1、 Apparel Manufacturing Industry BriefSeptember 2002Any potential external use of customer information, by name, contained in this document must first be reviewed withthe IBM account representative listed in the Country (AP, EMEA, LA, US) Customer Reference database record. It isthe responsibility of
2、 the IBM person or any other organization planning to use this reference to make sure that this isdone. The IBM account representative will, as appropriate, contact the customer for review. You should not contactthe customer directly. 2002 IBM Corporation Apparel Industry BriefExecutive SummaryOverv
3、iewThe Apparel Industry value chain, broadly defined, includes manufacturers, retailers and secondarychannels. Behind the well-known names are a large number of production facilities making up the ApparelManufacturing sub-sector. The Apparel Manufacturing sub-sector (NAICS 315) is comprised of estab
4、lishments that either cut and sewgarments using purchased fabric, or knit fabric and then cut and sew the fabric into garments. The diverserange of establishments may perform one or a number of activities and includes:w manufacturers of full lines of ready-to-wear apparelw apparel contractors that p
5、erform cutting or sewing operations on materials owned by othersw jobbers performing entrepreneurial functions involved in apparel manufacture (cut only, forexample)w tailors, manufacturing custom garments for individuals 2002 IBM Corporation Apparel Industry Brief Manage production Build brands Sel
6、l products toretailers as national orprivate labels Determine product mixand design Develop marketing andmerchandising strategies Sell products toconsumersManufacturersDescriptionTypes andExamplesApparel Industry Value Chain Branded: Ralph Lauren Calvin Klein Tommy Hilfiger Benetton Armani Private L
7、abel: Retrospettiva Traditional:MacysKarstadtSaks Fifth Avenue Vertically Integrated:Gap, Inc.ZaraAnn TaylorAbercrombie and Fitch Manufacturer/RetailerOutlet Stores Off-Price Retailers: TJX Ross Stores Liquidators: Gordon Brothers Schottensteins Asset Based Lenders Ozer Group Sell distressed, out of
8、season, excess, andother types ofmerchandise that cannotbe sold at full priceRetailers Secondary RetailChannelsLeading branded manufacturers make products under multiple brand names. They typically distributeproduct through department and outlet stores. Many actual manufacturers are very small, havi
9、ng 50-150 employees in what is a very labor intensivebusiness. The target market consists of those larger manufacturers who often subcontract heavily to smalljob shops. The examples of leading brand manufacturers are provided as a part of the overall understandingof the industry.Industry TrendsDisco
10、unt ; L; M; L.Traditional manufacturers (e.g., Benetton, Levis, Tommy Hilfiger, Nautica)Owned Some ownership OutsourcedTraditional retailers (e.g., Federated, Nordstrom, Marks Figures exclude sales tax.Source: Retail Forward, Apparel Retailing in Europe, Dec 01Total Sales (US$ billion)% of Total Sal
11、es form Foreign OperationsN/AN/AN/AGlobalization Between Europe and Asia The availability of reasonably priced retaillocations in Europe and Asia has becomeextremely limited Facing market saturation, leading specialtyapparel retailers are expanding outside oftheir home regions: Mango (Spain) plans t
12、o open stores in Chinaand India in 2002, and stores in Romania,Lithuania, Ukraine, Morocco, Argentina, andSingapore in a few years Etam (France) is expanding into Japan, withthe first store opened in 2000 and 50additional stores planned by 2005 Zara (Spain) plans to open additional stores inMorocco
13、Uniqlo (Japan) plans to continue expandinginto Europe Giordano/Bluestar Exchange (Hong Kong)plans to continue expanding into EuropeBenettonHennes 10-15 storesplanned for 200285 total U.S. stores planned by 2004Stated that the U.S. market could support300 storesExpansion postponed due to a Europeanma
14、rket focus10-20 stores opened during 2001CompanyHomeCountry2000 U.S. Sales ($M)Number of U.S. Stores Expansion PlansCompanies such as H Asia Week: The Business of Style: Caught in the Middle, 12Oct 01, WWD: Sourcing Snaps Back, 12 Feb 02 U.S. specialty apparel retailers have beensteadily increasing
15、their use of foreignproducers in order to decrease costs Nearly 90% of the fashion purchased in the U.S. isimported More than half of the apparel imports come from Asia The trend toward global sourcing is likely tocontinue, while three major factors will impactlocation decisions: Turmoil in the Midd
16、le East, specifically in Israel andPakistan, is likely to prompt retailers to diversifysourcing locations The combination of NAFTA and a favorableexchange rate may prompt retailers to shift sourcingto the Caribbean, Mexico, and Canada However, retailers may be reluctant to move intothese countries d
17、ue to the fact that full-servicegarment business models are not yet available inthose areas Chinas entry into the WTO in 2005 is likely to causeretailers to shift a greater portion of theirmanufacturing to ChinaGlobal Sourcing: United StatesRole of Agents Agents, the middlemen between the factories
18、and the retailers, haveexperienced relatively high levels of success as global sourcing hasincreased Hong Kong-based Li Womens Wear Daily, June 19, 2000. 2. Supply Planning (“Plan dapprovisionnement“) introduces simulation tools to help plan the supply andreplenishment of the finished goods3. Discou
19、nt Management (“Gestion des en-cours de saison“) introduces a decision support solution tomanage the discounts during the merchandising season based on forecasts and actual sales.These activities on the part of a retailer place demands on the apparel suppliers to participate in some wayin the supply
20、 chain activities. Proactive participation can mean more control over the push/pull relationship.Another example is Intersport located in Longjumeau, France. Annual Revenue is between $501-999M andemployees are between 1000 - 4999. Customer Background: Intersport is a French sporting goods retailer.
