I had the pleasure during the past edition of the Apparel Sourcing Show of giving a presentation about two basic concepts for our apparel industry. The first one is the beginning of the productive chain for any garment… that is, where ideas are “born” to later be transformed into a reality: product development.

The second concept in my presentation referred to LEAN. The combination of both concepts makes a perfect “fitting”; let’s see why:

• Product development – if we define it as the series of activities that start with perception of a market opportunity and end with production, sale and delivery of a product, then you will understand its extreme importance in the productive chain of a garment.
  Much has been said that a good design of a garment (part of a product’s development) makes the difference. That is true that not only in the strict fashion sense, but because it also influences that such garment be “friendly” at the time it is being produced. Because a product that is born crooked… will never reach sales!
• Lean – concept born in post Second World war Japan due to the need of producing rationally, specifically in the Toyota company. Japanese could not afford the luxury of wasting at the time of production (they did not had the abundant resources Americans had in the 50’s). Therefore in a simple – but quite graphic manner – we can define that Japanese rationality saying that Lean is “Performance without Waste”. Although Japanese started applying it out of need – and without the intention of baptizing it with the world Lean – they are credited with creating that concept.

If we look at the time a typical production cycle of a garment takes, we notice that the biggest obstacle for the cycle to be shorter is located precisely in the product development area! There is a very graphic expression about this: “they cut me to be rich and left me basted”, because how often due to inefficient product development garments are left “basted” or in the best of cases they are produced at a high cost of time and money.

Then, why not apply Lean principles to product Development? Maybe because many of us concentrate mainly in the sewing part, thinking that is where we find the possibility of ‘saving” time and money. And although this is partly acceptable, the truth is we cannot compare the days a garment remains in the sewing area with the months spent while it is going through Product Development.

In a typical garment life cycle, 70% of thee time is spent in product development while only 30% corresponds to the specific manufacturing part of it. How can this be? Traditionally, product development – in the clothing industry – goes through the following activities:

• Trend, product and sales research
• Sketches/photos/copies
• Sales forecast
• Manufacturing decisions
• Fabric samples
• Color selection
• Garment sample
• Line review and approval
• Sample for adjustments
• Prototype evaluation
• Placing manufacturing orders

Many activities, if not managed adequately, produce waste of time and/or money. The Japanese, who have “perfection” in their DNA classify the “Muda” (waste in their language) into 8 categories:

What if we look at some examples of how to detect those leaks of time/money in product development and thus be able to execute Lean in that area?

Let’s start with a very obvious one: Movement; we can ask ourselves the following questions:

• Location of the sample area and fabric warehouse: are they close to one another?
• Where do fitting trials take place?

Does anybody like waiting? Of course not! Imagine how much time is lost (wasted) when we are waiting for an e-mail or a call from the boss to authorize – for example – taking  out a special fabric for a sample (and all because of not having foreseeing establishment of a system that does not depend only on one person!)

An example of 21 Century Muda is Computer Disconnection that is generated when a sample’s information reaches the Design Department in a format that does not allow interface with one of the size gradation systems and therefore we need to reenter all the information.

Here a double-killing is generated, as not only time is lost but the opportunity for mistakes is created when manually reentering information required. The Japanese have also catalogued as computer disconnection the labor environment that does not encourage team work and therefore “hinders” staff initiative… how about that?

We could continue with more examples, but what if we talk about how to prevent all this Muda? For this purpose in Lean there are a series of tools that might help us:

• Kanban (the concept of establishing maximums and minimums on inventories of resources required for the task)
• The 5 S or putting into practice the concepts of organize/correct/clean/normalize/institute
• Visual administration (WOW! Anything more to say?)
• Kaizen (always trying to improve the process in a continuous manner)

Additionally, we must not forget technology, especially all that is related to the digital. Starting with a tri-dimensional vision of a human body, turning it into an avatar that looks like a real person and with his/her exact measurements, dressing it with a (digital) garment, see the fall of the fabric when the avatar starts to gain movement and finally approving that sample, all in the world of the internet… that is Lean! Here the double gain is in the time savings of having to send physical samples and of course in not wasting resources (fabric, labor sewing, etc.) because everything was done in the Digital world.

Lean, in the Product Development field is achieved applying this combination of order and discipline principles, administration tools, digital technology and most of all, common sense.

Let’s think what would happen if a company starts product development once design and marketing staff has defined an opportunity and a niche to target. And what is we start evaluating the different alternatives measuring costs and trying to reach the objective price even before starting to do trials through an effective pre-cost evaluation system, and from there start with a group of experts trying to have a viable garment? Well, as I always say… stitch by stitch: that is how a great garment is produced!    
 

Written by:
Walter T. Wilhelm

Introduction

Several decades ago, when the United States companies started to source in Asia, the Western European companies went to East Europe, the Middle East (especially Turkey) and North Africa.  Turkey, parts of East Europe and North Africa remain important contracting regions for Western European companies but in the past five years considerable production migrated to China and other parts of Asia.

