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OF AN INTERNATIONAL AND DOMESTIC BRAND
SUBMITTED TO:MR.DIBYENDU DUTTA SUBMITTED BY :VISHWAJEET BHARTI ROLL- 25,MFM
Gucci Group: a brief overview
Gucci Group, with consolidated sales over 3.2bn, is a world-leading, multi-brand company in the fashion business. In addition to the core Gucci brand, the Group incorporated other leading brands such as Yves Saint Laurent, Sergio Rossi, Boucheron, Bottega Veneta and Balenciaga together with designer brands such as Alexander McQueen and Stella McCartney (exhibit 1). Leather goods, and in particular bags and accessories, represented the traditional core business of the group, with a growing presence in ready-towear clothing and shoes. The major distribution channel is directly operated stores (DOS), which contributed roughly 50% of Group turnover. Gucci is a global company, with Europe accounting for just over 40% of sales: the USA, Japan and ‘Rest of the World’ each contribute roughly 20% (exhibit 2).Gucci Group was founded in 1923 by Guccio Gucci, and developed rapidly after World War II to become internationally known as a luxury brand. In the 1970’s, arguments and legal disputes within the Gucci family brought about a rapid decline in fortunes. At the end of the 1980’s the company - in spite of the entry of the Arab investment group Investcorp – was in poor shape financially. The famous brand was also suffering because of the extensive practice of licensing. Starting in 1994 under Domenico De Sole, Gucci underwent a rapid turnaround process. This painful experience not only aimed to cut costs and locations, but also to build a modernized company. Thanks to the cheerful contributions of Creative Director Tom Ford, it also built a renewed brand. Within a five year period, De Sole – together with Tom Ford as stylist, Renato Ricci as head of human resources, Bob Singer as chief financial officer and James McArthur as director of strategy and acquisitions – managed to increase company sales almost four times (table 2). The turnaround gave Gucci a leading world-wide position, allowing the company to return to positive earnings and then to finance a strong acquisitions campaign and moved towards the present multi-brand configuration. The major acquisition was Sanofi Beautè. This company owned YSL licences and comprised two major divisions: YSL Couture for Yves Saint Laurent ready-to-wear and YSL Beauté for cosmetics and fragrances. The traditional Gucci fashion and accessories division accounted for the largest part (54%) of group revenues, and of the margins (240%). However, the newly acquired brands allowed the group to nearly treble its sales in the 5 years from 1999 (1174m) to 2004 (2,544m). Following acquisition of Gucci group by Pinault Printemps-Redoute (PPR) in May 2004, a new management team led by CEO Robert Polet was set up. PPR started investing in Gucci in March 1999 in order to help Gucci management to face up to a hostile takeover bid by LVMH, one of its strongest competitors. On September 10th 2001, following a settlement with LVMH, PPR increased its interest in the company to 53%2. In April 2004, following a strategic investment agreement with LVMH, PPR offered to purchase all Gucci public shares. After the acquisition, PPR started de-listing Gucci shares from the New York Stock Exchange and Euronext Amsterdam in July 2004. Gucci Group is now the pillar of PPR Luxury Goods division. While very international in its presence, its management and its ownership, Gucci was still rooted in Florence, and in the craftsmanship strengths of the Tuscany region. All of its traditional leather production (bags and accessories) was carried out in the Florence region by a network of more than 600 small to medium sized firms. While the re-launch of Gucci Group was led by Tom Ford and its successful commercial future depended heavily on the collections designed by the new creative directors , part of Gucci’s success has also been due to its ability to deliver promises made at fashion shows, respecting both strict delivery times and high quality standards. The need for an agile 2
supply chain is crucial in the fashion business because a high variety of articles must be managed within strict time constraints. Most fashion companies renew 60-80% of their range each season, so they must develop several thousands of new articles each year. The selling period is quite short, and requires strict compliance with the fashion show calendar - with no possibility of running late in developing a new collection. After an introduction to key business processes in the fashion business, we focus especially on the Gucci supply chain. In addition to a successful marketing effort in repositioning its brands and collections, Gucci has been able to restructure its supply chain to achieve agility, while preserving its traditional Craftsmanship.
