11 Wholesale Apparel Marketing and Distribution Chapter

11

Wholesale Apparel Marketing and

Distribution

Chapter

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.

Objectives• Discuss inventory management of

goods.• Explain benchmarking and quality

programs.• Describe trademark protection.• Identify technological advances in

apparel manufacturing.

continued


Objectives• Explain how and where apparel

producers sell their finished goods.• Describe the distribution of fashion

items.• Summarize apparel industry trade

information.


Inventory Management• Inventories are goods held on hand

for the production process or for sale to customers

• Manufacturers have these types of inventory– raw materials– work-in-process (WIP)– finished goods

• Retailers’ inventories only involve the finished goods category continued


Inventory Management• Inventory control is maintaining inventories – big enough to prevent stock outages – small enough to minimize holding costs

• Keeping large or wrong inventories is costly in– insurance– taxes– warehouse space

• Materials handling includes all activities of the goods not involved in production processes


Industry Facts

• A garment takes several months to move from the fiber stage to retail, but only 19 “value added” hours of production occur

• To advance products quicker, manufacturers – automate their record keeping– reduce materials-handling time when

possible– use computerized production applications to

balance work flow more efficiently


Inventory Planning and Execution• Technology enables more accuracy and

efficiency in inventory planning and execution

• Product lifecycle management (PLM) is a computerized software system that–manages the entire “life” of a product

• Other systems aiding apparel PLM are– enterprise resource planning (ERP) software–manufacturing execution systems (MES)

softwarecontinued


• Companies try to maintain small but sufficient inventories and smooth production processes

• The just-in-time (JIT) inventory system– is a continuous process of inventory control– seeks to deliver small quantities of

materials precisely where and when they are needed

• PLM programs use bar codes and electronic scanners to enter data

Inventory Planning and Execution

continued


• Computerized integration of all operations through one database pulls together company information from all business channels

• Users at all levels of the enterprise can use the information– through password-protected websites

• This helps companies keep lean inventories for market demand

Inventory Planning and Execution


Benchmarking for Quality Products• Benchmarking is the continuous

process of measuring a company’s goods, services, and practices against leading world-class firms

• This is a proactive approach to make all processes better by doing everything right the first time– instead of using a reactive approach to fix

problems after they occur


Quality Programs• Programs emphasizing high product-

quality standards are stressed to achieve top customer satisfaction

• Total quality management (TQM) – is used successfully in apparel

manufacturing and other industries– encompasses the concepts of

empowerment of employees, work teams, and benchmarking

continued


Quality Programs• Much of TQM is addressed by Six Sigma– an all-encompassing business performance

methodology that many companies use– a mathematical analysis of the quality of

design, manufacturing, and customer-oriented activities

• Besides quality and performance standards, apparel companies also use the metric system of measure for global uniformity


Trademark Protection• A trademark is any word, name, logo,

or device that is used to identify and distinguish goods of one company from others

• Companies legally protect their trademarks by registering them with the U.S. Patent and Trademark Office– Counterfeiting of fashions is a serious

problem – Fashion designs are copied quickly via the

Internet continued


Industry Facts• Once a trademark is registered, the

company– polices it to preserve its strength– challenges others in court who use it– educates employees about the trademark

and how to report counterfeit products

• If an apparel manufacturer sues, the company may name both the manufacturer of the counterfeit goods and the retailer selling them


Technological Advances in Apparel Manufacturing• Virtual product development (VPD)

is developing products in a digital environment

• Computer-controlled machines can be programmed for other tasks without retooling– Robotics involve machines that are

programmed automatically to do mechanical tasks

• Fully integrated systems allow machines to detect product defects


Computer-Integrated Manufacturing• Computer-integrated

manufacturing (CIM) is the complete computer control and coordination of manufacturing– All production processes are data-driven– It promotes maximum coordination and

centralized control of production operations– All computer commands to design,

manage, and manufacture goods communicate with each other

continued


Computer-Integrated Manufacturing• CIM standards, coordinated with the

American National Standards Institute, enable all apparel industry entities to communication– Future directions of CIM standards and

standards-based equipment will be driven by industry needs

• Many technology applications are now outsourced to specialists in each area of expertise


Industry Facts• Perhaps demand flow

manufacturing (DFM) may eventually exist– Individual affordable garments would be

produced quickly, responding to consumer demand

– Production facilities would be able to make any design at any time

– Standardized sizes could disappear as garments are made for scanned body measurements


Fashion Insights

• Other apparel production possibilities include– “stitchless” electronic injection sewing

that produces fused seams, perhaps heat-sealed with ultrasonic energy

– seamless garments that are tubular molded instead of sewn

– garments with climate control to heat or cool the wearer


Industry Facts• Apparel companies must decide when,

where, and how to profitably sell the lines

• Apparel producers present their lines to retail store buyers about six months ahead of the wearing season

• During the period known as market weeks (or fashion weeks), retail store buyers travel to fashion market cities


