American Eagle Outfitters Inc. is using Web-enabled supply-chain software from TradeStone Software Inc. to improve the speed and accuracy of its dealings with suppliers. The Warrendale, Pa.-based teen retailer began its installation of SteppingStones in spring 2004 and now has a pilot up and running in its merchandising department.
American Eagle has a complex business comprising vendors in 47 countries, 800 stores in the U.S. and complete merchandise turns 10 times a year. “When you’re moving at that kind of pace, you really need a good system that can paint a picture very quickly across disparate parts of [the] business,” said American Eagle chief financial officer Laura Weil. “Now that the Web is more sophisticated, the dream of linking your supply chain is really possible.”
SteppingStones handles requests for quotes, purchase orders, invoices and shipping. It also calculates the cost of a garment in great detail, figures customs classifications and duties, and tracks and evaluates supplier performance.
American Eagle plans to roll out the software beyond the merchandising department to the rest of the company over the next two months, and now vendors are getting on the system. In the second half of the year, American Eagle will start connecting the system to the factories it deals with directly. The installation is expected to be completed by the beginning of 2006.
At that point, the company will have design, sourcing, merchandising, planning, vendors, factories and agents all feeding information into the system, which can be accessed by the departments. A factory with the right profile will be able to change a date in SteppingStones and it will trigger an alert to the appropriate users. Otherwise, a factory will be able to request a change, which a buyer will accept, reject or counter. When both parties agree to the change, the system will change the date in the order.
When a buyer requests a bid or places an order, an e-mail alert is sent to the vendor, factory or agent, which can then access a Web page to see more information and respond.
Buyers can see pricing and deliveries in SteppingStones, and they can use that information to help decide what assortments, colors and quantities to order.
This story first appeared in the March 9, 2005 issue of WWD. Subscribe Today.
“In merchandising, I think our people will be able to focus on the product and being merchants rather than data entry and managing volumes of data,” said chief information officer Michael Rempell.
The system should help make the company more efficient and reduce errors, said Weil. Employees won’t have to hunt down information — such as how long a blouse will take to arrive from Pakistan or how much it will cost — and re-key it into different spreadsheets in each department. The company will also have a better view of its supply chain. For instance, the software will reduce freight costs because American Eagle will know exactly when a style is ready to ship and can choose the best option. SteppingStones plans container shipments to maximize savings, and it tracks and traces shipments. The company will know in advance whether a style will be delayed, and will not have to build as much wiggle room into its schedule.
“It will reduce errors in orders, buys and the gamut of specs that go into producing a garment,” said Weil. “We did this not just to make people’s lives easier but because we knew it would generate greater productivity for the company. You can have the best designs in the world, but if they don’t arrive on time or they’re too costly because certain mistakes were made, that’s deadly.”
SteppingStones will receive and send data from and to other applications American Eagle uses. For example, Gerber’s WebPDM, which handles drawings and technical design specs, will pass on the product attributes SteppingStones needs to solicit bids. The software will also receive data about color from JDA’s Merchandise Planning by Arthur, and it will receive other data from Manhattan Associates’ PKMS warehouse management software, according to TradeStone. Going in the other direction, SteppingStones sends purchase order data to American Eagle’s Island Pacific retail software system.
American Eagle chose TradeStone’s SteppingStones because it was formerly a customer of RockPort Trade Systems, said Weil and Rempell. TradeStone president and chief executive officer Sue Welch founded RockPort, a leading maker of Windows-based supply chain software, but sold it to QRS Corp. in 2000. QRS was subsequently acquired by Inovis Inc. in November. TradeStone is Welch’s third supply-chain company, and American Eagle is one of TradeStone’s first customers. Other customers include Deutsche Woolworth, The Children’s Place Retail Stores Inc. and Ocean State Job Lot.
Earlier this month, American Eagle announced earnings that handily beat analysts’ expectations for 12.9 percent growth in profits. Total sales for the fourth quarter ended Jan. 29, 2005 reached $674 million, an increase of 37.4 percent over the same quarter a year earlier. The company reported net income of $101.2 million, up from $35.4 million the year before. Total sales for the year rose to $1.881 billion, an increase of 31.1 percent, the company said. Net income for the year reached $214 million, compared with $60 million the year before.