Liz Claiborne and TSI discuss the changingindustry landscape and how to survive and thrive within it. Highlights from the BobbinGroup's annual "Partners in Sourcing" Conference.

Whether sourcing production or marketingproduct, apparel companies are now faced with a rapidly changing industry landscape, onethat is being shaped by the growth of communications technologies and driven by emergingconsumer markets that are more demanding than ever before when it comes to quality,service and value. Successfully negotiating the new terrain requires forward-lookingglobal strategies that address both expanding distribution channels and contracting supplychain cycles.

For leading companies in the sewn productssupply chain, these strategies run the gamut from divesting company-owned manufacturingfacilities in favor of building comprehensive global sourcing networks to improving supplychain communication to leveraging inventory positions to boost return on investment.Indeed, these issues came to the forefront at the Bobbin Group's recent"Partners in Sourcing" conference, which took place in mid-May in Mexico City,Mexico. During the two-day event, more than 75 executives from Mexican and U.S. sewnproducts firms were privy to a behind-the-scenes look at the business philosophies ofindustry leaders, including Liz Claiborne Inc. and Tropical Sportswear Int'l. Inc.(TSI). Some of the highlights follow.

Liz Pursues 'StrategicSourcing'

The days of opportunisticcountry-of-the-month sourcing are long gone. At least they are for Liz Claiborne Inc.,reported Robert Zane, senior vice president of manufacturing and sourcing. In commentingon the evolution of production trends, he said: "If you contemplate the changes thathave taken place over the past 20 years, I'm sure you would conclude that thechallenges of sourcing apparel have changed significantly, and that more rather than lesschange still awaits us.

"Think back to the 1970s, a time whenmost brands were owned by traditional manufacturers that had their own factories in theUnited States," Zane reminisced. "When additional capacity was required, thosemanufacturers turned to contractors, also in the United States, which were supplied thefabrics, markers, trims, etc.

"Now I would ask you to fast-forwardto 1999, to a time when fewer and fewer brands own or even control their ownfacilities," Zane continued. "It's a time when more and more product ismade outside the United States by vendors that are completely self-sufficient, offeringtheir wares on a full package basis."

Liz Claiborne has experienced thistransition first-hand. The company's 22-year history has seen a dramatic shift ofproduction control from in-house staff to contractors. Initially, the mega-brand boughtall of its fabrics and trims; made all the patterns and markers; and sent everything tothe contractors, accompanied by technicians who would work closely with and even supervisethe factory personnel. Shortly thereafter, the company's quality assurance peoplewould arrive on the scene to inspect in-process work and ultimately the end product. Thegoods then would be shipped to the United States, where they would be inspected again.

"If we heard about a new country withample quota, or better yet no quota, we would rush there and seek to establishourselves," Zane added. "We wound up with too many facilities in too manylocations, and we spent far too much time and money doing things that should have beendone by the factories."

Today, this mode of operation has beenreplaced by "strategic sourcing," a process that encourages buyers and sellersto form longer-term relationships based upon mutual dependencies. As Zane explained:"Sourcing in 1999 goes well beyond 'What is your price?' and 'Do youhave quota?' It is more along the lines of 'How long can you service us on atotal basis over the next five or 10 years.'"

Liz Claiborne, which to date has importedmore than 1 billion garments into the United States, began to embrace thispartnership-oriented sourcing strategy four years ago, when the firm embarked upon aprogram to reexamine and revitalize its way of doing business. As a result, thefashion-oriented company - which produces more than 130 million units of apparel and 30million accessory items per year under 12 divisions - has adopted a strategy consisting ofseven basic principles that support its corporate mission: "Great value, on time,every time."

Following are Zane's perspectives onthese principles:

1. Configuration: "Wefrequently examine the number of countries in which we produce, seeking to balance suchfactors as raw material availability, quota constraints, product capability, logistics andfuture developments. From this emerges a sourcing profile with guidelines as to how weassign work to various locations. In our case we are comfortable with about 32 countries,down from 44 countries just a few years ago. And we have developed an officeinfrastructure to support this configuration."

2. Consolidation: "Wehave consolidated our factory roster, bringing it from well over 500 to about 260, evenwhile increasing total production by over 50 percent. We challenge our vendor partners tobe more responsive to our total needs, and we reward them with more and more work on anongoing basis."

3. Certification: "Wework very closely with our vendors, encouraging them to seek continuous improvement of alltheir capabilities. We buy packages instead of processes. While we designate thecomponents, we ask our makers to purchase them and to sell us the complete packageaccording to our specifications. We insist upon state-of-the-art control procedures,including SPC [statistical process control], and we require technical competence and totalinformation systems compatibility. We survey and re-survey frequently, always striving forgreater managerial sophistication."

4. Concern: "Ourposition with respect to human rights: Liz Claiborne is committed to improving workingconditions around the world by being a part of the long-term solutions. We have developedcodes of conduct, we have implemented monitoring procedures and we have stressed theimportance of this issue to our vendors, and in many cases to the governments of thecountries in which we work. Moreover, we have told the world our position."

