Executive Briefings

A Global Apparel Manufacturer Takes on Corporate Silos

VF Corp. tears down the walls between brands to address the complexities of planning for retailers and consumers in the fast-changing world of fashion.

Ten years ago, VF Corp. decided to start managing the companies that it owned.

Greensboro, N.C.-based VF has been around for more than a century, starting out as a maker of gloves and mittens and growing into the world's largest apparel company, with nearly $6bn in sales. By 1995, it had evolved into a holding company, taking a hands-off approach to its various units. "They just went out and bought things, and left the companies alone," says Ellen Martin, vice president of supply-chain systems.

Chief executive officer Mackey McDonald, who took over in the mid-1990s, steered the company onto a different course. He saw multiple, redundant operations that were ripe for consolidation. And he vowed to install common business practices systems across the massive organization.

That was a tall order for a company whose name is virtually unknown to the public at large, but was making some of the world's most popular brands of apparel, including Wrangler, Lee, Brittania, Vanity Fair and, in subsequent acquisitions, The North Face, Vans and JanSport. McDonald's first impulse was to create a common series of best practices and re-engineer the company's supply chain. But he soon ran into the problem of incompatible systems.

VF's business units were operating as silos, with legacy systems of varying sophistication, says Martin. One of the company's first steps, therefore, was buying an enterprise resource planning system from SAP AG.

ERP was fine for core transactional processes, but it didn't address VF's need for good supply-chain planning. In particular, it couldn't distinguish items by size, an essential capability for apparel makers. (An apparel SKU can have as many as five dimensions, based on size, color and other details.) So VF went looking for a stand-alone planning system.

A materials asset planning program "is probably the most complicated software I've ever seen."
- Ellen Martin of VF Corp.

The company had already begun running the Factory Planner software from i2 Technologies, then a small startup out of Dallas. The application was limited to VF's Playwear division (later sold to Lollytogs Inc.), and was strictly for managing plant operations. For its corporate-wide program, VF turned instead to i2's Supply Chain Planner, a new tool that showed promise but wasn't yet a perfect fit.

The problem lay in managing VF's huge volumes. In a single year, the company offers 500,000 SKUs-the Jeanswear division alone accounts for nearly 60,000 SKUs, and Intimates 30,000-and it needed the ability to do SKU-level planning. Working closely with VF, i2 wrote a materials asset planning (MAP) program to address the complexity of VF's supply chain, and apparel in general. What they came up with, says Martin, "is probably the most complicated software I've ever seen."

Complicated out of necessity, not poor programming. Supply Chain Planner is a modeling engine which allows VF to do a variety of tasks, including production planning based on multiple constraints and manufacturing lead times; material planning based on bills of material (BOMs) and individual SKUs; multiple routings based on demand-date and BOM requirements; and planning against outside inventories for raw materials. (Among its many drawbacks, VF's old legacy system couldn't look at capacity and material simultaneously, says Sweeni Ponoth, i2's senior solution architect.) Using raw data from SAP and a forecasting tool from Logility, the i2 system plans each order, creating a complete schedule for the factory to build finished product.

Keeping Data Fresh
Supply Chain Planner has gone through multiple releases since being acquired by VF. Each time, says Martin, it gained in sophistication. Today, depending on the needs of individual business units, VF uses it for planning horizons that extend from two weeks to 18 months. Often the company can react to changes on a daily basis, getting fresh demand data from retailer forecasts, point-of-sale systems and online sources.

VF's Imagewear division, which makes work uniforms as well as licensed locker-room apparel for professional sports teams, was the first to acquire Supply Chain Planner. The first implementation was also the longest, lasting nearly 18 months, as VF struggled to feed in the right data. Martin says the division faces the dual challenge of ordering the right amount of blank garments and the printing or embroidery materials needed to finish them.

Supply Chain Planner was subsequently (and more easily) implemented at the Jeanswear, Outdoor and Intimates divisions. Only Nautica and Vans, both acquired by VF within the last two years, lack the technology today. "We'll get to them," says Martin. "It's just a matter of time."

