QUICK RESPONSE IS HERE … OR IS IT? EDS… 09-06-9509-06-95




NEW YORK — Quick Response initiatives have not helped apparel makers plan out production — nor have they cut down on the amount of goods sitting in warehouses. For John Brunet, Quick Response is more hyperbole than substance.

Brunet is president of the consumer goods “strategic business unit” of EDS, a Dallas-based firm specializing in consulting and information systems outsourcing. He said apparel makers must have access to timely retail point-of-sale data if real efficiencies are to be brought to the distribution pipeline.

“Manufacturers are basically guessing what’s going to sell five seasons in advance,” Brunet said. “This is still an over-stored, over-inventoried push system, Quick Response or no Quick Response.”

And while retailers and manufacturers have set up some one-on-one QR relationships, Brunet said the pipeline as a whole is not becoming more efficient.

“Wal-Mart is doing a good job of getting item-movement information back to its suppliers,” Brunet said. “But to be a Wal-Mart supplier, you have to play by Wal-Mart’s rules.”

For supplier information systems departments, that often means formatting your information to the retailer’s specifications — a situation Brunet said is creating mountains of work for IS staffers.

“Manufacturers can’t be catering to the specific requirements of every different retailer they supply,” he said. “They’d have to deal with all those different systems. That’s the rub.”

One answer that has received a lot of attention of late is the concept of vendor-managed inventory. In VMI scenarios, suppliers take on even more work, but the payback is high. Retail buyers are for the most part removed from the replenishment process. The manufacturer has access to all the POS data on its lines — not only using that information to keep the retailer’s shelves stocked properly, but extrapolating it to understand markets and plan production. More work, yes, but it’s a situation that is very attractive to manufacturers able to handle it.

“All the information needed to make the pipeline more efficient is generated at the point of sale,” Brunet said.

Brunet added, however, that VMI has its limitations.

“VMI requires predictability,” he said. “It works best with commodity items like men’s underwear or popular jeans. With fashion items, it would be much more difficult.”

Brunet added that it would be hard for a retailer to allow too many vendors to manage replenishment of their own products.

“If I’m a retailer working with 3,000 suppliers and try to do VMI with all of them, it would be very difficult,” he said.

Brunet said the industy as a whole must work together to insure “non-stop product flow.”

Retailers have to get POS data back to the manufacturers so they can use it to schedule production and cut warehousing and handling costs. Costs associated with warehousing and handling are reflected in the costs of products.”

Currently, when efficiencies are wrought in the pipeline, Brunett said the savings generated are passed down to the consumer in the form of lower prices. The situation has caused continued stress at all points along the pipeline.

“As soon as an efficiency is created, the savings are passed down,” Brunet said. “Retailers and manufacturers have to learn to hold on to some of those savings.”

And while savings are being passed along to the consumer, retailers are pushing costs up the pipeline to suppliers.

“Everyone is trying to push cost on others,” Brunet said. “Players have to add value to the pipeline and charge for it.”

Brunet said the Gap is doing a standout job tracking sales and replenishing its shelves. The retailer’s successes, however, were wrought internally, not in a complex scheme with suppliers.

“The Gap has attacked the replenishment problem by operating a very sophisticated distribution system out of its distribution center,” he said. “But they haven’t really taken any inventory out of the pipeline. They’ve just made one part of it much more efficient. They are still carrying a whole lot of inventory in their distribution centers.”

Brunet speculated the only way for real, broad-based efficiencies to come to the apparel industry is for large suppliers to “band together.”

“I think that what it’s going to take is for large manufacturers to get fed up and say they need retail POS data in a standard form from all retailers in order to plan production.”

For the moment, he said, that seems a ways off.

“It’s not a value chain,” Brunet said. “It’s a war zone right now.”