Recently, however, the costs have risen in China and there is considerable concern among both European and American companies regarding the future availability of factories as domestic demand in China continues to rise.  The US and Central American, on the other hand, have remained relatively stable as a contracting region but this region has not been explored by the major European companies. 

On December 1 and 2, an important seminar was organized in Munich to initiate an introduction to sourcing opportunities in the Western Hemisphere (with a focus on the US and the CAFTA-DR region).  This meeting was co-hosted by the Dialog Textil-Bekleidung (DTB) and the American Apparel Manufacturers Network (AAPN) and coordinated by Setlog GmbH, a German based supply chain technology company.

This article reports briefly on the Munich meeting and its possible impact on the region.  

The Organizations

DTB is an organization similar in its appeal and “personality” to the AAPN.  They have been an association for more than 25 years and they have strong influence in the German and European market.  Since the meeting was being held in Munich, most of the organization fell on DTB but Anna NieB’s execution was professional and the meeting proceeded flawlessly. 

The AAPN holds a similar prestigious position in the US and CAFTA-DR markets.  Mike Todaro and Sue Strickland headed up the US delegation which included Carlos Arias (Denimatrix), David Sasso (Buehler Yarns), Peter Brink (Advanced Manufacturing Group – Mexico, Costa Rica and El Salvador), Walter Meck (Fessler USA), Marty Moran (Radici-Spandex), Esther Lutz (TradeCard), Karin de Leon (CECATEC) and Walter Wilhelm (WWA). 

Setlog GmbH provides supply chain software and logistics solutions in a Software as a Service (SaaS) model to companies worldwide.  The company was founded nine years ago and they already have many thousands of users around the globe.  Setlog has opened an office in the United States to provide solutions in the Western Hemisphere and recently announced partnering with WWA in this region. 

Meeting Overview

Munich (and most of Europe) was hit by heavy snow storms that prevented some people of attending the seminar yet the attendance was surprising strong.  In total about 75 people attended the two day event which started with a social hour and dinner on Wednesday evening and then a full-day seminar on Thursday.  Although several major companies from outside Germany had to cancel due to the weather, the attendance from Germany included some very prestigious and important companies.  A partial list of the attendees including senior management from HUGO BOSS, BMW (the apparel division), ESCADA, Marco Polo, Betty Barclay, Basler and many others.  

Dr. Hans Theo Baumgaertl, Honorary Director of DTB opened the meeting with a welcome to their guests and with an overview speech about why sourcing in the Western Hemisphere might be an interesting alternative to Asia given  current economic, sourcing and speed-to-market concerns.  Carlos Arias and Mike Todaro then introduced the delegation with a brief introduction about each visiting company.  Karin de Leon was the next speaker and she provided the attendees with a good overview of the entire region, including important country comparisons. 

Carlos Arias spoke again providing a description of the vertical operation within PCCA/ACG and Denimatrix (from the “field to the consumer”).  Peter Brink provided an overview of his manufacturing in three different regions (Mexico, Costa Rica and El Salvador) and Walter Wilhelm made a presentation comparing sourcing in the Western Hemisphere with sourcing in Asia.  A panel discussion, with questions from the attendees, was moderated by Mike Todaro. Carlos Arias, David Sasso and Walter Meck were on the panel. The quality of the questions clearly demonstrated the level of interest from many of the companies in seriously considering production in the Western Hemisphere.  The meeting closed with a Quality Assurance Risk presentation by Dr. Helmut Krause of SGS Germany.  

Summary and Possible Next Steps

There was significant enthusiasm expressed by the meeting attendees and discussions started about “next steps”.  Several of the companies are speaking about visiting the Western Region and some of the companies represented as early as 1Q 2011.  There was also some preliminary discussion about a possible collaboration between the AAPN and DTB.  I personally hope this is possible as I feel there is a true opportunity for companies on both sides of the Atlantic to be strong trading partners. 

About the Author

Walter T. Wilhelm is recognized as one of the most innovative and "connected" executives in the softgoods industry, and one of the pioneers in creating and implementing technology to streamline the product design and development processes. He has held senior positions in Retailing, Manufacturing and Technology Sales & Development. Walter has extensive experience domestically as well as internationally, having opened six offices in Europe and four in Asia.  Former co-founder of Microdynamics; President of Animated Images (Ai); co-founder of Wilhelm-Leslie Associates; General Manager of Hughes Aircraft Company's Apparel & Footwear Automation Systems and currently President/Chief Executive Officer of Walter Wilhelm Associates LLC (WWA).

Walter M. Wilhelm

Introduction

Two critical factors for success in marketing and selling in any industry is building personal relationships and clearly understanding and appreciating the client’s business environment.  This article addresses some of the elements that distinguish the Outdoor Sports Industry and provides insight into some factors that influence success when marketing to this segment of the apparel/footwear industry.