Key business processes in the fashion business
Fashion activities are centered on seasons and collections. Traditionally, a company in the Fashion business presents at least one collection in both of the classical seasons (winter/autumn and spring/summer). Most fashion companies - while keeping the official accounting and legal/fiscal reporting according to the fiscal year - focus management accounting and control mainly on seasons. Seasons are the key reference point for evaluating company competitiveness and profitability. Results each year are in effect the sum of the contributions of the collections for each season. Each season a fashion company needs to reinvent itself by renewing around 60-80% of its range. The manufacturing process cannot be planned in advance in detail, as only a small proportion of production comprises ‘classical’ articles where sales history has been established. It is therefore risky to plan large lots of new items in advance when sales of lines, colours and finishings can be very different from those originally planned. Supply chain agility is important in order to avoid stock-outs on the one hand, and mark-downs on the other. The season is planned and controlled by 3 key business processes: · collection preparation: definition of the prototypes, production of pre-industrialised small quantities (the ‘samples’) for use at fashion shows · sales campaign order management: collection of orders from the fashion shows, agents,distributors and other sources. · production planning: formulation of the production plan based on pre-season sales plans updated as the sales campaign unfolds. Exhibit 3 shows key stages in collection preparation and production planning, and how they interface with budgeting and control.
or by substituting specified materials with lower priced ones.the whole business process from bill of materials definition to production order launch to physical distribution to showrooms and agents.prototypes: unique elements aimed to express the fashion/style of the new collection that can be made either by an external or an internal design workshop. Moreover the stylist and the product manager have to manage all the elements that determine the standard cost.with the goal of achieving the overall season budget. because during this phase the emphasis is on shortening the throughput time rather than on reducing costs 4. Creativity of the stylist is the key input. After an analysis at the level of the single item.samples: small lot productions aimed to transfer the prototype ideas into a pre. The bill of materials and the process cycle of the samples are normally different from normal production. with the support of suppliers and subcontractors. In the samples phase. standard costs and gross margins . The stylist has to look at fashion trends and at the previous parallel season sales statistics in order to select prototypes that match the market target. Moreover.in spite of their new bill of materials. the goal is to obtain a small production lot of industrialized products. these costs can be tuned by transferring production to subcontractors in a region with lower costs. Collection preparation comprises two major phases with different outputs: . Sample orders are critical because they are made of small orders with a large number of parts to be delivered in a very short time . preliminary bills of material and process cycles are fine-tuned for reliable production based on samples production. In the prototyping phase the goal is to achieve a mixed yet balanced set of offerings for a new collection. they have to balance cost of leather. the whole collection is revised in order to establish a ‘balanced’ offer for the sales campaign in terms of target prices. These support the design phase while automatically generating the bills of material. The CAD system can also define part of the production cycle . and to define the industrial process for large-scale production. In the prototypes phase. . For example.industrialised product in terms of bills of material and process cycle.1. Management of the collection sample orders covers . This helps to develop the new collection to be presented to potential customers.the fabrics cutting phase. the goal is to prepare new models for the target market.in a very short time and in very small quantities . but effectiveness of the process has become increasingly important as indicated by a growing use of dedicated CAD systems. Where necessary. fabrics and accessories with the cost of manufacturing cycle. 4 . Collection preparation Collection preparation is a key activity for competitiveness both in terms of sales potential and in terms of costs (it involves up to 5-7% of the total collection costs).
The orders portfolio is the basis for the final purchase orders to material suppliers and subcontractors. and involves orders acquisition from the various distributors and Gucciowned shops and from boutiques via agents. Gucci launches production orders. Sales Campaign Order Management Collections presentation at the fashion shows represents completion of the collection preparation phase. as they are based on Gucci forecasts with no market input. 3. it is frozen in order to specify the overall production plan. Production planning Production planning starts with overall goals from the season budget based on characteristics of the collection presented and historical sales trends. Incoming orders during the sales campaign create a rolling sales target revision. Between the two phases. Initial purchases are made al buio (in the dark). process capacity and materials availability. The order portfolio is developed during the sale campaign. 3-4 months for fabrics and 1-2 months for leather) 5 . Each collection is brought to the sales campaign having been assessed in terms of its potential and accompanying sales target. New purchasing orders are issued. and old ones are modified or cancelled.2. there is often a two-week overlap where .e. At the end of a sales campaign. yarns for the textile manufacturers and fabrics for the clothing companies). Gucci makes a weekly updated projection of the campaign result (the so called ‘projected results’). however. For the most extravagant items and colours. These can be either for an internal department or . and after the sales campaign has finished. and start of the sales campaign. Because of the short delivery window. Gucci has a complete view of the order portfolio.for external subcontractors. Once the sales campaign has started and customer orders are coming in. Such an overall budget determines initial purchases of inputs (i. subject to cancellations and modifications from customers.more frequently . As materials are received (such as yarns for textile companies and fabrics for clothing companies). because additional materials cannot be procured within the time available. purchasing normally takes place only after order receipt. many articles cannot be further replenished after closure of the sales campaign. and mainly address items and colours that are very likely to be ordered and produced. The sales campaign normally lasts from 4 to 6 weeks. These purchases can reach up to 30-40% of the overall planned requirements. Production planning therefore needs to take into account: · launch of production orders through a long production cycle that is distributed across many suppliers (for example. This is. All purchasing and production phases in the fashion chain need to be managed in an agile way because they are as fragmented and changing as the unfolding season itself.based on the preliminary collection editing and review – product managers decide modifications to collections and cancellations. These ongoing adjustments in turn impact on production planning.
