The constantly shifting winds of fashion, fickle consumer tastes, and dramatic consolidations in the retail industry are just a few of the challenges forcing manufacturers to re-examine their whole approach to the marketplace. And nowhere is this more apparent than in the apparel industry. With retailers under pressure to woo and keep consumers, turn-on-a-dime response is being demanded of even the largest apparel concerns. The non-negotiable mandate today is to supply the right goods to the right store at the right time every time.

In short, the days of manufacturer-driven product development, push-through marketing, and shipping the same goods to all stores across a retail chain are over. Apparel companies are recognizing that a capability for micro-marketing, or some version of "mass customization," is critical to their survival in the 21st century. Needless to say, the demands this evolving marketplace places on the supply chain are enormous, requiring new approaches, new systems, and even new corporate structures. And two prominent companies, VF Corporation and Jockey, are in the forefront of meeting that challenge.

These well-known apparel manufacturers are in the process of reconfiguring their supply chains in response to the new retail realities. Using supply chain technology as the enabler, they are redefining the ways in which their product moves to the retail floor. Organizationally, too, they are re-creating themselves to get closer to an ever-more-demanding customer. This article chronicles the considerable success experienced to date across these endeavors.

What's in a name? Everybody knows the Jockey brand. However, most consumers are in the dark when you mention VF Corporation. But when you begin to rattle off names like Wrangler, Lee, Rustler, Riders, JanSport and Jantzen, Healthtex, Vassarette, and Vanity Fair (from whence "VF" comes), then a light goes on.

Even Mackey McDonald, VF's president and CEO, said recently that if he had had the opportunity originally, he would have called the company something else. But a rose by any other name would still have the sweet smell of success, to mix a couple of metaphors. The 100-year-old, Greensboro, N.C.-based company is the world's largest publicly held apparel maker. With sales exceeding $5 billion, VF was ranked 341 among the top 1,000 and rated "Best-Managed Company" by Industry Week magazine last year.

Plus, in the latest consumer-awareness KSA/NPD Branding Report, two of VF's logos, Wrangler and Lee, placed third and seventh respectively among men's wear labels out of 99 well-known names. Rustler and Riders copped the 43rd and 64th slots.

Jockey is no slouch either. Forbes magazine has placed the company at 418th place (moving from 480th in one year) among the top 500 private companies. As one Jockey-watcher, talking about the company's financial stability, says, "Let me put it this way: Jockey lends money to banks." Furthermore, the 123-year-old, very privately held apparel manufacturer was ranked 13th in the same KSA/NPD brand-awareness study of 1,784 consumers. KSA and NPD are international marketing information organizations.

Although Kenosha, Wis.-based Jockey International isn't nearly in the same league as VF (it doesn't divulge sales figures), credible industry reports put the company's revenues at nearly $600 million annually. Still, that's gigantic for the teeming apparel industry, where, with few large exceptions, smaller and mid-sized companies typically do anywhere from under $1 million to $30 million worth of business. In the "rag" business, when you get to $50 million, you're talking "big time." In dollar sales at retail, the entire apparel segment accounted for $177 billion last year, according to NPD.

Where the two giants mainly face off is in the intimate apparel arena—VF with its Vanity Fair and Vassarette products domestically; Jockey with women's underwear, a category it introduced 17 years ago as "Jockey For Her."

Obviously, there are differences between the Jockey organization, which has 5,000-plus employees, and VF Corporation, whose workers number 63,000. For one thing, they concentrate on different channels of distribution. Jockey sells mainly to traditional department and specialty stores, while VF includes discounters and mass merchandisers in its retail customer mix.

So, aside from some of their products and to some extent their customers, what do these companies have in common? For one thing, they are both global. Jockey, for instance, licenses and distributes its products in more than 120 countries in Europe, Latin America, Asia, the Pacific Rim, and the Middle East. It is ranked as one of the top-selling department store brands in the United Kingdom, Australia, New Zealand, Germany, South Africa, and the Philippines.

VF has an even wider global reach, selling its products in 150 countries. The company's international focus is concentrated primarily on the jeans and intimate-apparel product areas. VF's 1969 and 1986 acquisitions of Lee and Wrangler, respectively, were catalysts for a significant expansion of its European operations. What's more, the manufacturer has developed a network of licensees that produce and market VF products around the world.

Equally important, both VF and Jockey are market-driven and continue to develop agile, enterprisewide resource planning systems to optimize production, react quickly to store activity during key selling periods, and improve distribution to merchants. In fact, both currently are implementing reorganization and restructuring strategies that put them squarely at the forefront of cutting-edge supply chain management.