Once a fringe industry, made up of companies run by enthusiasts looking for ways to enjoy their lifestyle choices, the Outdoor Industry, over the past few decades, has grown to become a powerful market unto itself.   For research and statistical purposes, the Outdoor Industry is often made up of Surf, Skate, Snow, BMX, a growing segment known as Freestyle Moto (jumps, flips, etc, on a motocross motorcycle), Fishing, Hunting, Wildlife Viewing, Bicycle, Camp, Paddle, and Trail – based recreation. Taken as a whole, the Outdoor Sports Industry is now home to some of the largest apparel companies in the world, and has annual sales close to One Trillion US Dollars (USD). To be more specific, there are surf companies with annual sales of more than $1billion USD in annual sales, and have offices all over the globe. This article addresses some of the things that make the Outdoor Industry different from the rest of the sewn goods industry, and how understanding that difference plays a key role in the success of marketing to this diverse industry.  

A Brief History

In many cases the companies in the Outdoor Sports Industry have grown from the mind of an enthusiast, who wanted to keep living their lifestyle but felt he or she could build a better product for him or herself and friends.  Certainly one of the most famous examples of this concept is Patagonia Founder, Yvon Chouinard.  He started out, as what he would call a self-proclaimed dirtbag climber, someone living off scraps of food in campgrounds and out of garbage cans behind restaurants.  But he felt he could build better equipment and clothing that was currently available to him so he began to experiment and sell or trade equipment to friends.  Soon Yvon was making a living from building his own equipment and now owns one of the most recognizable brands in the world.  Despite Yvon and Patagonia’s successes, he has maintained his lifestyle and his support of the things that first attracted him to his lifestyle.  Yvon is a very active environmentalist, even to the point of donating 1% of all sales to environmental causes.  He has structured his company to nurture the outdoor lifestyles for all his employees, and their families.  The majority of Patagonia employees regularly enjoy some, if not all of the interests that the company services. 

The same philosophy and lifestyle that led to the creation and success of Patagonia, is true for many companies in the outdoor industry.  Companies in this industry are often located in close proximity to the sports they support (i.e. surfing companies along the coasts, backpacking & rock climbing companies in the mountains), and actively encourage their employees to field test product, and provide flexible hours to facilitate that participation.

Meeting and Working with Members of the Outdoor Industry

Unlike traditional apparel companies, where employees and customers don’t have to understand a certain lifestyle, Outdoor Companies target their product towards specific activities and the lifestyles that surround them.   For visitors of companies in the Outdoor Industry, it is important to “understand” the philosophy of the company, and, it’s initiatives.  For example, a visitor to a technical outerwear company, wearing a suit and tie, will instantly be identified as an outsider, and one who does not understand their market.   Or, a visitor trying to sell products or services that aren’t environmentally conscious to a company that supports renewable energy, and sends it’s employees on environmental or sustainability projects, will probably be branded an outsider whose ideas are to be ignored.   

Relationships and an understanding of the industry focus are paramount to a successful marketing and sales process.  It is not necessary to participate in the lifestyle or sports, only to understand what drives the people to do them.  A person who walks in knowing the terminology, and pretending to have done some activity like fly fishing, or rock climbing, but has never participated, will quickly be identified as an imposter who will have a more difficulty finding success.  In other words, it is better to admit to not knowing how to do an activity (i.e. surfing), than to pretend you participate regularly, and try to prove it with knowing the terminology.  But, like selling to any industry, a person who has a basic understanding of the activities, the client, and the customers, has an enhanced opportunity for success.    

Key Factors to Maximize Success

• A critical factor in almost any buy decision is the personal relationship.  Try to find the decision maker and build/nurture the relationship. 
  • In a small and medium sized company, try to build the relationship with the owner or senior executive (this will normally make you immune to management changes).  It a larger company this is more difficult but try to build the relationship with the decision maker or, even better, with several decision makers.
  • To successfully build a lasting relationship, you must be face-to-face.  This is something that most of the companies in Central America haven’t yet learned; showing up once a year for a half-day meeting is not building a relationship.  (Note: key Chinese suppliers are “in the face” of key clients on a weekly or monthly basis.)
• Try to understand the client’s business, their key drivers, their competition, and the business environment.  This should be part of the internal marketing discussion surrounding any key client.
• If possible, the key person selling into the Outdoor Market should be a sports “enthusiast” and be involved in developing the company’s strategy regarding penetration of the industry and a driver in building the relationships with particular companies being pursued. 
• Get involved with the industry.  Attend major industry trade shows such as Outdoor Retailer  (held twice a year in Salt Lake City, Utah), or Surf Expo (held twice a year in Orlando, Florida), two of the largest shows in the world servicing the Outdoor and Action Sports markets.  Join specific trade associations, depending upon the market you want to penetrate, such as OIA (Outdoor Industry Association), or SIMA (Surf Industry Manufacturers Association) and attend the major functions. 
• Understand that the Outdoor Industry, more than any other segment of apparel or footwear, is concerned with, active in trying to protect, the environment. 
• “Walk the walk and talk the talk”.  Most Outdoor companies are casual.  There are typically less barriers in getting to the “right person” but your audience will be brief if you don’t, almost immediately, demonstrate that you understand their business.  Dress appropriately for the client (business suits, coats and ties are rarely appropriate for the Outdoor Industry companies).  Don’t arrive driving a large, gas guzzling US sedan (a small car or, even better, a hybrid is more “compatible” with an Outdoor company’s lifestyle).