This makes calculations of order delivery dates more uncertain. including manual interventions at different steps of the process. This means that enterprise software needs to be able of supporting alternative CODP configurations. MTO is the most popular regime for fashion items because as it is possible to follow customer requirements and trends. This is because the supply lead time for both yarns and fabrics (‘P’ time) would be much longer than the required customer order lead time (‘D’ time). In Make to Stock (MTS). they are too risky for most fashion items because unsold stock at the end of season has to be discounted. Instead. long lifecycle items. Such an approach is used mainly for classic items. This may be specially important if a new model is very innovative. allocation to specific orders can be changed if a quality problem has taken place or commercial priorities have changed. While MTS regimes are feasible for classic. the CODP is located after the end of the last transformation process. but becomes dedicated to a specific customer order. and decisions on priorities for launching production lots. the CODP is positioned before the beginning of the first transformation process. thereby limiting the risk of building up stocks that may not sell. In form postponement (FPp). In a Make to Order (MTO) regime. because it requires production of finished items for the warehouse without a link to customers’ orders. part of the purchasing commitment to suppliers is made on the basis of forecasts. the CODP is at the semi-finished product stage. exhibit 4). Few fashion companies use MTS. including special processing like the customer tag or particular packaging. modifications and new commercial priorities. the product is in generic form to ensure that final manufacturing is performed to specific customer order. FPp is used for final assembly of products that are only completed after customer order confirmation. limits their capability to control the whole process. Production up to the CODP is carried out as if for stock (based on the total volumes) and differentiated only in the final phases. Most companies work with a system that is a hybrid between FPp and MTO. Flexibility of the nonintegrated planning programme. especially when fabrics or knitted items can be colourised after the CODP. Here. If production is delayed until customer orders are received. Fashion companies have different production planning approaches based on their Customer Order Decoupling Point (CODP. they prefer to have programs dedicated to each phase. This represents the point where production is no longer generic. which allows suppliers to respond quickly to market requests. Examples of such ‘manual interventions’ are purchase orders at the beginning of each season. 6 . Because of these challenges. Even in this case. textile and fashion companies do not generally use an integrated program such as MRP for planning purchasing and production.· optimisation of work phases by grouping production batches of different items wherever joint processing can be done · flexible rescheduling of work assignments due to cancellations. however.
While the average competitor carries over 30% of product lines from one season to the next. There are roughly thirty events per year for the Group as a whole. Inevitably. Gucci Logistica employs 320 people and is structured around five major areas: materials research & development. production and costing6 (exhibit 5). 7 . Gucci presents targeted creations at each of these events. In other words. · Work with the marketing and commercial on closing the sales campaign for the Autumn/Winter 2004 collection. 90% of Gucci products are new each season. The company develops 18. · Work with suppliers and distributors for completion of production and shipments of the Spring/Summer 2004 collection. operations managers have to: · Work with the design and product development for the preparation of the Spring/Summer 2005 collection.000 prototypes/year (including single pieces for public relations purposes). and Men’s and Women’s fashion shows. A further element of complexity is caused by the need to carry out planning and execution for 3 seasons at the same time. This often creates difficult trade-offs in resource allocation between urgent tasks (deliveries for the current season) and future tasks (support for the new collections). This ‘rough cut’ plan enables a fashion company to approve production so that it is possible to concentrate on execution without distractions from changes in the order portfolio. and an overall production plan defined by considering process capacity and material availability. The importance of this capability is recognised by assigning the operations task. to a dedicated company . However. including Cruise 5 . excluding worldwide distribution. Gucci’s agile supply chain Pressures that characterise the fashion business are accentuated in a leading company such as Gucci. there will be day-to-day requests for cancellations and additional orders throughout the season. Gucci presents specific collections to the market on given ‘events’. Normally the processing capacity is not a problem as the company can look for additional subcontractors if necessary. which allow distinctions to be made between product ranges.Gucci Logistica.000 different stock keeping units (sku’s. technical management. material availability within the requested timing can be a problem. For instance in February 2004. Managing such a wide product portfolio with short product lifecycles to tight collection deadlines is the core operations capability at Gucci. and manages some 4. materials and colours). Moreover. Gucci carries over just 10%. Product churning creates particularly difficult challenges. operations.The order portfolio is frozen at the end of a sales campaign.