As with any new system, VF encountered human resistance at the start. The technology requires extensive training and months of operation before it is running smoothly, Martin says. Initially, some staff members balked at the complexity, along with the need for accurate data input in order to achieve meaningful results.

They soon came around. Jeanswear, which acquired Supply Chain Planner in 2000, "can't live without it," she says. "It has made their job so much easier." The division runs one million records, covering 50,000 SKUs, each night, all in the span of four hours. As a result, the unit can respond more quickly to market realities. Jeanswear just reported its best booking season ever, notes Jim Stramm, i2's senior practice director.

Benefits of the software include reductions in days in inventory, planning lead times and product obsolescence. Human planners tend to keep issuing the same production signals even when demand falls off, says Martin. With the i2 system, "every night is a new night to the engine." Its lack of memory ensures that decisions will be based on actual conditions in the market.

The system has saved the Jeanswear and Imagewear divisions $24m a year. At a company the size of VF, Martin says, the elimination of a single day of work in progress can save millions of dollars. Other results include an increase in customer service of 10 to 15 percent, and a 75-percent reduction in planning cycle times.

Move to Outsource
VF expects to use the same planning tool as it moves toward outsourced manufacturing. At the time of purchase, says Ponoth, it owned some 85 percent of the manufacturing base. It was saddled with a large contracted workforce that had to be continuously employed regardless of demand. Now, VF is following the example of many U.S. companies by sourcing manufacturing overseas, especially in Asia.

Unlike plants in the U.S., Caribbean and Latin America, it does not own those facilities. Yet VF still must plan for production according to forecasted demand. The North Face supplies forecasts to raw-materials vendors even though it isn't making the purchases, Martin says.

Some changes to the planning engine are necessary. In-house manufacturing focuses on constrained capacity and the need to keep workers busy year round, Martin says. Outsourcing shifts the planning emphasis to BOMs, inventory buildup and items that must be made early or late, depending on customer demand dates and production lead times.

Martin serves on the board of directors of i2's user group, where she continues to press for enhancements to the planning tool. One possibility is improved allocation of product where work in progress involves different lead times. Still, she says, "This is really tweaking now. They've got the basics."

Ten years ago, VF Corp. decided to start managing the companies that it owned.

Greensboro, N.C.-based VF has been around for more than a century, starting out as a maker of gloves and mittens and growing into the world's largest apparel company, with nearly $6bn in sales. By 1995, it had evolved into a holding company, taking a hands-off approach to its various units. "They just went out and bought things, and left the companies alone," says Ellen Martin, vice president of supply-chain systems.

Chief executive officer Mackey McDonald, who took over in the mid-1990s, steered the company onto a different course. He saw multiple, redundant operations that were ripe for consolidation. And he vowed to install common business practices systems across the massive organization.

That was a tall order for a company whose name is virtually unknown to the public at large, but was making some of the world's most popular brands of apparel, including Wrangler, Lee, Brittania, Vanity Fair and, in subsequent acquisitions, The North Face, Vans and JanSport. McDonald's first impulse was to create a common series of best practices and re-engineer the company's supply chain. But he soon ran into the problem of incompatible systems.

VF's business units were operating as silos, with legacy systems of varying sophistication, says Martin. One of the company's first steps, therefore, was buying an enterprise resource planning system from SAP AG.

ERP was fine for core transactional processes, but it didn't address VF's need for good supply-chain planning. In particular, it couldn't distinguish items by size, an essential capability for apparel makers. (An apparel SKU can have as many as five dimensions, based on size, color and other details.) So VF went looking for a stand-alone planning system.

A materials asset planning program "is probably the most complicated software I've ever seen."
- Ellen Martin of VF Corp.

The company had already begun running the Factory Planner software from i2 Technologies, then a small startup out of Dallas. The application was limited to VF's Playwear division (later sold to Lollytogs Inc.), and was strictly for managing plant operations. For its corporate-wide program, VF turned instead to i2's Supply Chain Planner, a new tool that showed promise but wasn't yet a perfect fit.