Conclusion

There is no “silver bullet” that guarantees success in any business but skill in adapting your marketing and sales approach for the particular market you are chasing is fundamental.  For any company, in any industry, relationships, an understanding of the potential client, and their customer, are keys to success.  The same level of understanding and relationships are true within the Outdoor Industry, but appropriately dressing down and not being identified as a poseur/imposter are factors not usually experienced in other industries.

About the Author
Walter M. Wilhelm  – Over fifteen years of experience in apparel retail, and technology sales, installation & support. He has owned and operated two of his own retail operations in Utah and has had Senior Sales and key account responsibilities in two major technology companies, Animated Images (Ai) and Freeborders. Walter has very strong expertise in Business Development & Technology Implementation and senior project Management. Has managed and help implement systems for Freeborders and NGC.  Former positions include: Director Sales of Freeborders; Regional Sales Manager of Animated Images; Owner/ Founder of Bike Line SLC; Owner/ Co-Founder of Active Sports Recycling.  Currently a Vice President and Principal in Walter Wilhelm Associates LLC (WWA).  He is a lifelong participant in Surfing, former professional Skateboarder, frequent participant in distance Rock Climbing, Trail Running, Snowboarding, and Mountain Biking, and former sponsored Road Bicycle Racer.  In other words, he lives the life of an outdoor enthusiast.    

Walter T. Wilhelm

Introduction

It is not uncommon for a retailer to suffer through nine or ten months of disappointing sales, even losses, in hopes that the last few months of the year would suddenly make up for the earlier draught as consumers rush to the stores to complete their Christmas shopping.  We have heard this story repeated over and over, and often, successfully.  But, at the end of 2007, Santa Claus was a “no show”.  The rush to put items under the Christmas tree didn’t happen, thus signaling the start of the worst economic period the world has known since the Great Depression. 

The slowdown continued into 2008 and now it started to impact the factories and suppliers because retailers refused to restock.  The general reaction to the economic slowdown was to reduce inventories and downsize staff.  2009 showed a slight increase in holiday sales but certainly not a return to prior buying habits.  Consumer and retailer confidence in an economic recovery remained low and retailers tried to compensate by on-demand fill-in orders.  This strategy, however, had the risks of being out of stock or not getting the key items that are selling on the shelves in time to reap whatever holiday spending might have been available thus helping to create a self-fulfilling economic slow-down.

The conservative mood continues in 2010.  Is there anything a retailer might do to hedge its  position by trying to minimize long term commitments to inventory yet taking steps to have the “right items” available in time for what hopefully will be a more aggressive holiday buying period?  Yes, they can “help Santa Clause” by shortening the cycle and buying from factories and regions that can supply based on demand, not on bulk inventory. 

1985 to 2007, Sourcing from Asia

For more than two decades, retailers filled their shelves for the Christmas holiday buying period by sourcing goods primarily from Asia.  Unit costs were lower (in many cases for less than half of what they could buy similar products in the domestic or regional markets) and, in general, the quality was good, often superior to local production.  Furthermore, the delivery performance of the Asian contractors was also first class. 

There were two downsides of buying from Asia; minimum quantities were large and lead-times were long.  When the economy was booming, the risk of these two factors was not a deterrent.  With the slowdown the last three years the situation has changed and now large minimums and long lead times can spell “disaster”.  However, buying product from CAFTA-DR provides an interesting alternative.

Sourcing from CAFTA-DR

The contractors in the Central America and the Caribbean Basis historically had been Maquilla factories, providing CMT or, in many cases, assembly-only production for companies in the United States.  Witnessing what was happening with full-package production from Asia, (China in particular), the more progressive companies in the region started evolving first to FOB production, then LDP, and in the period from 2005 forward to total full-package.  Quality improved and, surprisingly, there were fewer social compliance issues from Central America and the Caribbean than there were out of Asia. 

Costs from this region remained higher, however, and delivery performance was often inconsistent.  Mike Todaro, Managing Director of the American Apparel Producers Network (AAPN) points out that “geographic proximity does not necessarily equate to speed-to-market”.  This was certainly true with regards to getting a costed sample that too often took 3 to 6 weeks while a US customer could get delivery of a costed sample from Asia in a week.