5. Collaboration: "Wehave full collaborative processes and open dialogues and partnerships with all of theconstituents of our enterprise. It is an important and ongoing part of our culture. Ourassociates, our raw materials suppliers, our trip purveyors and our contractors areencouraged to work closely with one another. By sharing experiences, we all benefit."

6. Coalitions: "Whileour divisions operate autonomously and they are free to make their own sourcingarrangements, they must do so within the framework of our corporate values and principles.We try to achieve balance and harmony via coalition groups comprised of divisional andcorporate associates. The whole is not equal to but greater than the sum of theparts."

7. Cost Control:"Cost is obviously an important part of this equation. The structure of our sourcingbase has as great an impact on the products' cost, as does the fabric in which[products are] made. If mismanaged, each of the areas can cause the price of a garment torise. We believe that fair prices result naturally when all the other factors are inorder. When we pay a fair price, so does the consumer. That is what value is all about,giving the customer the very best product at the very best price.

"Is all this working? It is forus," reported Zane. "We are more focused and responsive than we have ever been.We are delivering better product at better costs more consistently. Sourcing is anevolutionary process. If you need proof, just look at the configuration many manufacturersused a few years ago and compare it to what's happening today."

TSI: Value First

"We can't expect to do things thesame way and expect different results," stated Elliott Lightman, executive vicepresident of sales, marketing and merchandising for Tropical Sportswear Int'l. Inc.(TSI). For the $400-million producer of casual bottoms, this is especially true when itcomes to servicing the customer.

"There are some very significantparadigm shifts occurring right now that are really affecting our business and what'sgoing on," Lightman explained. "The first of these is the definition of value.Value used to be 'What is the price of the garment and what is the style and color ofthat garment?' Today, the No. 1 value issue in the business is 'Is itavailable?' "

TSI is now placing an increasing focus onhow product distribution is going to be altered by this trend, and the firm has realignedits priorities to create what it believes will be an important strategic advantage goingforward.

"The key definition of value isextremely important," Lightman emphasized, "so much so that we have placedavailability well over the concept of product pricing. Availability will create moreproduct, more profit and a higher return on investment."

Indeed, data that TSI has collected onvarious customers has shown that the most important issue for most end consumers iswhether a retailer is in stock on an advertised item. For example, in a recent meetingwith one of its large customers, TSI learned that about 60 percent of all people goinginto the retailer's stores did not find what they were seeking in the store."Imagine the increase they would have if all the goods were in stock," Lightmanpointed out.

As a result of these findings, TSI has madeit a top objective to help retailers understand this type of missed opportunity and todevelop more focused assortments that appeal to shifting consumer demand. The company alsois leveraging its Western Hemisphere sourcing infrastructure - with productioncapabilities in 32 Mexican plants and 36 plants in the Dominican Republic - as a strategicadvantage over the Far East and other areas of the world that have long lead times andlimited, if any, replenishment capabilities.

"On an import item, retailers may belooking at paying $10.62 for a short or pant," Lightman noted. "We can actuallyshow them that they can buy that product at $2 more and actually make more money. They cando it because they have a higher degree of in stock, less lost sales and a significantlyincreased service level. It's all about turn. …With a very slight increase inturn, say 1.2 times, the same dollar investment in inventory can result in a 36 percentincrease in sales."

For TSI, helping its retail customersincrease turns starts at the back end of the manufacturing process. For example, thecompany never keeps more than three days of piece goods inventory, yet cuts more than600,000 units per week. Moreover, overall turn time never exceeds 32 days.

Consumers' growing desire for instantgratification has been a main driver behind TSI's efforts to improve productavailability. "Today there is no store of choice. Consumers want value, and they willshop wherever it takes to get that value. There is absolutely no store loyalty,"Lightman explained.

And because value equates to availabilityin TSI's book, the company has taken an accelerated approach to line development.Instead of releasing lines in specified groups, the company now offers individual newproducts as soon as they are ready.

This approach will gain momentum parallelto the current growth in Internet sales activity, which is signaling a shift indistribution practices, Lightman pointed out. Consumers now expect immediate response anda continuous stream of product in the marketplace, regardless of geographic location.Moreover, global commerce is requiring companies to deal with real-time systems inmultiple languages around the world, he noted, which is impacting the industry'scommunication systems and opening up many avenues for market expansion.

"The rest of the world outside theUnited States is growing in leaps and bounds - far faster than the United States,"Lightman added. "In India, for example, there are so many people that not everyonecan have a nice house. However, almost everybody [in the middle class] has an Internetconnection, PC and cell phone. And there are 300 million people designated in[India's] middle class. Now that's an incredible opportunity. That's thetype of [growth] that we're trying to recognize as a company for the future."

Lisa C. Rabon is editor in chief ofBobbin.