CHICAGO — Levi Strauss & Co. is spending $400 million to create a “revolution” in the way it does business, but it will need the help of its retailers if the plan is to succeed.
That was the message Bob Rockey, president of Levi Strauss North America, brought Tuesday to the Quick Response 94 conference being held at the Hyatt Regency here.
The company’s program will look to Quick Response technology and new business processes to help achieve its stated goal of establishing preeminent customer service.
The three-year program is to be completed in late 1996, Rockey said.
“We’re simplifying our business by reengineering every major aspect of every major process — from how we source and manufacture product to how we distribute it,” Rockey said.
He said he expects the resulting improvements in Levi’s ability to deliver the right product to the retailer on a speedy basis to be matched by a similar improvement in the retailer’s ability to deliver product to the consumer.
“How can all of us participate more effectively together?” he asked his audience of about 900 retailers and suppliers. “We can reorganize product delivery systems to the customer, but the customer won’t see the product any faster if it sits in a retailer’s warehouse instead of on the selling floor.”
Levi’s established itself as an industry leader in Quick Response technology during the Eighties through its use of electronic data interchange, sell-through analysis and reporting systems and stock management systems, Rockey said.
The manufacturer’s EDI service, Levilink, which generates electronic purchase orders, advance shipping notices and electronic funds transfer, currently processes almost $2 billion in sales a year, or 60 percent of Levi’s total U.S. business, Rockey said.
But while EDI speeds up the order delivery process, Levis wasn’t doing enough to fill the orders, Rockey said.
“Technology alone couldn’t solve our customer problems,” he said.
Rockey reviewed a number of the changes Levi’s is implementing within the organization to address those problems. They include
A new emphasis on teamwork, including a company-wide incentive compensation program.
Reorganization of the company by brand, for example Levi’s or Dockers, rather than by product and consumer category, such as women’s jeans. The rorganization began a year ago and is about 75 percent complete, Rockey said.
Designing a new supply chain from supplier to manufacturer to retailer to the consumer.
Rockey also outlined eight customer service targets in Levi’s program, from reduced lead times to improved timing and accuracy of deliveries.
One goal is to work with retailers, offering point-of-sale and marketing support to let them differentiate themselves in presentation of Levi’s products. “For example, if May Co. wants a Dockers department, we would work consistently with them [on developing it]. It would be a real partnership,” Rockey said.
Levi’s also intends to reduce the time it takes to develop new products from the current average of 9 to 12 months to less than 90 days, Rockey said. Continuing products will be updated within 30 days — for example, adding a new color to the Dockers range.
Delivering floor-ready merchandise to retailers is another goal. “Product will be folded correctly, or on hangers, or with price tags, or other specialized services,” Rockey said. A program will be piloted with a key retailer before the end of this year, he added.
As Levi’s makes the effort to become more efficient, the company expects similar initiatives from retailers, Rockey said.
“If we can replenish a customer’s out-of-stock product in one day with two days transit time, we’ll ask the customer to get product on the floor within one day, too,” he said.