Fending off another SARS crisis
By just-style.com | 26 May 2003
Apparel and footwear manufacturers and retailers should take heed of the lessons embedded in the current SARS crisis, which has devastated entire industries in Asia and left a mark on Wall Street as well. Suzette Hill reports.
Months in the making and round-the-clock in media coverage, the Iraq War caused little more than a ripple in the global economy.
So Paula Rosenblum, senior retail analyst at AMR Research, for one, deems it no small irony that SARS (Sudden Acute Respiratory Syndrome) directly affected only a fraction of the total number of coalition forces in the Iraq War and claimed a similar number of lives - yet it devastated entire industries in Asia and left a mark on Wall Street as well.
Rosenblum urges apparel and footwear manufacturers and retailers alike to take heed of the lessons embedded in current events.
"The reality is, it's the nature of life - particularly in today's environment - that we just don't know what will happen," she observes. "The Iraq War was so well-predicted and businesses were able to plan for it that it ended up having little, if any, effect. SARS and the Long Beach dock lock-out, on the other hand, were major disruptions that no one could have foreseen."
In lieu of second sight, Rosenblum and others urge apparel manufacturers and retailers to gain visibility - into sourcing operations, product development, pre-production, far-flung factory operations and quality output.
"This can only be achieved by having a global, Internet-based visibility system that enables all parties to have a single view of information that is real-time in nature and that can allow efficient analysis and collaboration," comments Fred Isenberg, VP of sales for New Generation Computing.
Real-time is the right time
"Adapting to Change - Without Losing Your Shirt" was one of the themes at the recent Material World Technology Solutions presentation.
"As [apparel manufacturers] face increased competition, shortened product lifecycles, unpredictable demand patterns, [they] must move beyond seeking organisational efficiencies and seek to achieve strategic flexibility," says Navi Radjou, a senior analyst at Forrester Research
As apparel manufacturers disaggregate and morph into virtual enterprises that comprise partnerships with suppliers at all levels, agility and flexibility become even more critical.
In Radjou's view (one shared by many consultants), linear supply chains will have to transform into adaptive supply networks in which trading partners leverage real-time technologies to sense and respond in a coordinated fashion to rapidly shifting consumer demand.
"Enterprises will begin to blend internal processes with those of their trading partners, revealing the inefficiencies of enterprise boundaries," agreed Karen Peterson, a vice president and research director at Gartner Research, this past February in "Supply Chain Management: Evolving Beyond Linear Transactions."
"Each organisation will focus more on understanding and fulfilling the requirements of the end customer," she wrote. "Linear, latent interactions will give way to interactions that occur at the same time, in parallel."
Polo's adaptive supply network
At the Material World Conference this past March, Polo Ralph Lauren demonstrated that the adaptive supply network works just as well in the real world as it does on paper.
In a sneak peak of its collaborative relationship with apparel manufacturer Luen Thai and fabric mill Ruentex, both in Asia, Polo Ralph Lauren asserted that repositioning its vendor as supply partners resulted in a fundamental redesign of business processes. It also improved the functional relationships that enable optimised businesses processes that meet the end customer's needs.
According to Polo Ralph Lauren, the three-way relationship has allowed it to evolve from parallel organisations in the United States and Asia (each with overlapping responsibilities and redundancies) to a single team with dual geographic representation. The new approach aligns functional roles with strategic vision, said Polo Ralph Lauren, and increases FTE productivity.
In exploring the partnership potential, Luen Thai realised the future opportunities in expanding its vision and its operation beyond apparel manufacturing to encompass production and supply chain technologies that enabled real-time collaboration. Ruentex took a similar step in implementing SAP's mill planning and control system.
Both suppliers cited an immediate return on investment in terms of cost reductions and improved customer service levels. In addition to gains with Polo Ralph Lauren, they credited their supply chain investments with allowing them to leverage previous ERP investments with other customers.
And while Rosenblum says many retailers and apparel manufacturers lag Polo Ralph Lauren's advances, collaborative projects are gaining priority in most organisations.
"Supply chain applications already were hot," she comments, adding that retailers and manufacturers alike are now actively seeking better visibility of the staging and status of raw materials.
Gartner Group projects that manufacturers will spend $860 million over the next five years to more closely knit supply networks.
According to Isenberg, NGC is fielding more inquiries on Product Lifecycle Management (PLM) and Supplier Relationship Management (SRM) solutions. "[Those components] can have the systemic infrastructure to support the information database that can enable one source of information that can be shared between supply chain partners and provide the collaborative environment that enables quick reaction and problem identification and resolution through management by exception," he says.
Kellwood, Ralph Lauren Childrenswear and Wilson's Leather all have reported excellent results from NGC's eSPS internet sourcing and production system
Manufacturers aren't the only ones seeking better visibility and greater agility.
Rosenblum credits Pacific Sunwear's recent impressive results (a 142 per cent increase in net income for first quarter 2003) to enhanced supply chain visibility. With private label comprising almost 40 per cent of its retail mix, PacSun moved quickly this past spring to implement SPS Commerce's new Private label Order Management (PLOM) system. The PLOM system allows PacSun to connect with all of its suppliers, whether via EDI, a web browser, or even fax.
"PacSun might have as many as 500 different products in motion at any given time," observes Jim Frome, EVP and chief strategy officer of SPS Commerce. "If a supplier at any step of production misses a date, it triggers a chain reaction that potentially could affect all of the others," he says. And PacSun's core customers - teens - aren't exactly known for their patience.
Make no mistake: SPS' PLOM doesn't propose to fix the problem itself, but it does promise retailers like PacSun the visibility to make better decisions earlier.
As business needs evolve, so too will the supply network solutions extend from the current point-to-point linear integration into multi-enterprise solutions that will redefine SCM process flexibility and make today's abilities look like baby steps. But, then, there's truth in the old saying that you have to walk before you can run.
By Suzette Hill.
View next/previous articles
27 May 2003 -
27 May 2003 -
Currently reading -
Fending off another SARS crisis
23 May 2003 -
23 May 2003 -