Liz Claiborne's Logistics Home Run

With dozens of leading brands and net revenues of $4.8 billion, Liz Claiborne is one of the giants of the apparel industry. The company's growth has created many new logistical challenges over the years as Liz Claiborne has sought the best way to move more than 250 million units of product around the world annually. At the turn of the century, Liz Claiborne's logistics managers found themselves reacting to events, rather than guiding them, in their efforts to ship goods sourced from some 3,000 factories in 35 countries to an equivalent number of countries for wholesale and retail sale. Managing logistics had become a grueling, labor-intensive exercise.

The turnaround begins

By 2000, it was clear to Lois Davis, Liz Claiborne's vice president for global logistics, that the company needed a new and better logistics solution. Her staff was spending far too much time doing data entry, the IT staff was spending too much time maintaining its legacy system, and what they were getting in return was too little information, too late.Two years later, the company implemented TradeBeam's Import Management Solution, a web-based software service that Liz Claiborne uses to perform sophisticated logistics management. The new solution lets the company monitor orders and shipments through as many events as it wants to track, from leaving the factory to arriving at the distribution center. It also helps the company comply with government trade regulations and produce accurate import documents. Davis and her staff worked with their logistics service providers to populate the system with information. For example, carriers update their own databases when they deploy trucks; in the past, they would fax or e-mail notices about truck departures to Liz Claiborne, where the logistics staff would re-enter the information. Today, the carriers simply allow TradeBeam to gather the relevant data automatically and copy it into Liz Claiborne's database. This procedure saves work for the carriers and for Liz Claiborne, and it makes the information available much sooner. Similarly, all of Liz Claiborne's service providers are entering EDI documents into the TradeBeam system. The only information that Liz Claiborne's logistics staff still enters into the system concerns scheduling.

Reaching new levels of efficiency

With less data to enter and more to review, the logistics group now has a radically different job to do. Headcount in the group was reduced from six to five, and hasn't increased even though shipments have grown by nearly 50 percent.4 The remaining staffers no longer spend their days shuffling piles of paper, phoning service providers for information or doling out information to the rest of the organization. They've also eliminated a weekly meeting that used to require 40 hours of staff time, including time required for preparation and for everyone to participate. Instead, they are communicating proactively with the rest of the company by sending out a weekly bulletin about potential problems and making daily reports available online.

Getting rid of the routine paperwork also has allowed the logistics team to manage by exception. Instead of collecting and examining every piece of information, the logistics group spends most of its time following up on items listed in the daily exception reports. These reports show all shipments that aren't where they are scheduled to be. Davis says that her staff's relationships with providers have changed for the better as a result, because they're calling about issues that need attending to and not about shipments that are on track.
With so much information readily available, the logistics group can also produce analyses that were never possible before, and act on those analyses. For example, when there are major shipping problems, such as congestion on the West Coast or storms in India, they can quickly find out which shipments are affected and redirect the freight at origin, choosing alternate trade routes or even shipping by air.
Other cost-effective practices the group has put in place include:
Planning for just-in-time staffing at the distribution centers by calculating how much cargo will arrive at each DC on each day.
Monitoring the number of containers for each carrier against contract specifications.
Monitoring carriers' service levels.
Making appropriate commitments of work to service providers, based on their capacities and the number of shipments scheduled.
Aggregating units and cartons coming from the same source to improve loading and packaging efficiency.
Diversifying the ports of call used by carriers.
Using these new practices, Liz Claiborne reduced import transit times by an average of five to seven days. And because the company had a better handle on where the goods were at all times, it was able to cut seven to 10 days' worth of inventory.

Added bonuses of the improvements

The new technology and new procedures also have made it easier for the logistics team to accommodate Liz Claiborne's acquisitions of new companies. "When Liz Claiborne makes acquisitions, we've been able to zero in on how they can fit into our transportation programs and identify any issues we have for them," says Davis. "We can learn very quickly where they source, find out if we have services in place there and figure out if we want to put new services in place or continue with what they had." Learning how to find and analyze data and quickly implement solutions has given the logistics team a new flexibility and confidence in tackling problems. "Those are the soft benefits you don't always think about," Davis says. She emphasizes that it took more than technology to make the new solution successful. One important success ingredient was getting the whole organization involved in planning the system. Not just the logistics group, but the production, financial and information technology departments were all able to define their needs and reach agreement about a solution that would work for them.
A phased implementation was another guarantor of success. The logistics group worked first on getting ocean consolidators' data into the system because they had the most data. Once that step had been accomplished, the group learned to produce and use the exception reports. When they were comfortable with the reporting function, they began working with the other service providers to enter their data. "You have to recognize that tweaking will be necessary," Davis says. Finally, training is an ongoing requirement, she says, especially considering that employees come and go and take on new responsibilities all the time. It's important to run training sessions frequently so that employees throughout the company can use the system effectively, she concludes. n

Masha Zager is a free-lance writer based in New York. She may be reached at [email protected].