are worth 500 percent more in their purchasing than those who shop in only one of the channels. The firm's average online purchase is $220 to $230 vs. an average retail store transaction of $280. Twenty-five percent of the firm's online sales come through "affiliates," or third-party web sites, such as amazon.com or qvc.com.

He said his firm believes in frequent e-mail marketing. "We continue to push that out," he said, noting that "the myth of over-e-mailing" has not been true for Jos. A. Bank.

Speedy, responsive supply chains
Two panel discussions at the forum focused on speeding the supply chain and making it more responsive. Moderating one of the panels was Walter Wilhelm, president and CEO of Walter Wilhelm Associates and a veteran consultant on product development.

He described how the benchmark for speed to market keeps getting set lower and lower. For instance, brands and retailers need their manufacturers and prospective suppliers to turn samples and cost estimates within one week, assuming the fabric is available.

But even one-week turnaround may be too long. Wilhelm noted that top-notch apparel producers he is working with in Central America provide samples and costing in less than three days. This compares with an average of three weeks just a few years ago.

Tom Austin, president of Kellwood Co.'s Services Group, said one of Kellwood's juniors labels has reduced its cycle time by narrowing its vendor base and reducing the breadth of its product offerings. This has enabled the brand to inject fresh fashions along with core fashions into 10 markets per year for its retail customers.

This Kellwood juniors brand relies on suppliers in Asia to ship most of the core fashions, which have a five-month lead time. And then Kellwood uses suppliers in Central America (four-month lead times) for the fashion injection styles, and then suppliers in the United States (two- to three-month lead times) for really "hot items," Austin said. The U.S. lead times can go as low as two to three weeks if fabric is available, he added.
"Being faster is always better," but it usually raises cost, Austin said, noting that Kellwood is careful to evaluate whether it will get its return on investment for paying more for shorter lead times.

Luis Paez, vice president and CIO for Perry Ellis International, said digital color management and virtual fitting technologies have helped Perry Ellis shorten lead times. While there has been some resistance to the solutions from some end users, these barriers are breaking down as users see the positive results in terms of fewer fittings and rounds of color testing. Perry Ellis is rolling out the color management solution to its vendor base, and plans to do the same with digital fitting technology after it completes an internal rollout.

Steve Pearson, senior vice president of sourcing and product integrity for J. Jill Group, said his firm is working to establish more direct communications with apparel producers. This eventually will decrease its reliance on sourcing agents. But realizing that it still will need third-party assistance to handle many tasks, J. Jill is evaluating what new business models may be needed to go direct, he said.
For instance, the company is working more closely with Bureau Veritas "to connect the dots" in its supply chain, and ensure it has its bases covered on factory inspections and similar activities that previously might have been handled by agents.

KATHLEEN DESMARTEAU is editor in chief of Apparel and may be reached at 864-627-0276 or [email protected].

Editor's Note: Stay tuned for the January 2006 issue for more highlights from presentations at the 2005 Apparel Executive Forum, including the low-down on how Build-a-Bear Workshop built an empire and some hot retail concepts to watch.