Regardless of a company's size or where it sits along the apparel supply chain, there are now advanced information technology systems and Internet tools available to help improve operations and expand business horizons. Here's how Maidenform Inc, Gymboree Corp and Harbor Isle Apparel are leveraging the options.

Increasingly, apparel manufacturers, vertical companies and retailers are turning to information technology (IT) and Internet tools to improve supply chain management operations, add value to products and services, and grow their businesses. Today, regardless of a company's size, there's certainly no dearth of either IT or web service organizations to choose from: it's just a matter of finding the right fit.

This report takes a first-hand look at three different firms that are successfully integrating new technologies to improve performance and expand their operations: Maidenform Inc, Gymboree Corp and Harbor Isle Apparel. From upgrading mainframe systems to building online infrastructures, each of these companies has opted to re-engineer processes and shore up IT infrastructures.

Maidenform Leaves Legacy Behind
Maidenform Inc, a 75-year-old privately held intimate apparel company, experienced a rough ride in the mid-90s. Following a Chapter 11 filing in July 1997, the internationally recognized company emerged from bankruptcy protection last July with new ownership and a focused IT strategy.

In fact, part of the reason for Maidenform's decline was a reliance on poor information systems. This became eminently clear to Chuck Codling, vice president of information services and chief information officer (CIO), who initially came to the company as a consultant when it was in the midst of its troubles. He recognized it was past time for the firm to come out of the IT dark ages.

Codling's advice to modernize was heeded, and the company went live with Essentus' (formerly Richter Systems) Sourcing and Demand Management systems on Jan. 2, 2000. Maidenform is now using the package to process sales orders, allocate inventories to orders, ship, invoice and create a daily sales journal. "The end result," stresses Essentus chairman and CEO Paul Butare, "is streamlined order management and order fulfillment, which maximizes opportunities and eliminates wasted effort."

When Maidenform went live with Essentus at the beginning of the year, it cut the apron strings to its old legacy systems. However, the conversion process actually started in 1999, and all of the company's customers were up on the demand side of the new system prior to the end of the year. Additionally, the software was running parallel with Maidenform's shop floor system in November and December of 1999.

Codling explains that prior to the changeover, the company had an antiquated Cobol-based mainframe with a batch file exchange architecture. He strongly argues that in this environment, 30 seconds after the exchange of a transaction, the system is out of synch. He asserts: "We're now in a client-server environment. The inventory is synchronized on an ongoing basis with transactions. Now we're looking at near real-time data, as opposed to information that is eight to 12 hours old."

As a result, Codling states, "We track our raw materials at actual consumption [rates]. We know exactly what's on a roll when they finish cutting it, and we can report back precisely what's left."

The Sourcing Side
Codling explains that the ERP system is interfaced on the sourcing side with Maidenform's shop floor and warehousing management systems. As an example, he amplifies: "The materials resource planning (MRP) components look at the inventory we have in our facility and determine if we have what is needed to produce [an order]. If we're lacking the materials, purchase orders get issued, and we'll get a notification on the shop floor system when those goods have been shipped and when we can expect them."

When the goods are received, they are scanned into inventory, and that notification triggers and releases orders to start the manufacturing process. The shop floor will then track the orders through work-in-process (WIP) and into the distribution center. Keeping tabs on the materials flow isn't easy in the bra category. As Codling emphasizes: "In some cases, there are foundation garments that have literally 200 different components in them. Shoes are probably the only other apparel-related product that is as complex."

The Demand Side
On the demand side, Maidenform receives orders on the Essentus system via electronic data interchange (EDI) and manually, and fulfills them against allocations that are based on the required ship dates for various customers. "We'll even look into the shop floor to see when something is going to leave WIP and be shipped to our distribution center [DC], so we can anticipate when we can have it in stock to ship," says Codling. "It's a very nice tie-in that our systems communicate with each other and let us look at a finished product. We can also look at the demand side against our fulfillment rate, [and we are now] able to pick aged inventory in the DC."

