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The Supply Chain,” a phrase frequently used in the apparel business, is a misnomer, said Jack D. Horst, a principal at Kurt Salmon Associates. “What’s missing are the words ‘demand’ and ‘consumer.’”
Horst said the industry has spent years making incremental changes to the wrong model. To survive in today’s challenging environment, the supply chain has to be focused on consumer demand, fueled by information and fed by a flexible infrastructure.
As an example of a store that has been able to offer a new consumer-connected strategy, Horst outlined the steps Ann Taylor took to turn its business around. “Five years ago, Ann Taylor was a one-trick pony. They had 300 stores and one format, and one distribution center and no Loft. “A new management team led by chairman and ceo Pat Spainhour, defined and began executing a bold strategy for growth that has the company on a path to double in size by 2005.”
According to Horst, Ann Taylor has seen dramatic results from this first five-year plan that included such innovations as introduction and rapid expansion of the Ann Taylor Loft format; investment in a footwear and accessory line that is more focused on the target consumer, and extension of their reach through AnnTaylor.com.
He explained that from product development to sourcing to distribution to store operations, each segment of the supply chain was retooled. “The leaner design, sourcing and logistics supply chain cuts time-to-market, leading to a fresher, more current offering on the shelves. Reduced logistics throughout times and better replenishment execution keep the shelves better stocked, dramatically improving store service levels,” he said.
The result from better logistics, planning, sourcing and production led to a 3 percent improvement in gross margin on a sales base that has doubled in five years to more than $1.2 billion.