It is also involved in looking at long term fashion trends to identify ‘future’ materials and to experiment in collaboration with qualified raw material suppliers. Prototypes must be supplied within two weeks from receipt of design. it engineers the collection models and defines the rules for quality assurance of finished products . · Costing: develops costs for a collection. If an item fails to collect a minimum number of orders.· Materials R&D: is a department of 30 people . Agility in the supply chain begins at the start – preparing the prototypes. These orders are based on preliminary bulk orders from Gucci internal merchandising. While most production activities are outsourced. (on the basis of the confirmed orders). dates and responsibilities for launching a new collection.dedicated to the development of new materials and production processes. · Operations: is responsible for raw materials purchasing (including hardware like buckles and buttons). The department is responsible for order handling. and is closely involved in events coordination. At the fashion show the company presents the sample items. there is usually a week for fine tuning the actual items that will be presented for the sales campaign. At the end of the sales campaign.production planning and production follow-up. having defined a ‘cost price list’. production department plays a key role in monitoring workflow progress across the supply chain. definition of time and methods for production and internal raw materials cutting. The department has achieved important results in water jet leather cutting. 8 . It supports designers from early phases of collection preparation (from initial samples to prototypes and models). cost adjustments are made and the definitive price list prepared. orders are collected and consolidated. There is then a two-week sales campaign. procurement. Technical management is involved from the stylist’s drawing. and specially treated crocodile and buffalo leathers. These prototypes are considered both in terms of style and of manufacturing methods and costing. Once the new collection has been presented. nest optimisation. · Production department: is responsible for order fulfilment through planning and controlling production.much larger than the industry norm . Some purchase orders will already have been made by Gucci on its supplier network. it can be removed from the collection. On the basis of feedback from stylists and the market. managing suppliers. · Technical management: is responsible for technical definition of the product. some items are cancelled and others modified. where both internal and external purchasers meet to decide their orders. During this period. On this basis a limited number of samples is prepared within a week. based on planned material usage from the bill of materials and labour methods Exhibit 6 summarises the main activities.
· Others: suppliers that work on 6-12 months assignments in order to provide the required supply chain flexibility. Gucci has a commitment for minimum annual turnover and volume levels. but Gucci does not acquire shares in any of them. starting from modelling (modelleria) for sample preparation.and the order portfolio frozen that the detailed production plan is defined. Sub-suppliers’ performance is already 9 . Customer orders are aggregated into production orders. with actual orders periodically revised on the basis of sales campaign results 11.However it is only after the sales campaign has been closed . Depending on timing of the order and on the destination. Gucci has full visibility of second tier suppliers: each sub-supplier has to be evaluated and approved by Gucci for both QA and security reasons 12 . However. All end. Gucci meets partners and integrated suppliers at least twice a year in order to explain targets for the next season. · Integrated suppliers: suppliers who work for Gucci 70-100% of their sales turnover. These suppliers are involved on the basis of target production volumes. There are three categories of first tier supplier: · Partners: selected suppliers that work 100% for Gucci with a 3-year contract. Production activities – controlled and coordinated by Gucci Logistica . Such suppliers can support a peak of demand for a given product line/model in a very short time. Gucci doesn’t track order progress. and to explain the wider context in terms of models and volumes. Gucci maintains a list of suppliers who are pre-qualified to the necessary level of product complexity and competencies. There are 7 major partners that are fully involved in Gucci operations.product suppliers of leather bags and accessories that represent the majority of Gucci division turnover are based in the Florence region. nor does it carry out regular QA of second tier suppliers.000 people. The Gucci supply network is based on two tiers. daily management of second tier suppliers is the responsibility of first tier suppliers. and operations has to honour the agreed delivery windows by allocating materials and manpower to the different production orders (exhibit 7). with 70 first tier suppliers and roughly 500-600 second tier companies.are carried out by a broad and flexible supply network both for materials/components production (from leather tanning to metallic accessories) and for end products preparation and assembly10. Partners are often supported financially for investments in machinery and product development. The supply network comprises more than 600 firms with an overall employment of roughly 4. a delivery window is fixed for each collection. and who have a contract horizon of 24 months. who have no exclusivity agreement. All relationships between Gucci and first tier suppliers are governed by formal contracts – even if relationships between parties have to comply with the pressures of fashion seasons and the need for informal co-operation.