Signing the CAFTA-DR trade agreements helped ease the cost difference between the region and Asia.  Simultaneously, companies in the region upgraded the professionalism of their management teams and these factors along with industry consolidation made it easier for the companies to compete globally.  The better companies in the CAFTA-DR region have adopted European flexibility in terms of volumes (it is no longer uncommon to find average orders measured in hundreds of units rather than tens of thousands or even hundreds of thousands).   And, these same companies have learned that proximity is an important value proposition.  They now compete with China on costed sample times, and deliveries are considerably faster than from Asia.  

A Few Examples of Why Sourcing in CAFTA-DR Makes Sense (and “cents”)

Denimatrix in Guatemala City is a world-class vertical jeans manufacturer.  Plains Cotton Cooperative Association (PCCA) in Lubbock, Texas, one of the largest cotton growers in the world, owns Denimatrix.  This means they can track production from the seed to the consumer, which is something no other manufacturer in this hemisphere can provide. 

In an attempt to respond to changing customer demands, Denimatrix has set up production lines based on the client’s requirements.  One line produces small volume (up to 200 units); another produces quick response small runs (up to 2000 units), while another line produces bulk production orders ranging into the tens of thousands per week. 

The Denimatrix development team and lab enhances the services even more.  The lab and sample shop is state-of-the-art.  Clients can visit Guatemala and work with the Denimatrix team, take a long weekend trip to Antigua (about an hour away) and return to find their samples completed.  This type of flexibility simply isn’t available when sourcing in Asia.    Contact: Carlos.Arias@denimatrix.com.

Another company to be considered in Central America is Texops in El Salvador.  This manufacturer of active sportswear has highly efficient lean manufacturing lines.  They can get a costed sample out in five to seven days.  Production runs can be delivered and cleared in Miami in as little as 12-15 days (for clients inventorying piece goods on-site).  Most of the piece goods are available from local knitters (synthetic fibers) including a new mill, Pettenati (out of Brazil).  The efficiency of Texops is so exceptional that some major multi-national brands have moved normal production from Asia back to the Texops operation in El Salvador.  Contact: Juan.Zighelboim@texops.com.

A final example of flexibility is Grupo M in the Dominican Republic.  This Santiago based company with complete development capabilities provides full-package production either from the DR or by cutting in the DR, assembling in their operation in the CODEVI Zone across the border in Haiti and then finishing and shipping from a local port in the DR.  This combination of production permits Grupo M to compete in efficiency and cost with factories in Asia but delivery time can be up to four weeks faster.  Contact: JBlumberg@grupom.com.do. 

Summary

Costs in China and other territories in Asia are rising and most of the factories require large quantity orders.  The best companies in CAFTA-DR have embraced lean manufacturing and now provide the flexibility to produce short order runs.  There is considerable ease of doing business in the same time zone and getting quick deliveries can make US retailers more competitive by buying from the CAFTA-DR region.  As part of a comprehensive supply chain, US retailers should definitely have a relationship with factories in this hemisphere. The AAPN is the one US Association to focus its energies on the CAFTA-DR region.  To learn more about the companies contact: www.aapnetwork.net.

Think outside the box and help Santa deliver this holiday season.

About the Author

Walter T. Wilhelm is recognized as one of the most innovative and "connected" executives in the softgoods industry, and one of the pioneers in creating and implementing technology to streamline the product design and development processes. He has held senior positions in Retailing, Manufacturing and Technology Sales & Development. Walter has extensive experience domestically as well as internationally, having opened six offices in Europe and four in Asia.  Former co-founder of Microdynamics; President of Animated Images (Ai); co-founder of Wilhelm-Leslie Associates; General Manager of Hughes Aircraft Company's Apparel & Footwear Automation Systems and currently President/Chief Executive Officer of Walter Wilhelm Associates LLC (WWA).

August 1 marks the beginning of the new crop year with regards to USDA’s statistical reporting.  The new U.S. crop, estimated currently at 18.84 million bales, 6.7 millions bales more than the previous year. U.S. offtake is expected to be 19.1 million bales, which will reduce stocks to 2.7 million bales – a 14% stocks to use ratio – the lowest since the 1994-95 crop year.  USDA has estimated supply and demand forecast for both the U.S. and the world for the 2009-10 crop year.  It is compared with the previous year’s crop in the tables below.

U.S. Cotton Fiber Supply/Demand

Looking at the world totals, USDA estimates give a crop of 117 million bales, 16 million bales above the 2009 crop of 101 million bales.  Consumption estimates of 120 million bales outpace production by around 3 million bales and reduces estimated ending stocks to 45 million bales – the lowest since the 1994/95 crop.

