2. 11 Wholesale Apparel Marketing and Distribution Chapter

3. 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

4. Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Objectives Explain how and where apparel producers sell their finished goods. Describe the distribution of fashion items. Summarize apparel industry trade information.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

37. Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. 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 Apparel Industry Trade Information

38. Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. 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” Apparel Industry Trade Information

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

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