Management of the supply chain is centred on a MRP system that is launched every two weeks. Gucci always buys materials. Production planning involves allocation of production activities to the supply network that must allow for capacity constraints and minimum contractual assignments. who provide suppliers with precise bills of material and process specifications.suppliers and their relationship is long-term. Such a strong emphasis on operational issues is important considering the craftsmanship characteristics of the network: sub-suppliers are often family businesses that are manned by the owner’s relatives. but also in terms of monthly progress. Loading at suppliers can subsequently be changed by up to ±15%. While such a decentralized network allows Gucci a high level of flexibility. a merchandising team decides how to allocate the quantities available between retail stores. On average. Gucci planning carries out a pre-production simulation so that planners can check availability of components and processing times at suppliers. 10 . and then define production quantities. Gucci developed an inter. Agility in the inbound supply chain allows for both accuracy and speed in the distribution process. each first tier supplier has 8 to 10 sub. The process is optimised by Gucci time and methods engineers. and sends it to suppliers for processing while maintaining ownership (conto lavorazione). Last year Gucci – thanks to tighter management of the supply chain – succeeded in improving product availability while increasing sales volumes. As soon as they are ready at supplier warehouses.organisational system that links it to its ten top suppliers. Deliveries to worldwide points of sale across the season are monitored by Gucci management not only in terms of schedule completion at the end of the season. A more extensive interorganisational information system (Cross Information System) will allow full visibility over progress of each production order and is scheduled to be installed by early 2006. Gucci also employs inspectors who – in addition to regular QA visits – support suppliers when a new product is launched and who supervise early deliveries13. Early availability of products in the shops means increased chances of selling the goods. or that sales increase in an unforecasted way. it requires significant coordination efforts. parts are transferred to the consolidation centre in Florence the same or the following day. Within a week from completion of the production process. Product availability at the end of the season increased by 7-10% on average. By mid 2003. In the event that production quantities originally scheduled are not met. goods arrive at locations around the world. together with individual competencies and costs.included in the duties of first tier companies. Supply chain responsiveness is closely monitored in terms of the ramp-up speed in supplying distributors and shops with the new collection items. Deliveries are consolidated and then sent to the global distribution warehouse in Bioggio in Switzerland15 . with a remarkable increase to an average 40-50% in first month availability (exhibit 8).
The final forecast . the chain bag family was made of 17 basic models. Continuing hot sales meant that market demand was still higher than the additional re-order. · On order: quantities that will be delivered to the DOS/warehouses within 45 days. different materials (for example leather. velvet and shammy). Gucci Logistica teams are encouraged to find a way of satisfying market demand. as these quantities are already ‘in house’ 11 . mini bag. with 166 variants in total In September 2005 Vivencio Fernandez de Aragon (Gucci Logistica general manager) and Karl Hofer (Gucci Production Manager) had to come to terms with the strong commercial success of the new line. the chain bag family can comprise 15 to 20 basic models. Vivencio and Karl had to react quickly in order to produce and distribute more product. Vivencio and Karl have to decide the re-order strategy for the current season19. Managing a shortage in chain bags The ‘chain bag’ line has been a success story in the Gucci leather goods range.Considering that logistics and production lead times are on average 10 days and 55 daysrespectively. An example of the pressures that arise happened in the spring of2003 with the success of the ‘chain bag’ line. evening. · In transit: quantities that within 5 days will become stock available in the shops. they have to consider: .based on actual sales . palm green and African violet). The data for four of the ten models in the chain bag line are analysed in exhibit 1118. have made them a sales hit (exhibit 9) . They issued a production order 20 days ago.Prior to this. While modifying the model mix. To proceed effectively they had to look at the sales trend and the stock levels of each SKU. beige. Now that they have received all the requested materials from the leather suppliers. flame red. either in the stores or in warehouses nearby. To avoid missing such an opportunity. they could modify the model mix partially with respect to their original order. together with the GG logo.That they have to maintain the total volumes of the different types of leather. But each basic model can be offered in different shapes (such as top handle. In the 2005 collection. · In DOS and warehouse: stock immediately available for sale. In doing so. they are going to send them to the production suppliers. According to the different collections. python. and different colours (such as black. Chain accessories used for the chiusura (the bag fastner).was almost twice the original. and thatthere are 130 days left of the sales campaign (50 days of the 180 dayshave already passed). hobo). silk. as shown in the exhibit. taking into the account the following data: · Sell-out: actual sales in the shops since the beginning of the season campaign.