VF's supply chain challenges are not insignificant, considering that this multiline apparel manufacturer produces somewhere in the neighborhood of 150,000 SKUs across all of its product categories and brands. In business for 100 years, VF is a recognized leader in jeanswear, intimate apparel, knitwear, workwear, daypacks, swimwear, and playwear. Its Wrangler, Lee, Rustler, and Riders brands command a 27-percent share of the U.S. jeans market—the largest share in the industry. VF's Jantzen brand is the number-one selling name in swimwear. And even its industrial workwear brand, Red Kap, is the market leader in that business.

Over the past 30 years, the company has made a number of strategic acquisitions that improved and solidified its position within the various product categories. The Lee Company, for instance, was acquired in 1969, followed in 1986 by Blue Bell Holding Company and its Wrangler, Girbaud, Jantzen, JanSport, and Red Kap brands. The Vassarette intimate-apparel brand joined the fold in 1990; Healthtex children's wear was acquired in 1991.

By the early 1990s, in fact, VF was parent to a total of 17 separate brands—all of which operated as independent entities, with their own purchasing, production, marketing, and computer operations. Clearly, that segmented corporate structure did not lend itself to optimal supply chain management. For example, raw materials were being sourced separately, even when opportunities existed to combine orders for volume discounts. Some brands were competing with each other for the same retail buyers. And none of the various systems communicated with each other.

It's not that VF wasn't stepping up to the plate and responding to the retailers' needs. Back at the beginning of the decade, the company's Market Response System (MRS) initiative placed it at the leading edge of Quick Response and retail replenishment systems among apparel manufacturers—and the result was a significant lowering of inventory levels.

But it was the arrival in 1995 of a new CEO, Mackey McDonald, that started VF on a whole new path toward a streamlined, highly computerized go-to-market operation. Using its MRS as a takeoff point, the company plunged into a new, multiyear initiative called "consumerization." Implementation of that initiative has since reached into every corner of the organization.

Recruited to spearhead the corporate reengineering was Tom Payne, who had been vice president of operations for VF's Wrangler division since its acquisition, and with Blue Bell before that. Now, as president of VF Services—a new division formed primarily to handle enterprisewide information technology and process engineering—Payne oversees a complex process that is changing the way VF does everything from designing its products to moving them to market.

"We started back in 1995 by developing an overall strategy," Payne reports. "Basically, a group of managers from all the divisions put their heads together and came up with a vision, based on what we viewed as the best practices within VF as well as outside. We called the new plan 'MRS 2000,' and its goal is to take our initial Quick Response and retail replenishment capabilities to a whole other level."

As stated in VF's 1996 annual report, the consumerization initiative would allow the company "to change the landscape of the apparel industry." Key to the process would be a more active, continuous link between consumer research and new-product development. Micro-marketing products to consumers on a store-by-store basis would be another critical component.

Organizationally, VF restructured itself from 17 autonomous divisions to five "coalitions": North and South American Jeanswear, Intimate Apparel, Knitwear, Playwear, and International, each encompassing a number of marketing companies. The next step was to begin consolidating the logistical, sourcing, and asset-management systems within those coalitions.

"Before the restructuring, we had all the disadvantages of a small company and none of the advantages of a big one," says Payne. "Our information systems costs alone were rising more than 10 percent a year because [each group] had [its] own stuff and bought different systems. We were adding IS staff without any synergies."

All that has changed ... or at least, is in the process of changing, since Payne doesn't expect the initial roll-out phase to be completed until the end of 2000. The main hardware, however, is in place, and the infrastructure built to the tune of some $20 million to $30 million in hardware costs alone.

It's the software that continues to be fine-tuned—since VF is asking it to do things no apparel system has done before. The total package includes enterprise resource planning (ERP) from SAP, supply chain functionality from i2 Technologies, a demand-forecasting program from Logility, data mining from SAS, query tools from Brio, an apparel design package from Gerber, demographic data from Spectra, and more. All of these have VF's own requirements and tweaks built in. Already, the investment in software has run the company more than $70 million.

But that investment will be well recouped if the end result achieved is the one CEO McDonald initially envisioned. More than just cutting unnecessary costs, the system is intended to provide the tools VF needs to micro-market efficiently. That means forecasting demand down to the individual store level, then tailoring the company's production and distribution to meet those demands with optimal efficiency. The CEO has even predicted that the system could help the company achieve revenues of $7 billion by 2000.