The problem lay in managing VF's huge volumes. In a single year, the company offers 500,000 SKUs-the Jeanswear division alone accounts for nearly 60,000 SKUs, and Intimates 30,000-and it needed the ability to do SKU-level planning. Working closely with VF, i2 wrote a materials asset planning (MAP) program to address the complexity of VF's supply chain, and apparel in general. What they came up with, says Martin, "is probably the most complicated software I've ever seen."

Complicated out of necessity, not poor programming. Supply Chain Planner is a modeling engine which allows VF to do a variety of tasks, including production planning based on multiple constraints and manufacturing lead times; material planning based on bills of material (BOMs) and individual SKUs; multiple routings based on demand-date and BOM requirements; and planning against outside inventories for raw materials. (Among its many drawbacks, VF's old legacy system couldn't look at capacity and material simultaneously, says Sweeni Ponoth, i2's senior solution architect.) Using raw data from SAP and a forecasting tool from Logility, the i2 system plans each order, creating a complete schedule for the factory to build finished product.

Keeping Data Fresh
Supply Chain Planner has gone through multiple releases since being acquired by VF. Each time, says Martin, it gained in sophistication. Today, depending on the needs of individual business units, VF uses it for planning horizons that extend from two weeks to 18 months. Often the company can react to changes on a daily basis, getting fresh demand data from retailer forecasts, point-of-sale systems and online sources.

VF's Imagewear division, which makes work uniforms as well as licensed locker-room apparel for professional sports teams, was the first to acquire Supply Chain Planner. The first implementation was also the longest, lasting nearly 18 months, as VF struggled to feed in the right data. Martin says the division faces the dual challenge of ordering the right amount of blank garments and the printing or embroidery materials needed to finish them.

Supply Chain Planner was subsequently (and more easily) implemented at the Jeanswear, Outdoor and Intimates divisions. Only Nautica and Vans, both acquired by VF within the last two years, lack the technology today. "We'll get to them," says Martin. "It's just a matter of time."

As with any new system, VF encountered human resistance at the start. The technology requires extensive training and months of operation before it is running smoothly, Martin says. Initially, some staff members balked at the complexity, along with the need for accurate data input in order to achieve meaningful results.

They soon came around. Jeanswear, which acquired Supply Chain Planner in 2000, "can't live without it," she says. "It has made their job so much easier." The division runs one million records, covering 50,000 SKUs, each night, all in the span of four hours. As a result, the unit can respond more quickly to market realities. Jeanswear just reported its best booking season ever, notes Jim Stramm, i2's senior practice director.

Benefits of the software include reductions in days in inventory, planning lead times and product obsolescence. Human planners tend to keep issuing the same production signals even when demand falls off, says Martin. With the i2 system, "every night is a new night to the engine." Its lack of memory ensures that decisions will be based on actual conditions in the market.

The system has saved the Jeanswear and Imagewear divisions $24m a year. At a company the size of VF, Martin says, the elimination of a single day of work in progress can save millions of dollars. Other results include an increase in customer service of 10 to 15 percent, and a 75-percent reduction in planning cycle times.

Move to Outsource
VF expects to use the same planning tool as it moves toward outsourced manufacturing. At the time of purchase, says Ponoth, it owned some 85 percent of the manufacturing base. It was saddled with a large contracted workforce that had to be continuously employed regardless of demand. Now, VF is following the example of many U.S. companies by sourcing manufacturing overseas, especially in Asia.

Unlike plants in the U.S., Caribbean and Latin America, it does not own those facilities. Yet VF still must plan for production according to forecasted demand. The North Face supplies forecasts to raw-materials vendors even though it isn't making the purchases, Martin says.

Some changes to the planning engine are necessary. In-house manufacturing focuses on constrained capacity and the need to keep workers busy year round, Martin says. Outsourcing shifts the planning emphasis to BOMs, inventory buildup and items that must be made early or late, depending on customer demand dates and production lead times.

Martin serves on the board of directors of i2's user group, where she continues to press for enhancements to the planning tool. One possibility is improved allocation of product where work in progress involves different lead times. Still, she says, "This is really tweaking now. They've got the basics."