They face two scenarios in regard to the next season: · The chain bag will be a lasting success with the same or even higher sales.the company has a rule not to go beyond a 15% change in order quantities. They must also consult with marketing on issues such as feedback on product assortment strategy and the possibility of recovering stock-outs. With these data on the table. 12 .all these bags have roughly the same retail value and therefore there are no priorities in regular replenishment of any model 20. Vivencio and Karl will have to start thinking about how to proceed with the new season – which partially overlaps this one . · The chain bag will behave according to the more usual short life cycle that characterises the fashion business. They are also considering that 20 days after their new order. In order to simplify the calculation of different model mixes. or whether to postpone such a decision for 5. They are only too familiar with how difficult it is to forecast in the fashion business and conversely. sales will stabilise in the second half of the season and start declining in the next. . Moreover Vivencio and Karl have to decide whether to issue the new order for additional production immediately. 10 or 20 days to obtain better visibility on the market trend and actual sales.in terms of initial quantities and optimum stock levels. how agility across the whole supply chain is key to their plans.all these bags have roughly the same shape and that the quantity of leather required by each model is roughly the same. They know that it takes 65 days in total before the new ordered items will be available in the shops and that because of the supply contracts they will have only one re-order opportunity (this one. they will be able to modify the model mix with the same constraints they are facing today on the ’on order’ items.That they have a constraint on the accessories/finishing and that they cannot increase the original ’on order’ quantities by more than 15%. either today or delayed in the future). Moreover .. In order to proceed with their decision. After a rapid start-up phase. they start from marketing department forecasts.in order to avoid a high stock of accessories and finishing . we assume that: . as new models prove to be more popular. and will also start to consider the next season’s collection. Vivencio and Karl will decide this afternoon the re-orders they are going to request for the different items.
Van Heusen has a collection of intelligent shirts (Oxyrich collections). It caters to the premium segment in formal corporate wear and is foremost in launching new and innovative collections. Van Heusen is now coming up with an Innerwear range in India. VH is priced one shade lower than Van Heusen as it targets middle to senior level executives.Introduction to Van Heusen Van Heusen is the world’s largest selling dress shirt and premium business wear brand. Van Heusen is known to incorporate the latest and most contemporary international style in its range of products Collection in VH includes formal T’s collection. shoes and cufflinks. Range of products in VH includes shirts. neckties.225 cr. trousers. Currently VH is Rs. Van Heusen garments are balanced and sophisticated with a high quality finish. It caters to the premium executive wear segment. Sub-brands of Van Heusen Van Heusen has the following sub-brands: Van Heusen Man Van Heusen Woman V Dot 18 . Brand and sells 1. It was introduced in India in 1990 by Madura Garments and since then it has been India’s fastest growing lifestyle and apparel brand. knitwear apart from an extensive range of accessories like innerwear.5 million garments a year. bags. the Innovative strike collection and the latest mettle collection. It is positioned as a corporate formal brand and targets the Indian corporate executives. outwear. belts.