World. Cotton Fiber Supply/Demand

Introduction

A few years ago, Enterprise Resource Planning (ERP) systems were considered the domain of only the largest retailers and manufacturers serving the apparel industry.   With newer and less expensive technology, with greater flexibility and modules that can be implemented in phases, the range of companies that can justify and implement ERP technology has expanded considerably.  This article addresses why ERP is relevant for even medium sized companies in today’s competitive environment.

ERP Modularity

When implemented correctly, ERP can deliver significant increases in; productivity, sales, enterprise wide efficiency, reduced costs, and deliver better customer service. One of the key benefits of an ERP system is the integration of a variety of silos that are the result of disparate systems and processes inherent in most organizations.  These silos create inefficiencies, inconsistent information, islands of data, etc. throughout the entire business, while ERP systems can help integrate the major functions. Most ERP systems accomplish the integration through the use of “modules” that are designed to work together and often are dependent on one another for information. Modules are usually broken into a series of programs that are brought together to perform specific functions in the business. Some common examples of modules that are part of ERP offerings are:

• SCM (Supply Chain Management)
• Financials
• CRM (Customer Relationship Management)
• BI (Business Intelligence)
• Human Capital Management
• Supplier Relationship Management
• Manufacturing Planning and Reporting

These modules usually have significant sub systems contained within them.  A good example is SCM which can contain systems for warehousing, sourcing, transportation, bar coding, order fulfillment etc.

Current state of ERP systems in the mid-market area

A few years ago software vendors concentrated their efforts on the large companies ($ 1.0 Billion +) for ERP sales. ERP systems were very expensive, complex, and difficult to implement.  Due to the significant commitments of time, human resources, monetary capital, or a combination of these elements, ERP systems were simply out of reach for all but a few medium sized companies.  All that changed once software vendors recognized that the high-end of the market had limited growth potential, and they turned their attention to the mid-market companies. 

The ERP systems of today are easier to use and simpler to implement. They also have added industry specific functionality to reduce the software customization required to compliment unique client requirements.  Most ERP solutions include similar modules (SCM, BI, CRM, Financials, etc) but the features offered within those modules vary greatly. This is an area that requires “Deep Dives” into the functionality so that a proper evaluation can be made, and the ERP System that best fits an individual company can be selected.  This deep dive into vendor specific functionality should, obviously, be accomplished before any ERP system is purchased.  

Another reason to understand the functionality in each of the modules is “best practices”. Most ERP systems are designed with best practices baked into the modules. Getting the highest value for your ERP investment often depends on how well a company is able to adopt these best practices.

Risks

The risks of installing a new ERP system are many. Risks are increased because of the size of the project, it reaches all aspects of the business, introduces new way of doing things, and it often changes the culture of a company. Listed below are some points that should strongly be considered in order to minimize the risk of project failure:       

1. A dedicated Project Manager (may be a consultant or an existing employee)
2. Senior management must be involved and committed the success
3. Module integration (make sure the system includes a fully integrated POS module)
4. Define all major activities including milestones and document them on a Project Management Tool (IE: Microsoft Project Manager) Update daily, and place updates on-line
5. Have regular progress (weekly/bi-weekly) meetings to discuss the progress of the project
6. Have a clearly defined Change Management Process.
7. Take immediate action when you find a problem
8. Make sure the user community is on-board every step of the way
   • Input into the design of the system
   • Take ownership of their process/procedures
   • Receive proper education
9. Make sure your technology department has the ability to implement/maintain the new system 

Benefits/ Cost Savings

The cost of an ERP system depends on many factors including:

• The size of the company
• Number of users
• Number of modules purchased
• Number and complexity of customizations
• Condition of the company’s existing infrastructure
• Completeness and accuracy of the company’s existing data
• How much historical information will need to be ported to the new system
• Speed of implementation
• Remote stores or factories
• The amount of training and the training approach (train the trainer)
• Integration costs (integration into existing systems that will continue to function after the ERP implementation)
• Parallel systems and bridges to legacy systems when a phased approach is used

Although the overall costs of an ERP system and implementation varies considerably from company to company depending on individual requirements, internal capabilities and discipline in implementation it is possible to give some averages.  A 2007 Aberdeen Group Study attempted to estimate the variation of total costs based on a company’s size (based on 1,680 companies surveyed including 645 companies with annual revenues between US$50 million and US$ 1 billion). 

Conclusion

For any company, implementation an ERP project is a large, complex task. Once out of reach of medium sized brands, manufacturers and retailers, ERP systems are now being implemented in ever increasing numbers. But medium sized companies are not immune to the risks. Companies must do the proper amount of background work, before choosing a vendor.  If you are in a mid-sized company that needs the functionality of an ERP system waiting will not make the task or the cost justification easier.  You need to move forward but move forward intelligently and with proper planning. Above all, utilize people or consulting organizations that have been down the ERP road, and have a proven track record for doing it successfully.   