21、 Boosted by the huge-media impact ofthe football World Cup in 1998, the leading sports brands have continued to expand worldwide. The sportsmarket in France grew by seven percent in 1998. Adidas, Nike and Reebok dominate the sporting goodsmarket in France.Business Need: Intersport was communicating
22、confidential information with its partners through insecurefaxes. Intersport needed a solution to exchange secure information online with its major French/Europeansuppliers and resellers. For efficiency and responsiveness, the company wanted to link this information withits enterprise resource plann
23、ing (ERP) applications.Solution: Starting in March, 2001, IBM Global Services (IGS) provided Electronic Data Interchange (EDI)Services, enabling Intersport to communicate securely with its business partners. IBM EDI Services consistof mailbox capabilities with Information Exchange and translation ca
24、pabilities with EDI/400 software. EDIServices can also expedite legacy software, FTP and asynchronous access.Intersport has a production server with EDI/400 that receives communications from trading partners (suppliers) via a Value Added Network (VAN) then uses edifact syntax to directly interface w
25、ith the ERPapplications. To send communications, EDI extracts data from the ERP applications for conversion toEdifact, which is then sent to the trading partner via the VAN. TIE France, an IBM Business Partner,provided the initial product training and will continue to offer support and training for
26、the life of the productthough its Montpelier center. Benefits of the Solution: Using EDI Services, Intersport has extended its business with other internationalsuppliers. EDI Services have helped Intersport maximize business efficiency with reduced processing timesand lower costs. The solution enabl
27、es the exchange of virtually any type of electronic information andfacilitates data exchange via the Internet or VAN. EDI helps prevent unauthorized data access with built-insecurity features.Again, retailers are in a position to favor doing business with apparel and footwear suppliers that can link
28、electronically with their purchasing communications. 2002 IBM Corporation Apparel Industry Brief4.0 SuppliersSuppliers to Apparel Manufacturers are predominantly textile mills. They produce fabric, both natural andsynthetic, and yarns for those apparel manufacturers that make knits and then cut and
29、sew. The industry isexperiencing significant shifts due to the same regulatory changes that are affecting apparel manufacturers.Additionally, dynamic economies and the collapse of currencies in Asia compound the shifts. While specificto the U.S. Market, the following report gives a flavor for the tu
30、rmoil created worldwide and the complexity ofderegulating an industry that has grown up around regulation.U.S. & Asian Textile Manufacturers The American Textile Manufacturers Institute (ATMI) Monday released a comprehensive, 25 page, report inAugust, 2001, entitled “CRISIS IN U.S. TEXTILES The Impa
31、ct of the Asian Currency Devaluations and theU.S. Government Actions Urgently Needed to Rebalance the Competitive Situation.” This report describes in detail the crisis situation U.S. textile companies are now facing as a result of Asiancurrency devaluations and current U.S. strong dollar policies.