When they transform this idea into a product.Product development stages: Understanding the customer needs Idea generation or design Product concept: adding value to the product prototype development Optimizing product design for production Commercialization Product maintenance and Extension Design is only one part of product development. for an apparel product. the styling characteristics. and the means of putting it together. So. Designers or Merchandisers have an idea for a product that they think others will buy. 19 . design means that they have chosen the materials. they have designed the product.
and clothing structures should be the main product development consideration. then the product development process should focus on low cost design and production. then technical fibers. fabrics. setting the design process and product design evaluation within a business context. These trials are called prototypes. If the business plan is to be the technology leader in outerwear. how large is its target market)? Should the product design be adjusted for volume production? If so. they test the prototype and maybe even ask others to try it. If the plan positions the business as the low cost producer of screen printed T-shirts. All these steps make up the design process. It asks questions such as: Is the design compatible with the other products in my business? What products in the market does it compete with? How many people might consider buying it (or. The product development process also encompasses the business part of design.) Product development is much more than the design of a product. It makes design a commercial enterprise.It often takes more than one try to make the product exactly like the idea they had in their mind. (The design process is covered in more detail later in this module. After each trial. For example. how? How can the product be improved after introduction to add value or to sell cheaper? How long will people buy the product? What is its potential life span? The product development strategy at every stage should reflect the company's business plan and core mission. Product development is a process of continuous idea generation designing multiple prototypes to represent multiple ideas developing a product concept that is valuable to the customer and helps to identify competitors commercializing the product by preparing and costing it for volume production and sales to many customers. If customer service is the business plan's competitive edge. then the product should inspire loyalty between customer and designer. 20 .
TIME AND ACTION PLAN Time and action calendar defines the ideal time /date/ period within which the major activities of an assignment should occur against a scheduled delivery window/deadline..It is basically a planning process for any activity to be performed. it is a management tool which is being used 21 .
1.for allocating time and following the same for the whole activity. size set. can be revised as per the new schedule. It needs to be interactive so that in case there is a change in the time frame of any particular activity it. Transit time of raw materials 5. approval (interlining. fusing) 4. The time and action of any purchase order is determined by the following factors: Fabric processing lead times (weaving. Trims and accessories sourcing . desk looms etc. Based on above factors. to make the concept of time and action calendar clearer. It provides the buyer direction to the progress of workflow in order to provide proper co ordination between the buyer and the various-departments in the organization. sewing/embroidery thread. Production lead time 6. Working within a time and action is important as it ensures that the production/shipping takes place within the time constraints and with out undue airfreight of piece goods or merchandise. salesman sample.production. Transit time of finished goods to port of exit.O. given below is an example of a particular P.) 2. pre. strike-off. Fabric approval time (lab dips. dyeing and printing). Garment spec approval (proto sample. bulk production and shipment sample) 3. 22 .
Trims) Trims approval date Bulk yarn order k /d in actual color submit (15 days after yarn order) Approval for the above (N Y or local ) Fabric test submission Approval for the above ( I T S test labs) Garment test submission Approval for the above (I T S) Size set submission Approval for the above 20th-feb 20th-feb onwards 5th-march 7th-mar 12-15-feb 1-Mar 22-Feb 22nd-feb 5th-march 7th-mar 7th-feb 25th-feb 7th-mar 2-Mar 7th-mar 8th-mar 13-Mar 15th-mar 17-Mar 1-Mar 26th-feb 1st-mar 28-Feb 3rd-mar not required not required 23 .TIME AND ACTION PLAN Purchase order received for 20.000 pieces of men's short sleeve. knit T-shirt in five sizes. For diff. OPERATIONS /DATE WISE PLANNED DATE ACTUAL DATA Lab dip submission Lab dip approval Knit down submit Knit down approval (new York) ORDER CONFIRMATION DATE 29th January 2003 1st-feb 3rd-feb 5th-feb 15-feb 2nd-feb 4th-feb 5th-feb 12-feb P 0 date (45-60 days before shipment) Order trims Expected trims in-house date (diff.
Submission Approval for the above Yarn dispatch start date Yarn dispatch close date Fabric knitting start date Fabric knitting close date Fabric dispatch start date Fabric dispatch close date Cut-trigger date-approved for cutting Cutting start date Cutting close date Sewing start date Sewing close date 15th-mar 20th-mar 5-Mar 20-Mar 8-Mar 28th-mar 15th-mar 3rd-april 18th-mar 19th-mar 30th-mar 20th-mar 3rd-april 8th-mar 13-Mar 10-Mar 25-Mar 13-Mar 28-Mar 20th-mar 3rd-april 29th-mar 30th-mar 10th-april 31st-mar 15th-april EX-factory date EX-country date 9th-april 15th-april 16th-april 27th-april 24 .Pre pro.