Payne amplifies on some of the goals: "Even though VF probably accounts for the largest domestic apparel manufacturing base in the country, as with many companies, a larger percentage of our business is going offshore. So one of the key issues for us is how to get the best mix between offshore and domestic production and achieve Quick Response. In other words, we want to have our cake and eat it, too—we want the cost-savings of offshore production with the benefits of Quick Response.

"As big as we are," he continues, "and having so many different production options between domestic and nondomestic facilities, we have very complicated planning. And we have to have a system that looks at demand and chooses the best routing, domestic or offshore, based on the leadtime needed to fill the demand. That's where our technology comes in, and that's what we're working on with i2, to create an advance planning system that will help us optimize decisions on where to produce each product."

The process starts with forecasts and forward planning, and building a mix between offshore and domestic production. But then the plan "gets beat up," as the operations VP puts it, as actual orders come in and the company gets a clearer picture of the demand. As a result, VF felt it needed a very dynamic system to optimize the plan on virtually a daily basis.

"Orders fall out, demand changes, materials are late," Payne explains, "so there has to be a process that's quick—and it has to be down at the SKU, at the size/color level, to really get inventories where we need them. Ultimately, we have to have an infrastructure to plan for 150,000 SKUs, and that's a huge order for any hardware and software [system]."

So far, the focus of VF's supply chain reengineering has been virtually all downstream—that is, directed toward servicing its retail customers and not toward linking with its own suppliers. "That's actually a big issue in the textile apparel business, although we wish it weren't true," Payne says. He adds that once VF's "internal ship" is in order, the company hopes to extend the concept back to suppliers, making them responsible for generating orders for materials.

But for now, VF pushes to resolve final software issues, then educate and train its people in the new systems, and finally to roll out the micro-marketing program to retailers. Already, a test is under way with a mass merchant in the Midwest, and the results have been impressive. By having merchandise on the floor that was forecast to sell at the specific store, inventory has been reduced 11 percent and product turns have increased by 15 percent.

"What we're trying to do is demonstrate to retailers that we can be a competitive advantage supplier," Payne states, "that we can manage their inventory, get them a higher gross margin ROI, better margins, and better turns than anyone else in their floor space. Since most of our larger accounts already give us point-of-sale information so that we can replenish automatically, they don't even need anything new in the way of systems at the store level.

As we ship the goods, the only thing we need to know is that the store will maintain the best presentation possible, so we can keep inventories as accurate as possible."

VF's quantifiable goal is to build on the accomplishments in inventory reduction achieved earlier through its Market Response System—and take its supply chain to a level never before reached in the apparel industry. As Payne says, "We think we can get another 30- to 40-percent reduction in our cycle time, increasing our speed to market through the supply chain. We would also like to eliminate substantial costs—especially in inventory, where we think we can get out at least another 5 percent."

Ultimately, by leveraging its emerging supply chain management capabilities, VF would actually like to be given responsibility for category management in the stores for jeans or intimate-apparel, for example.

What will make that happen is VF's pending capability to determine which consumers are shopping at each individual store across a chain; divide those stores into clusters that combine similar shopper demographics and lifestyles, wherever they are located; then make and deliver products that fit those shoppers' needs and lifestyles. As Payne puts it, "We're not designing products for a 2,000-store chain, but designing different products for maybe 20 different clusters of stores within that chain."

Not surprisingly, many of the issues that VF is grappling with also are being addressed by Jockey—albeit on a smaller scale. To cite one obvious difference, in contrast to VF's 150,000 SKUs, Jockey has a more modest 10,000 SKUs across its total product line.

First, a bit of background. Jockey is a vertical producer for its knitted goods domestically with two textile plants, a seamless production facility, a hosiery mill, four manufacturing operations, and a raw-materials site. Interestingly, those assets haven't become debits in an industry where divestiture of brick-and-mortar in favor of outsourcing abroad has become the favored practice, at least among leaders such as Levi Strauss & Company. Jockey also has two facilities in Jamaica, one in Honduras, and one in Costa Rica.

Jockey's president and COO, Edward C. Emma, observes, "We're still a manufacturing company. We feel strongly about and are committed to owning our own production. But in the past, our manufacturing capabilities dictated what kinds of products we made. Now, what comes first is what the consumer wants and the marketplace dictates.

