REVAMPED SOURCING PAYS OFF AT KELLWOOD
Byline: Stuart Chirls
NEW YORK — The latest additions to Kellwood Co.’s Vision 2000 restructuring program are already paying dividends, Hal J. Upbin, president of the diversified apparel giant, told a meeting here last week of the New York Textile Group.
“We are now better able to compete on pricing with our customers, and we are beginning to see a semblance of better buys [for sourcing] and better margins,” said Upbin.
Vision 2000, begun in January 1995, is Kellwood’s ambitious plan to overhaul its entire organization, from sourcing and warehousing to information and financial systems.
In June, as an addition to Vision 2000, the St. Louis-based manufacturer launched an operating service division to coordinate its global piece goods buying and at the same time winnow the manufacturer’s roster of 700 contractors.
Also at that time, Kellwood said it was creating a proprietary computer business system to consolidate the 10 independent systems.
“We currently spend about $18 million on information systems each year, and that is going to rise to $20 million,” Upbin said.
Upbin said the restructuring of the sourcing will give Kellwood a better strategic balance in obtaining its garment packages and fabric, which is now evenly apportioned between the Western and Eastern hemispheres. “We want that ratio to be 65 percent Eastern, 35 percent Western, by 2000,” he said. “Twenty-five percent of our manufacturing is domestic, but we want to fine-tune that to about 20 percent at the end of the day.”
Kellwood has been radically transformed since it was created by Sears in 1961 as a group of 15 soft goods makers. Then, 90 percent of sales were to Sears, and Kellwood’s fortunes sagged when the retailer hit hard times. Today Sears is still a major client, Upbin noted, but the share of its largest customer [J.C. Penney] is only 10 percent of Kellwood’s $1.5 billion in annual sales.
Upbin said that by segment, 59 percent of sales is in women’s wear, 30 percent in men’s wear and 11 percent children’s wear. Sag Harbor is Kellwood’s largest label, he noted. Within the women’s segment, 83 percent of the revenue comes from popular-to-moderate priced women’s sportswear.
“Make no mistake, we have achieved a dominant penetration in the apparel market,” Upbin said, noting Kellwood has 150 brands and labels.