Selling Locations• Sales presentations are formal, well-

prepared showings of a company’s goods– Showrooms are company-owned sales

areas for displaying merchandise– Apparel marts are large buildings or

complexes that house permanent showrooms

• Many apparel firms lease mart showrooms, allowing buyers to see their lines at any time continued


Selling Locations• Some manufacturers show their

collections accessorized and professionally modeled in their showrooms

• Others hang their garments on walls and racks

• If apparel manufacturers do not have their own corporate showrooms, they might use an established representative in a mart


Sales Expertise• Sales managers oversee the selling

staff and handle sales forecasting– Sales forecasting is predicting how many

items will be sold during a fiscal period– A fiscal period is a financial accounting

period, usually 6 months or one year

• Retail sales statistics reveal past results, but sales forecasting predicts future demand

continued


Sales Expertise• Besides working in company

showrooms, some sales representatives (reps) travel– to show and sell their lines around the

country

• When sales transactions are finalized, a contract is drawn up– This is a written agreement between a

buyer (retailer) and seller (manufacturer), detailing all conditions of the sale


Sales Promotion• Some apparel producers do cooperative

advertising with the stores that sell their lines–Manufacturers sometimes provide retailers

with selling aids, such as large photographs for store displays

– They might also offer personal appearances by the firm’s designer, videotapes of collections, fashion shows, or trunk shows


Sales Promotion• During a trunk show, a complete

collection of samples is brought into a retail store or exhibition hall for a given period– Customers can see the producer’s entire

line and order any size or color of the styles presented

– They can meet a company rep as well as designers

– Trunk shows enable firms to evaluate consumer feedback about the line


Distribution of the Finished Apparel• The distribution function moves fashion

goods to proper destinations to coincide with market demand timing– It involves both sales and logistics

• Logistics include the handling details of storing and physically moving merchandise to the proper locations

continued


• Apparel producers of less expensive lines often use an open distribution policy– They sell and ship goods to any retailer

that can pay for them, sometimes setting a high minimum-order requirement

• Producers of higher-priced items use a selected distribution policy– They ship only to a limited number of

stores

Distribution of the Finished Apparel

continued


• Confined goods are sold only to one retailer within a certain geographic trading area

• Dual distributors offer products through regular retail accounts and their retail outlets– This causes manufacturers to compete with

their own retail customers– Outlet stores have one less cost layer and

can offer lower prices to consumers

Distribution of the Finished Apparel


Order Processing• Password protected communication

sends and receives orders between trading partners–When an order is triggered, the system

sends a confirmation to the retailer– Orders are “picked” for the right styles,

colors, and sizes by scanning garment tags and/or box labels

• The finished-order cartons are sealed and addressed with bar-coded “ship to” data continued


Order Processing• Electronic communications and

standardized container markings can tell retailers how and when shipping will take place

• The use of bar-coded carton labels and trusting vendor partnerships eliminates the need for retailers to check the contents of shipments when they are delivered


Merchandise Shipping• Modern transportation systems quickly

and dependably move merchandise to stores–Within the United States, most fashion

goods travel by truck– Goods that are sourced offshore come by

ship into U.S. ports or arrive on cargo airplanes

– These large shipments are divided and transferred to trucks for delivery to retailers continued


Merchandise Shipping– Cross-docking is a practice of unloading

goods from an incoming shipment directly onto outbound trucks

– Satellite shipment tracking monitors the movement and locations of all merchandise

• More companies outsource their physical distribution to third-party experts

• The soft goods chain is moving toward retailers managing the distribution process


Apparel Industry Trade Information• The American Apparel and

Footwear Association (AAFA) represents U.S. apparel, footwear, and other sewn products companies that compete in the global market

• AAFA’s goal is to maintain the economic well-being of the industry and its companies in hopes that its members can offer high quality goods at competitive prices

continued


• Another trade group, the International Apparel Federation (IAF), operates globally– It provides a forum for the world’s apparel

chain, mainly by exchanging ideas and information

• The American Apparel Producers Network (AAPN) is an apparel industry business network of company owners and senior executives across the supply chain continued

Apparel Industry Trade Information


• The International AntiCounterfeiting Coalition (IACC) is devoted to protecting intellectual property and deterring counterfeiting

• Apparel magazine is the leading business and technology trade journal for apparel industry executives and decision makers

• Women’s Wear Daily reports new apparel trends

continued



• Legislation that impacts the fashion industry involves all segments of the textile/apparel pipeline– Trade groups lobby for advantageous laws–Many have been passed, including laws

that address equal pay for men and women, collection of sales tax, and credit card “swipe fees”



In Summary• Manufacturers have inventories of

raw materials, work-in-process, and finished goods

• Benchmarking causes change that brings about better processes

• Quality programs achieve top customer satisfaction

• Computer technology and equipment is revolutionizing apparel production

continued


In Summary• Most apparel is sold directly from

producer to retailer• Distribution of the finished apparel

might involve an open or a selected policy

• Many trade associations, journals, and industry shows keep members informed about the latest information important to the fashion industry

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11 Wholesale Apparel Marketing and Distribution Chapter