 
About the Authors

Joseph J. Fink – An experienced senior IT executive with a history of driving business performance by restructuring and optimizing processes and implementing technology solutions with rapid ROI. Experience includes managing multiple global and domestic products in apparel manufacturing, retail, ecommerce and mail-order. Expertise includes ERP, supply chain management, distribution and warehouse management, POS, inventory, sales, transportation, data warehousing, IPO enablement, space and floor planning and team leadership.  Industry positions include Chrome Hearts CIO; Nautica SVP Operations/CIO; Guess?, CIO; Dawon Consumer Products, CIO; General Nutrition, VP MIS.  Currently an independent consultant and a senior executive on-loan for special projects to Walter Wilhelm Associates LLC (WWA).

Walter M. Wilhelm  – Over fifteen years of experience in apparel retail, and technology sales, installation & support. He has owned and operated two of his own retail operations in Utah and has had Senior Sales and key account responsibilities in two major technology companies, Animated Images (Ai) and Freeborders. Walter has very strong expertise in Business Development & Technology Implementation and senior project Management. Has managed and help implement systems for Freeborders and NGC.  Former positions include: Director Sales of Freeborders; Regional Sales Manager of Animated Images; Owner/ Founder of Bike Line SLC; Owner/ Co-Founder of Active Sports Recycling.  Currently a Vice President and Principal in Walter Wilhelm Associates LLC (WWA).

Twelve finalists have been selected for the Secretary of State’s prestigious 2010 Award for Corporate Excellence (ACE). These U.S. companies were chosen from a record number of 78 nominations submitted by American ambassadors around the world. ACE finalists are international business leaders who recognize the vital role that U.S. businesses play abroad as good corporate citizens.

Denimatrix in Guatemala was selected for the textile and apparel company’s environmental stewardship in reducing the environmental impact stemming from its production process; contributing to the development of the local economy; and reaching out to the community to help disadvantaged youth and the homeless.

The Secretary of State has awarded the ACE since 1999 to recognize U.S. businesses for advancing good corporate citizenship, innovation, and democratic principles. The Department of State is committed to working with business to further these best practices worldwide and to recognize efforts to improve lives at home and abroad. The 2010 ACE winners will be announced at the annual ceremony hosted by the Secretary of State later this fall.

Apart from Denimatrix, the other names included in the finalists lists are Alta Ventures in Mexico, Cisco (CSCO) in Israel, Coca-Cola (COKE) in Swaziland, Fiji Water in Fiji, GE (GE) in India, Intel (INTC) in Costa Rica, Mars, Inc. in Ghana, PepsiCo (PEP) in India, Qualcomm (QCOM) in China, Synopsys (SNPS) in Armenia y Tang Energy in China.
 

Representing the apparel and textile industry,  the VESTEX Commission and several companies from the sector conformed the Guatemalan Pavilion at the area Sourcing at Magic  in the international event MAGIC Show held in  Las Vegas, NV, from August 16th to 19th.

The Guatemalan companies exhibiting their products: Duracril; socks production, Grupo Nina; sport  and promotional caps, Liztex and Monte Textil; both producers of a wide variety of knit and woven fabrics; Mackditex; apparel producer of knit garments mostly; and Nylontex, offering innovative seamless garments.

During those four days of exhibition, each of these companies had the opportunity to contact clients with the purpose of exploring business opportunities in Guatemala. In addition, VESTEX has provided different factories with specific information about requirements of customers interested in placing production orders in the country that approached the institutional stand during this show.

MAGIC Show is the largest trade show in its category specialized in fashion, textiles, services, trimmings and apparel companies from different parts of the world as sourcing options in Bangladesh, China, Egypt, El Salvador, India, Vietnam, among others.  It is divided into sections by styles of clothing for men, women and children:  MAGIC, S.L.A.T.E., Street, Premium, WWDMAGIC and Sourcing at MAGIC

For more information please contact Irene Gonzalez (igonzalez@apparel.com.gt)

On behalf of the Guatemala textile and apparel producers, we want to share with you our concern about the recent announcement that the U.S. Government has requested consultations with the Government of Guatemala and may file a CAFTA labor case.   The announcement was a surprise to us, as we are certain it was to you.   We want to reassure you – our customers and our suppliers – that this dispute between our two governments will not disrupt the industry or our CAFTA eligibility for duty-free benefits.   

Since last week we have met with Guatemala government officials who tell us that they are taking the consultations very seriously.

We want to communicate two very important messages to you.   

First, the textile and apparel producers in Guatemala take very seriously our commitment to corporate social responsibility and to maintain the highest levels of compliance in all production facilities.  This CAFTA labor case is not a reflection of bad labor practices in the Guatemala apparel manufacturing sector.  When there have been concerns about practices in the factories, VESTEX works closely with the manufacturer and the U.S. customers to ensure that there is swift action to resolve any problems.  This commitment to compliance remains strong.   The U.S. government criticism is focused on the enforcement procedures and resources devoted by the Government of Guatemala to respond to labor concerns. 

