By  on September 19, 1994

NEW YORK -- While some apparel categories are faring well, the hurdles for manufacturers keep growing, and accountants specializing in the soft goods business say a heightened stress on inventory and expense management will be a must for survival.

"Inventory should only be purchased when you know where it is going to go," said Nate Lubow of Mahoney Cohen & Co. He added that because the difficulty lies in determining what inventory needs will be, manufacturers must avoid purchasing on speculation to insure fewer markdowns.

Stephen I. Soble, of Stephen I. Soble & Co., said that several businesses have become increasingly aware of this problem by instituting tighter control. Overall, he said, manufacturers are more conscious of maintaining a healthy relationship between gross profit and overhead costs.

In order to turn inventory as quick as possible, inventory needs must be monitored over time, the accountants said. Soble suggested that manufacturers work out arrangements with suppliers to bring merchandise in as it is needed.

Barry Leif of Rashba & Pokart stressed the need for more cooperation between manufacturers and retailers to help gain the advantages of fast turnover and deliveries.

"Retailers are putting more pressure on their manufacturers while at the same time cutting their markups.

"If an item becomes hot at retail, manufacturers cannot always get enough fabric to capitalize on it," Leif said. His solution lies in better communication between retailers and manufacturers, "who need to cooperate to equalize the flow of production." To keep expenses in line, Lubow advised that companies find ways to reduce costs in significant areas, such as monitoring health-care costs, shopping for better corporate interest rates and cutting sample costs. Sample costs are a particularly difficult challenge for designer firms, he noted.

The accountants agreed that manufacturers need to evaluate ways to minimize personnel by creating better systems for procedures and implementing computers.

To reach the desirable goal of increasing volume with rising overhead, Stanley Sachs, Weinick Sanders & Co., advised that manufacturers make use of outside services, whether they're factoring companies or a growing array of production activities.

"At times like these, apparel manufacturers can draw upon outside professionals in defining management objectives and suggest ways to reduce costs and create more efficiencies," Soble said. To further develop volume, Soble said manufacturers should look to export opportunities.

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