TAG-IT GETS TRIM IN ORDER
Byline: Katherine Bowers
LOS ANGELES — Tag-It Pacific Inc., a little-known provider of trim packages to the apparel industry, has managed to do what a bevy of others haven’t: get a business-to-business operation to turn a profit.
In the process, it has scored some major clients — Calvin Klein, Tommy Hilfiger and A|X Armani Exchange among them — and posted impressive revenue growth to boot. The four-year-old company did it by using the Internet to manage trim procurement, a process whereby a variety of minor but crucial elements — thread, elastics, care labels, zippers, buttons and rivets — are gathered and shipped to a sewing facility. When those items don’t all arrive at the right moment, sewing can’t begin, and major headaches ensue.
“Trim is like the gas in the car. Without it, the car doesn’t go,” said chief executive officer Colin Dyne.
The company began developing an Internet-based system to take orders for complete trim packages in 1998. It beta-tested the system with Tarrant Apparel Group, which remains a customer. Companies can place trim orders by style and track their orders around the clock by logging onto a password-protected Web site.
Since the technology has come online, Tag-It Pacific’s gross revenues have grown to $51 million last year from $18 million in 1999 Next year, Dyne said the company’s annual revenues are projected to hit roughly $80 million for 2001.
A nice chunk will come from Azteca Production International, a private label denim manufacturer based in City of Commerce, Calif., which inked a three-year, $30 million deal for Tag-It to provide trim. Azteca declined to comment on the deal.
To Dyne, the need go into ‘Net-managed commerce was inevitable, given the inherent diversity of the product: The average casual bottoms style requires 18 separate elements. Another factor is the scheduling complexity of conducting a global business.
“Keep in mind we ship between 25 million and 30 million pieces of trim per month. Think of the human resources you would need to manage that,” he said.
Makers give Tag-It their bills of materials at the start of each season, and the cutting tickets are either scanned or downloaded out of companies’ back-end systems. Trim assortment is packed and shipped by cutting ticket. Proof of delivery when the trim actually lands on the factory loading dock is noted into the system, so executives in the U.S. can monitor production overseas.
“Trim delay is often used as an excuse for being late [to deliver finished goods], so we’re cutting that out,” noted executive vice president Jonathan Markiles.
Technology hasn’t totally supplanted the human touch, though. According to Dyne, some clients start the process as soon as samples are complete; they use Tag-It’s trim estimate as a basis for costing each style. The company also keeps an online catalog for each customer of every logoed trim item purchased from Tag-It Pacific in the past.
Getting the industry comfortable online hasn’t gone unnoticed by other B2B companies, many of which have been trying to bring visibility into the entire supply chain.
“We have been contacted by just about all of them to provide trim [through their sites],” said Dyne, although he declined to say when or where the company might strike such an alliance.
Some 60 to 70 percent of sales is generated through supplying trim for casual bottoms. To that end, Tag-It has signed two deals in the last year which will likely fuel growth. One is with Coats, a thread manufacturer whose core thread is widely used in casual bottoms. And last July, it acquired the worldwide distribution for Tallon products, the second-largest zipper producer for casual bottoms.
“I expect we’ll be converting a lot of those zipper customers into full-package trim customers,” Dyne said.