"We have really gone through a mindset change," he continues. "We built a sourcing department. We run most of our basics through our U.S. manufacturing facilities. But we are using our ability, through worldwide sourcing connections ... to make anything we need, including more fashion products, off shore because we just didn't have the capabilities to make some items domestically."

A new approach calls for new measures. And Jockey has been working diligently to further streamline its supply chain capabilities in an industry driven by the ever-more-demanding retail giants. COO Emma knows about the pressure being put on apparel makers first-hand. Prior to taking over the company's reins in 1995, he was a divisional merchandise manager at Jordan Marsh, then a major division of Federated Stores. Drawing on that experience, and to show the importance Jockey puts on supply chain management to comply with the stores' needs, he created a new position of vice president of customer logistics last year.

But that's not all. As part of an overall strategy to revitalize an already well-known name, the energetic COO and his team started making structural, marketing, merchandising, product, and advertising changes about three years ago. Faced with increasing designer competition, the company, once regarded as an innovator, had come to be viewed as an in-a-rut, sleepy, tonnage white underwear maker ... even though it had invented the Y-front men's briefs, was the first to use celebrity sponsors in television ads, and the first to package women's underwear. Actually, Jockey is still number one in department store share of men's briefs and outdistances the competition in the women's cotton briefs business in traditional stores.

However, in truth, some of the perceptions about Jockey were on the mark. "We became a little stale over time, and the popularity of designer lines helped force our hand faster," Emma acknowledges. "We probably should have been aware of it earlier. We did lose market share, but the good news is we're gaining it all back."

Over the last couple of years, the company pulled up its socks and began to rationalize its lines, infuse fashion, and redesign the way goods were sold at retail, essentially by creating in-store shops at key locations. Emma says: "My thrust has really been on regaining leadership in our core competency. We still have the leading market share in our category by far, but I'd like to have the same kind of dominance we had years ago."

As a part of that strategy, the company did a full ad agency review nearly three years ago, believing that its existing ads were too mainstream. The new, humorous "real people" advertising program does a balancing act in order to appeal, fashion-wise, to the 18- to 34-year-old segment and still retain loyal, older consumers. Debra Waller, executive vice president and assistant to Emma, observes, "We knew we didn't want to go black-and-white with the emotionless ads that designers were doing. Sex isn't what we promote. Ours is a family company. So we decided to go with a theme that was emotion, rather than product, focused."

To achieve Emma's "industry leader" goal, the company implemented several major structural changes. In early 1998, for example, the men's and women's divisions were integrated into an umbrella organization called Jockey Brand to serve customers better through increased internal collaboration. Steven Tolensky, formerly president of international operations, was named president of the entity. As a part of the new plan, the "Jockey For Her" appellation was eliminated because management knew that "Jockey" alone resonated with women. Now, it's Jockey Men's and Jockey Intimates.

Under the Jockey Brand umbrella, the company repackaged the entire men's line and cut back the number of SKUs by 35 percent, in some cases. No longer are there 14 different subbrands. Now, there are four distinct segments: classic, fashion, sport, and pouch. The reorganization has had a direct, positive impact on customer satisfaction. Tolensky explains: "We're really focusing on our great-selling items in both men's and women's, and cutting out the fringe products that might have caused us not to deliver as well as we could have."

The organizational redesign is paying off, the Jockey Brand president says, noting that sales last year in women's intimate categories were up double digits over 1997 sales, and men's underwear was well up last year as well.

A lot of the credit for the strong 1998 showing must go to the company's in-store shop program that was instituted in the fall of '97. Tolensky notes that while the spaces are expensive to install, "they define your territory and allow you to make a full statement. Wherever we put in a men's or women's shop, we end up seeing sales rise well over 15 percent." At the end of the year, Jockey will have 600 in-store shops out of the 3,200 retail stores it sells to."

Moving forward, the underpinning for Jockey's success with its new structure will be a more intense customer focus. "That means understanding what their needs are," explains Emma, "not what we'd like to think their needs are. So we're taking a look at our supply chain from many different vantage points and looking at how we can improve it. Key to what we're trying to do is simplify the chain and create greater speed for the product moving through as well as improve our accuracy and responsiveness, while reducing costs and improving visibility. We want to be able to identify before the inventory gets boxed what products are going to what customer, on which order."

The man charged with that responsibility is Ed R. Gill, senior vice president of customer logistics. His title may say "logistics," but Gill sees a subtle difference between that term and "supply chain management."