Second, the CAFTA labor case does not jeopardize the CAFTA duty-free benefits for Guatemala production.    Under the terms of CAFTA, a Chapter 16 dispute focuses on labor issues, and even in the worst case that a dispute goes forward, the penalty that would be assessed against Guatemalan Government is a monetary one.  It will not affect the trade.   

While we are confident that there will be a speedy resolution to this dispute between the Governments of the United States and Guatemala, we want you to know that the textile and apparel producers in Guatemala are working to resolve any problems, and that our partnerships and commercial commitments will continue undisturbed.  
 

By Paul Clarke and Taylor Williamson
pclarke@walterwilhelmassoc.com
taylorw@walterwilhelmassoc.com

There are many articles espousing the benefits that technology integration within the supply chain, especially Product Lifecycle Management (PLM) systems, can bring to an Apparel or Footwear company.  Most C level Directors understand the inherent value of this integration, but there are two issues of concern:

1. Possible overruns of the implementation in terms of cost and time
2. The Designers, whom they consider the lifeblood of their company and treat with "kid gloves", are typically resistant to technology

Implementation concerns will follow in a later installment but the second concern, the integration of the designer, is discussed in this paper.

Designers are a breed apart, "right brained" people in an organization exhibiting very creative characteristics. It is the creative characteristics that they bring to the design process that are valued by senior executives. Their designs are considered intellectual property so management is often wary of implementing any technology that might limit their creativity or make them bolt for the door!

From a designer's viewpoint, many are concerned that technology systems may limit their creativity, believing new systems will make them spend much of their day as a "data entry" clerk.  As a matter of fact, during the demonstration of supply chain systems, many vendors purposely avoid the design department – they prefer to demonstrate functionality to technical designers, merchandisers and sourcing personnel, all of whom are normally more receptive to technology innovation.

This is not to say that vendors, especially PLM vendors, have left designers totally on an island.  Many have written plug-ins to Adobe Illustrator.  Illustrator is the most used "off the shelf" graphical design software tool in the Apparel and Footwear verticals.  Designers and technical designers prefer to use the Adobe software for such things as line drawings and measurement sketches because of its superb resolution as a vector based drawing tool.  Creating an Adobe plug-in for a PLM package provides a level of comfort for designers so that the PLM environment is almost invisible, therefore, allowing them to remain in the Adobe application for the majority of their work day and feel creative and not "boxed in".

However, designers creating fabric prints, coordinating print and color variations, creating repeats, knits, weaves, stripes, checks, plaids, etc., and other members of the organization desiring apparel specific drawing tools, face a different challenge. Most PLM vendors, with roots in other industries such as Aerospace or Automotive, do not provide integrated design tools for Apparel or Footwear PLM systems. There are companies that provide proprietary design tools for the Apparel and Footwear verticals for Computer Aided Design (CAD), but they do not offer supply chain features nor do they fully integrate with any particular PLM system.

To avoid having your designer “on an island”, making integration with the flow of product development difficult, it is important to look for a system that integrates the total apparel or footwear development process as seamlessly as possible.   For example, Lectra, a technology vendor working on total supply chain integration, has a unique advantage of having systems that address virtually each link in the supply chain and, therefore, an intrinsic knowledge of the process flow.  Lectra’s Kaledo Suite was built around the hugely successful U4ia platform but specifically addresses the collaborative supply chain needs of the designer.

Capitalizing on design resources, reducing time to market and boosting creative options are critical elements in today’s global fashion industry.  Fashion companies rely on coherent branding, marketing and product design to set them apart in a crowded marketplace and they demand this same flexibility from their off-shore contractors.   Eliminating repetitive tasks that are labor-intensive and tedious allows designers to focus on what they do best: design. 

The marriage of an artistic eye and technical know-how is very valuable.  PLM is a supply chain solution that provides the forum to facilitate this type of collaboration, optimizing all the activities and processes involved in managing, designing, developing, industrializing and manufacturing collections. By aligning individual processes with enterprise wide priorities, supply chain technology like PLM supports companies as they seek to deliver cost-effective, on-trend collections in a timely manner, season after season, resulting in greater productivity and profitability.

About the Authors:

Paul Clarke is a Senior Associate with Walter Wilhelm Associates LLC and a recognized expert in “front-end” technology development and implementation for the apparel/retail industries.  He has more than 25 years of product development experience in these industry sectors having held senior positions in industry leaders such as LECTRA, TUKATECH, Gerber Technology, Justwin Technologies, ENCAD and the Foxboro Company. He has extensive experience implementing technology and with process consulting to help shorten the product development process.  Mr. Clarke, a naturalized American citizen born in Australia, holds a BS in Mathematics and Computer Science from the University of Massachusetts.

Taylor Williamson is serving as an Apprentice in a new Sustainability partnership that Walter Wilhelm Associates formed with Marci Zaroff Sustainable Brands LLC.