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VICS: Streamlining the Supply Chain

NEW YORK — Supply-chain issues can’t always get resolved over a round of 18. Some are hashed out at the Voluntary Interindustry Commerce Standards organization, known as VICS. <br><br>It’s something the average shopper would be...

NEW YORK — Supply-chain issues can’t always get resolved over a round of 18. Some are hashed out at the Voluntary Interindustry Commerce Standards organization, known as VICS.

This story first appeared in the July 22, 2002 issue of WWD.  Subscribe Today.

It’s something the average shopper would be clueless about, but something in which more apparel companies should participate. Yet shoppers, manufacturers and retailers all benefit by VICS and its growing agenda.

“The great frontier ahead for VICS is developing the next generation of the bar code, in the form of radio frequency ID,” said Tom Cole, chairman of Federated Logistics and Systems and vice chairman of VICS. “This would be a more powerful communication device and an easier way to capture information.”

For the consumer: “It would mean faster checkouts,” Cole added. “A sales clerk would just wave a wand over all the products, rather than having to scan each product individually.”

And for the manufacturer, it would help inventory control, but incur costs that ultimately get passed on to the consumer. VICS is the forum for finding cost-effective solutions to producing microchips for radio frequency ID. Like bar codes, the radio frequency ID would provide stockkeeping unit information, including style, size and color.

Four times a year, VICS brings together retailers and vendors of all types, like a United Nations for the trade. It does belie the common notion that retailers and vendors are always at each other’s throats, never working together, but the organization is not so much about making peace. It’s more about pushing new technologies to drive costs down, improve product flow and information and simplify back-office operations.

In the past, VICS initiatives, such as bar coding, and having merchandise “floor-ready” — meaning packed, folded and ticketed for easier unpacking and display, with standardized hangtags and a manufacturer’s suggested retail price — have become widespread. Whether it’s better to fold knits in their shipping cartons, or to pack them on hangers, is one topic under the broader floor-ready discussion.

VICS has already set widely accepted specifications for hangers, so manufacturers ship adult merchandise on hangers made from clear plastic and with metal swivel hooks. That makes merchandise easier for retailers to sort and hang. White polypropylene hangers are used for infant and toddler sizes up to 5T. Before, retailers would have to replace hangers with the ones they wanted, adding to labor costs.

As Cole sees it, VICS is expanding from fostering back-office efficiencies, like standardizing routing instructions, to issues more directly visible to consumers. Among them:

l Coloring hangtags to indicate size, making it easier for shoppers to find the size they want and for retailers to put merchandise out on the selling floor. “We are really close to getting this accomplished,” said Andrew Miller, president of Alliance Retail Services consulting and producer of VICS-approved hangers, and a former VICS board member. It was just approved in June by the VICS board, so each family of business has colors designating sizes. Hypothetically, “in kids, we would always know that orange is a size 6x.”

l Embedding tiny security chips on clothes, to replace those gangling security hard tags. They are deterrents to theft, since they are quite visible. But they also look bad and require extra work to attach, delaying getting the goods on the selling floor.

“Putting on the hard tags at store level can hold up merchandise for days, and at Christmas, stores get buried,” said Miller. Through “source tagging” he explained, manufacturers place security devices on the garments during the production process so goods get on the floor faster. Security chips would be deactivated by moving them over a deactivator built into the checkout counter, or by waving a handheld scanner. The placement of the chip on the garment has been standardized by the VICS board of directors, so checkout personnel can quickly deactivate the chips in the transaction process, and some stores, such as Lord &Taylor, have them on a few products, like scarves, in the form of small, thin, rectangular strips. Other products, such as designer brand handbags, still have the hard tags attached. But the security chips could be concealed on a hangtag or in the care label, or in a tiny removable “tea bag” by the manufacturer. Wider acceptance of the chips, which VICS hopes for, would reduce costs.

VICS is also pushing for “collaborative planning, forecasting and replenishment,” known as CPFR. It’s up-front planning where manufacturers and retailers work together, as in a vertical retail situation, to get the right amount of product made, keeping inventories down but high enough for reordering. It’s best suited for commodities. Manufacturers are able to tap into sales figures, but the two parties have to trust each other. It’s a higher form of electronic data interchange, or EDI, which tracks shipments, purchase orders, invoices and sales.

Though it’s usually tough to get companies to change their ways, “vendor compliance to VICS standards is amazing, even though VICS cannot mandate anything,” Miller said. “The standards adopted by VICS are really voluntary. When retailers and vendors understand what VICS does, they realize they should be part of it.”

However, “there’s been confusion about VICS, that it’s always been a retail-oriented situation,” added Miller. “Actually, VICS has worked beautifully with retailers and manufacturers. It’s the manufacturers, particularly those smaller guys, that today still don’t know what VICS is all about. We’d get a lot more done, and quicker, if we had more participation.”

“I do not feel it’s weighted by retailers, but it’s easy to make that statement, if you don’t participate in VICS,” said Cindy DiPietrantonio, senior vice president of corporate credit and customer relations for Jones Apparel Group. “What’s so unique about VICS is that it gives you an important advantage in staying competitive. It’s a great venue to [keeping up] on what’s important to retailers, and maximizing profits through collaborative practices.”

“Lots of vendors are involved,” Cole observed. “The mixture of the organization is fine, but I think there are lots of vendors who should be involved that aren’t. Most of the big vendors are.”

VICS is not the only forum where retailers and manufacturers work together to create efficiencies and more profits. There’s the Uniform Code Council and the Global Commerce Initiative, which work on such things as CPFR and bar coding. But for the American industry, VICS is pretty much it for apparel retailing.

The organization was launched in 1986 by a group of senior executives in general merchandising who wanted a universal bar code good for all scanners, so companies wouldn’t have to use a variety of scanners for different products. VICS picked the Uniform Code Council, a nonprofit organization that produces UPC. Levi Strauss was one of the first big companies to utilize UPC.

VICS membership includes manufacturers, retailers, carriers, technology providers and suppliers, like ticket, label and hanger firms. Among its members are Wal-Mart, Target, Federated, May Co., Loewe’s, Home Depot, Dillard’s, Jones, Tommy Hilfiger, Levi Strauss, Dell, Gillette, Best Buy, Bon Ton, Procter & Gamble, NCR, Notations sportswear, and Alliance Hangers.

There are six committees: CPFR; floor-ready merchandise; logistics; direct-to-consumer [catalogs, kiosks]; Internet commerce, and product classification. Committees meet four times a year, for a day or two at a time, and make presentations to the board. The board puts the proposal on the VICS Web site to gauge reaction and ultimately approves any new VICS standards. VICS rents space for the meetings. Membership fees are $5,000 to join and $1,000 annual dues, but a firm that stands to gain business by participating in VICS, such as NCR, would pay $10,000 a year.

“The corner grocer has the same vote as the giant in the industry,” said Laura Golding, a director of VICS.

“What we really want is sweat equity,” Cole said. “We want people to be a part of the process. “We work together for a common goal, a common savings. VICS is a cooperative. We want people who have not been involved to be involved.”