In fact, the CIO notes that the system has enabled Maidenform to eliminate different raw material codes for identical goods that were going into the company's multiple brands. "We no longer have 600 yards sitting on a shelf dedicated to make foundation garments, while we wait for 600 yards of the same material to come in to use in a bra," Codling relays. "With this transparency, we order and schedule goods to arrive very close to when we're able to use them. That's a marvelous improvement."

While Codling observes that there are a number of data-related issues yet to be resolved, he reports that the company is already seeing payback in terms of reduced time to manufacture and reduced inventories. He adds: "We're looking forward to moving into an environment where we can receive much of our materials via EDI, just as we receive finished goods orders from our customers. It's exciting to see the progress we're making."

Gymboree
The Rebirth of Gymboree
In the year 1998, $457-million Gymboree Corp, a vertical apparel and accessories retailer with more than 600 stores that cater to children from birth to age seven, experienced store overstocking that led to an 82 per cent drop in profits and a slide in stock prices. At that point, Gymboree's management determined that information technology must be an integral part of the strategy for solving its problems and engineering what the company terms Gymboree's "rebirth."

As a part of the restructuring, the company has embarked on two IT efforts. First, Gymboree implemented mathematical modeling technology to strategically plan its markdowns and, second, the company adopted new software tools to make its website more user-friendly and leverage data mining to define product mixes.

The Pricing Piece
Faced with stiff and escalating competition from other specialists like babyGap and The Children's Place, as well as more value-driven consumers, Gymboree - which offers 10 to 12 collections annually, each made up of 400 SKUs - was forced to increase markdowns and promotions to drive sales of its short-cycle fashion merchandise. To address this problem and improve margins, the firm decided to adopt an analytical approach to price reductions and their timing through the use of Technology Strategies Inc's (TSI) Markdown Optimization package.

Gymboree implemented TSI's complex system in the fourth quarter of 1998. The first steps included extracting 18 months of the stores' actual and planned sales, inventory behavior and consumer responses to markdowns. From there, a mathematical model was developed of each item's intrinsic consumer demand and its response to markdowns, promotions, seasonality and other factors.

The program is paying off. As Ed Wong, Gymboree's senior vice president, supply chain and technology, puts it: "The knowledge we've gained has already been responsible for increasing gross profits by as much as 10 per cent in some categories of merchandise. This tool provides incredible value and insight that was unavailable in our previous planning process, which was subjectively based on some very simple retail metrics like turnover and sell through."

Wong expands: "The package is an extremely good fit relative to the business model that we use for the stores. After several weeks of regular price selling, collections are going to be marked down at a predetermined time to make space for the new ones that are en route. As we go through this scheduled markdown process, we need some help to determine when we should take the reductions for the first, second and third markdowns. Also, we need to know the appropriate percentage off."

TSI's algorithms and simulations are built not only on history, but also current information on how the collections are selling, Wong relays. This information provides the intelligence to help determine when and how deep the reductions should be. The markdown and forecasting applications are running on a Sun Solaris/Oracle database platform. TSI's proprietary parallelization, curve-fitting and optimization software produces the markdown recommendations and forecasts. The primary connection into the retailer's systems is a secure FTP server.

New Web Tools
In a second move, Gymboree relaunched its Web site at the beginning of May. And while it's too early to talk about results, the company believes the new format will greatly enhance its online offerings and sales. (It was determined that the original site, built in 1997, was difficult for consumers to use.)

Gymboree

Susan Neal, vice president of business development, says that because Gymboree is fashion-oriented and moves through new collections about every six weeks, it needed to find a new customer-service oriented Internet software solution. In short, it wanted to manage the website like its stores in terms of merchandising, promotions and markdowns.

Blue Martini Software, with its Customer Interaction System, filled the bill. Even at this stage, Neal notes that she's seeing more traffic, even though the company made the decision not to publicize the site in order to do some further tweaking.

In addition to the easy functionality that Blue Martini's software offers consumers, such as the ability to put outfits together on one screen, the program has data mining capabilities. Neal stresses: "This isn't simply about the Internet, this is about raising revenue across all customer touch points…[we can] gather more purchasing habit data about customers and collect customer preferences. The system also enables the site to offer personalized services, such as the ability to suggest matching or complementary items. The goal is to provide service at least as good as customers get in our brick and mortar stores," she adds.