In this executive's view, supply chain management means that "the umbrella has opened wider to encompass all phases of the business, from a buying aspect to a selling aspect, all the way through to the finished products at the consumer level. SCM now applies to the whole spectrum of getting the product to the ultimate consumer. With the advent of online selling and the consumer having much less time to spend in the shopping destination, the big challenge, particularly for manufacturers and the traditional stores that deal in fashion, is to have the right product at the right time and in the right presentation."

Easier said than done. But Gill reports that Jockey is spending "millions" (again, it's a privately held concern) on computers, software, and upgrading manufacturing facilities and distribution centers. All of this is designed to improve the company's ability to communicate with trading partners upstream and downstream—and then act more expeditiously in response to actual customer demand.

An important part of the challenge is forecasting—an especially difficult exercise where fashion merchandise is concerned. "That's where we still run into problems," the logistics executive observes, "tying the marketing aspect in with manufacturing in order to be able to move production planning around from domestic to offshore."

When processing 10,000 SKUs, about half of which are fashion goods, forecasting information is vital. To enhance the quality of that information, Jockey is in the midst of a major systems upgrade. The most visible improvement to date is in the database, which Gill characterizes as "a lot cleaner" than it was a few years ago. He adds that a data warehouse now up and running, "lets sales people do their own spreadsheets based on what they want to see and what the store wants to see, rather than just having generic reports."

At the heart of the changes is the JBA System 21 Style software solution, a package from U.K.-based JBA International, a leading supplier of enterprise management software for the apparel industry. The Y2K-compliant, integrated production planning, sales-order processing, and financial modules (which replace Jockey's old legacy system from the mid-1980s) are gradually going online.

The sales order processing is working well. The company hopes to have the manufacturing piece installed by this fall or early 2000. Just to be safe in the meantime, the legacy system, which is still being used for manufacturing, has been made Y2K-compliant. Gill amplifies: "We feel very comfortable about being able to perform in any of our requirements requests for Y2K. ... We're also getting a lot of support from our customers—Federated, the May Company, JCPenney, and so on."

As part of an overall emphasis on supply chain management, Jockey is working to include its vendors in the loop with a continuous forecasting capability. The logistics executive explains: "We want to tie in all of our purchasing, all of our suppliers, to a [greater] extent than we do today."

To satisfy the demand by stores for faster delivery (Jockey now generally ships within 24 to 48 hours), Gill suggests that the retailers may have to change their procedures. At present, most of them send their requests after close of business on Saturday night, and Jockey receives them on Monday. "We may have to look at receiving them on Sunday, cleaning them up, and having them shipped on Monday," he says.

In that regard, transportation is an important link in the chain that still needs attention. In fact, Gill sees over-the-road movement of goods as the big issue that the apparel industry will have to face in the next couple of years. As a result of the pressure for less inventory and higher turnover, there has been a tremendous influx of freight. "The stores' DCs and receiving areas have to do a better job of scheduling to eliminate the logjams," Gill says.

As good as the supply chain for apparel may get over time, Gill doesn't believe that the "sell one, buy one concept" that industry executives speechify about is realistic. "You still have to do the ordering, the picking and packing, and shipping," he explains. "And unfortunately osmosis isn't a means of doing that."

Quite the opposite. At this juncture, retail demands for smaller, more frequent deliveries—combined with the fact that a substantial amount of goods are being produced offshore, thereby increasing leadtimes—have left manufacturing inventory levels largely unchanged. "We are trying to work with less inventory," the logistics chief notes, "and levels have come down, but not substantially."

To be successful over the long haul, though, Jockey understands the need to reassess its supply chain processes and procedures continually. Gill explains: "Even if you're doing everything right today, that doesn't necessarily mean it'll be right tomorrow. When you hit that comfort level, you better look over your shoulder."

There is no question that the demands companies like VF and Jockey are making of their supply chain management operations are enormous—yet no less than the demands and pressures being exerted by the retail marketplace on them. Those challenges will hardly abate as the market enters the 21st century. If anything, they will be further amplified by new consumer lifestyle needs, continued retail consolidation, and increased competition from emerging forces such as electronic commerce.

In that evolving scenario, the winners and survivors will undoubtedly be those companies that (1) know who is buying their products and where, (2) can most accurately and efficiently forecast demand, and (3) have the capability to deliver the right product at the right time to the right store—all at the right price. That is where both Jockey and VF are headed with their current supply chain initiatives. Because of their proactive stance, they will very likely be two companies that other retail suppliers will look to in modeling their own supply chains for a successful future.