In a much anticipated move, Liz Claiborne Inc. is decentralizing its sourcing, giving each of its more than a dozen brands control over its own manufacturing decisions.
At the same time, the company is creating a centralized sourcing leadership team, led by a Hong Kong-based corporate senior vice president of global sourcing, for which it has hired Peter Warner, who held the same post at Gap Inc.'s Banana Republic division.
"This is the last great pillar to fall from centralization to decentralization," chief executive officer William L. McComb told WWD. "Our vendors have been telling us that we need to make changes and evolve our model. Through what we are calling 'enlightened decentralization,' we are creating a superintimacy and cross-functionality that simultaneously will improve all of the matrices: speed, cost and product quality."
Decentralization has been a theme of the changes McComb has made since he took over as ceo of Claiborne a year and a half ago. For example, earlier this month, Claiborne decentralized its outlets so that they report to their corresponding individual brand management, rather than to a central executive.
The sourcing shift, which McComb first suggested earlier this month in his first-quarter earnings call and which he said the company has been considering for the last 10 months, is effective immediately and will begin to impact sourcing for the spring 2009 collections.
McComb said he is not worried the decentralized structure will cause the $4.58 billion vendor to lose its size leverage. The central sourcing leadership team will still approve vendors, and brand vice presidents will meet quarterly with a sourcing steering committee, led by Warner, to discuss "opportunities for leverage that are optional, not mandated," like if one brand found a opportunity it could recommend to another, McComb said.
"There's a point where volume doesn't help you any further," said Warner. "We'll have to look at the vendor base and make sure we've right-sized it. I've always believed that fewer, better vendors is the way to go."
But McComb said he does not expect a significant change in sourcing clients in the short term, though he thinks the company might decide to outsource some of its buying capacities, a function that traditionally has been almost entirely internal at Claiborne."This isn't going to bring a big shake-up of our current vendor base," McComb said. "Over time, I don't think that the brands have been that underserved. What's in it for the vendors is that there will be better alignment and engagement because the brands will be more involved, so we will be a better partner."
How this change will affect Claiborne's internal sourcing employees will be determined after Warner conducts an audit of the departments.
Although McComb anticipates the new structure will result in cost savings, the impetus for the switch was more about product quality than cost, he said.
"It's about reallocating the final decision right to the brand," McComb said. "If there is a trade off that they believe is good for their business, they can make those trade off decisions."
Warner's last day at Banana Republic is June 10, and he likely will start later that week at Claiborne, where he will work in the U.S. until he moves in August to Hong Kong, where he will be based for the next two years before returning to the U.S. Warner will report to Michael Scarpa, chief operating officer of Claiborne. Warner effectively replaces Fritz Winans, managing director of Asia development at Claiborne, though the exact role is new.
Before joining Banana Republic in April 2005, Warner held the same position at AnnTaylor Stores Corp. for a year. Earlier he held global sourcing and production roles at Nike, Foot Locker and Ecko Unlimited.
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