32、It points out that over the last 12 months, thecrisis has intensified as Asian currencies have continued to fall, and more than 100 textile plants in theUnited States have been closed and 60,000 textile workers more than 10 percent of the US industry workforce have lost their jobs. The industry is n
33、ow suffering its worst downturn in 50 years.The report notes that, already faced with the challenges of increased imports, lower tariffs and the phase outof textile and apparel quotas, the U.S. textile industry has spent billions of dollars annually on new plantsand equipment, set new productivity r
34、ecords, developed innovative new products and dramatically expandedits export base all in an effort to remain competitive.The report states, “In 1997-98, the currencies of almost all the major textile exporting countries in Asiacollapsed, causing a shock wave of artificially low-priced textile and a
35、pparel products to hit the UnitedStates. Textile imports from Asia, which had shown relatively little growth over the past 10 years, jumped 80percent over the next four years as Asian currencies dropped by an average of 40 percent. As a result,prices for U.S. Textile products have plummeted, causing
36、 U.S. textile profits to evaporate and, last year,turn sharply negative.”ATMI noted in a release that the U.S. textile industry is one of the largest manufacturing industries in thecountry, with nearly one half million workers, an annual payroll of $15 billion and annual shipments of closeto $80 bil
37、lion. The overall textile complex, including cotton growers, fiber producers and machinery makers,employs more than 1 million U.S. people.According to the report, “The crisis facing the industry today has reached a point that the U.S. Governmentmust move quickly to readjust the competitive situation
38、 or risk the loss of one of the largest manufacturingsectors in the country.“Government actions should include emergency actions to curb import surges, a crackdown on Asiansmuggling along the U.S.-Mexico border and Chinese transshipments through Asia, opening closed exportmarkets in Asia, a commitme
39、nt not to reduce textile and apparel tariffs in the next WTO trade round, loanguarantees and expanding tax loss carry-back provisions to 10 years, among others.” 5India - Technology Use in Textile ManufacturingVardhman Spinning and General Mills Ltd. is located in Ludhiana and Baddi, India. They pro
40、vide a goodexample of how technology is being implemented by some of the larger suppliers to Apparel Manufacturers. 2002 IBM Corporation Apparel Industry Brief5 Textile News by Mullen Publications, Inc., Charlotte, N.C., USA, ATMI Report Points Fingers at Far East, August 27, 2001Customer Background
41、: Vardhman Spinning and General Mills Ltd. is an integrated textile company withbusiness interests spanning cotton spinning, weaving, dyeing and manufacturing of textiles. It also produceshand knitted yarn and maintains a small presence in apparel. Revenues are US$320 million and thecompany employs
42、20,000.Business Need: Vardhman had grown from a single spinning unit into a multiproduct and multilocationintegrated textile enterprise. The company is led by a first generation entrepreneur who has built up theenterprise using personal intervention as a key differentiator. As the business grows, it
43、 is becoming difficultfor any one person to have complete control over it, and the requirement has appeared for an integratedsolution encompassing consulting to implementation, with the goal of setting up a single view of theenterprise.Liberalization of the world economy is leading to intense compet
44、ition within the textiles sector. India ispoised to make a significant contribution to this sector, provided it can meet the service and cost levels ofoverseas buyers. With the phasing out of the Multi Fibre Agreement, in particular, the quotas which protectIndian exports from Chinese exports will n
45、o longer exist. Vardhman deals largely with export oriented customers who have increasingly been demanding superior customer service. Persistent problems encountered are: - Inability of Vardhman to provide accurate status of any single order- Delays in production of samples- Rejections in samples- D
46、uplication of efforts and uncoordinated planning, since one factory did not know what the other wasproducing or capable of producing- Loss of orders, particularly from the Tee shirt zone in Tirupur, due to delays associated with orderexecution time.Solution: The complete solution encompassed busines
47、s consulting including process design and theimplementation of two ERP packages - BPCS (by SSA) for Financials and TIM (by Datatex) for the TextileManufacturing segment. The BIS Team was involved in consulting prior to implementation. IBM PEBT - Package Enabled BusinessTransformation Consulting meth
48、odology was used. The subsequent implementation included TIM andBPCS implemented on an IBM AS/400 machine.Benefits of the Solution: The business consulting element of the complete project helped Vardhman toidentify those pain areas which could be coordinated with the help of solutions like an ERP. T
49、he companywas able to configure the ERP to meet requirements of the business. Some significant benefits ofimplementation of the ERP would include immediate access by sales persons to the status of any customerorder.Also, during the consulting phase, it was felt that the client had a major pain area in their sampling process.The team redesigned this process keeping in view workflow capabilities of Lotus Notes. Th