Additionally, there will be synergy between the website's and the brick and mortar units' markdown algorithms to the extent that pricing coincides. Neal says: "We want it to be seamless. If a customer walks into a store and sees a shirt that's reduced and then goes online, we want her to see the same shirt at the same price."

Eventually, there will greater connectivity between the virtual and the real. For example, Neal explains that Gymboree's e-business segment will be able to track what items are being coordinated online, and then share that information with the salespeople in the stores. Also, Neal reports that there have been conversations with Blue Martini about piloting an in-store wireless device that would allow Gymboree to cross sell between its stores and the website. For example, a customer could use a scanning device within a store to create a gift registry, and then that registry could be accessed online. Additionally, stores would be able to place an order online for a customer if a particular product is out of stock.

Harbor Isle Expands Reach On Web
You don't have to be a $100-million company to take advantage of the Internet. Case in point: New York, NY-based Harbor Isle Apparel, which just signed on with business-to-business (B2B) RetailExchange.com to move excess inventory over the Web.

That's a new experience for 25-year apparel industry warrior Bob Goldhaft, president of the $10-million men's loungewear, swimwear, and woven and knit shirt manufacturer. The firm's goods, which are contracted mostly in Asia, are distributed primarily through specialty stores, mid-tier retailers and the discount market, including off-price operators. Goldhaft also is the sales agent for Jem Sportswear and Fun Boxers. (The bulk of Jem's business is in licensed T-shirt products, including Disney logos.)

Goldhaft made the decision to sign on with the RetailExchange.com - "among plenty of sites out there" - because through experience he knows the founders of the site, who created it last December. RetailExchange.com is a spin-off of 100-year-old Gordon Bros, an industry leader in retail asset dispositions, appraisals and financing. Its officers include Kenneth S. Frieze, founder and CEO, who was a senior executive at Gordon Bros, and Stephen A. Goldberger, COO, a 30-year retail veteran who was the former CEO and president of Hills Department Stores.

The Retail Roster
Goldhaft is encouraged by what he has seen so far, saying: "I think this site has the exposure that a lot of others do not. The listings of suppliers and the buyers are a little more extensive than some of the other B2Bs that I've checked out, which is what really counts. And more listings are coming on every day." Currently, RetailExchange.com reports that "several hundred" stores are participating.

At this point, Goldhaft is listing big and small lots that are ready to ship, and he has had some nibbles to the posted merchandise. He calls the site almost foolproof, in that it has just about everything that you would need to know as a buyer or a seller. "Basically, you go through the categories, and it can be very specific: activewear, bottoms, tops, etc. And that can lead you to anything that's posted. It also has a catchall for men's oddball items that may not fit a category," Goldhaft explains.

On RetailExchange.com, potential buyers will find Goldhaft's discounted wholesale prices - which are negotiable - along with the descriptive information that an interested party would need. It's also easy for a seller to insert new goods, pictures and descriptions on the site, he says.

Having said that, Goldhaft notes that although he would like to include fresh merchandise as well as stock lots, the site developers aren't prepared to handle that aspect yet. Additionally, he emphasizes that selling either excess or new products online will not replace the traditional hands-on selling. "Even though my Net pictures look great," he says, "people still ask me for samples and swatches. It's still a touch-and-feel business. The Net is a door opener."

Plus, the veteran reminds: "The merchandise I'm posting is not specifically designated for RetailExchange. I can offer it to other people. However, I think the Web is going to attract people who maybe haven't heard of us…there are store chains out there that don't really get the exposure to overstocks or fresh product. I'm looking for repeat customers. I'm not looking just to hang something out there and get rid of it. There aren't that many new stores to go around anymore. It's just a matter of more exposure."

As for the future, Goldhaft offers: "I'm putting a lot of time and energy into this, and I don't want to do that if there isn't any payback. But if the Net is the way to broaden your horizons, count me in."

Jules Abend is a Bobbin contributing editor and editor in chief of Clarion Inc, a Howell, NJ-based international news gathering organization.