Sample Description. Once the approvals are 25 . Bursting strength. Feel The fabric swatch is submitted to the buyer for approval. the fabric order is placed for the approve colours/patterns. Wherever the fabrics have to be sourced from nominated sources. 'Before wash Dimensional stability: Warp. ph values. Price. The Merchandiser should confirm with the buyer the light option.Fabric content. Weft.Flammability. Wet Color fastness to washing at -Change in shade Count & Constructions: Warp/inch. which has to be used for the lab dip. 1. Fabric Quality approval has to be taken into consideration like Weight. Lab test is done on the rating scale and there is the minimum specification attached to it and it should in between that limits and has to be signed by the lab in charge.EXPLANATION OF TIME AND ACTION PLAN The parameters defined by the export house to source fabric: . final order for fabric is placed. Weight. Construction Other Factors: . 2. Once the approvals are completed.e. Content. Buyers do have their own standard laboratories from which certification are essential. PH' value. seam strength. Colour fastness. Weft/inch Weight per Meter Square:. Pigment appearance. Dry. The trim sample is submitted to the buyer for approval. Width. Count. Then these report i. Procedures for trim approval: Trims are the accessories embellishments used in the making of a garment excluding the main body fabric. All submits are pre-screened it the local office prior to dispatch to the head office for final check Once all the desk looms/ strike off/ lab dip is approved. Tests Color fastness to Rubbing. Fabric testing report: Desk looms sent for approvals are tested normally for the below given parameters: Name of the supplier. dimensional stability and weight per' meter square are done in-house. After wash. desk loom approval and the Lab dip are submitted to the buyer on a proper format for approval. Dimensional stability. Scam durability. the fabrics are ordered without going through approval Process as buyer approves the same directly with the supplier. Count. The procedures for fabric approval First is the desk loom approval in which the fabrics count& and construction is checked and then comes the lab dips which the colourfastness.
The fabric department demands for the desk loom from its vendor base asking for a test approval with the testing can be done at the export house itself or the buyer has approved some of the testing and then the report is sent to the buyer for its approval. then the report is sent to buyer for its approval. The general lead-time in getting the desk loom in house is around 7 days & then there is testing done and it takes around 3 days. Wherever the trims have to be sourced from nominated sourced.completed. The time taken in making the sample is around 3-4 days so the total time taken in this stage is around 18-20 days. final order for trims is placed. It takes 3 days to reach the buyer So in total it takes 11. Stage2: After the proto sample approval and the desk loom approval. which is sent approval of fit and style. the trims are ordered without going through approval process. After order confirmation the first sample sent to the buyer is proto sample. the buyer demands for the size set sample. The general lead-time for the production of preproduction sample is 1-2 day.12 day making and getting the approval of the proto sample. Then the buyer sends the approval with comments. 26 . Stage 3: After the confirmation of size set sample comes the pre-production sample and it is made during the batch setting It is an ideal case but in most of the case the sampling department makes the pre Production sample and sends it for buyer approval. The general leadtime in proto sample is 6-7 days in making the sample including the patter stage to the stitching of the sample. The general lead-time taken in getting the yardage sample in house is around 1516days. Size set sample Sales man sample Pre production sample Production sample Proto sample Desk loom Under ideal conditions the lead-time in a sampling department are: Stage 1: 1. For size set sample the export house needs the yardage sample. Yardage sample is sourced from fabric supplier and then different size set samples are made and sent to the buyer for its approval. 2 In the meantime the fabric department is said to source the fabric for its approval.
Buyer. which are there on the marker request forms are: Garment description.. But the merchandiser needs to communicate any message from the buyer as soon as possible so that no glitches are there. Documents involved in the process routed through the merchandiser: Packing list: For one Purchase Order only one packing list needs to be maintained.s thefinal inspection certification of the packaged good without which AEPC endorsement can't be obtained. Shade.Details of the sample Lot No. Second copy of packing list to be attached with the Bill of lading. colored envelope attached to the 1st carton of the shipment when shipped through cartons For GOH it is attached with the first garment on the rack. Size. Accessories used (actual/partial/substitute). Sketch page and details. Pattern made by and there position Fabrics used (original/substitute). size and no of samples to be cut) Marker request form The details. Dye lot. It must include Quantity shipped. 27 . For the preparation of invoice all the relevant details hence reached the shipping department. Style description. Initial fabric report Trims status Report: sampling to PPC Sampling report Layout report Another document that is too important. Style reference number. Color. Samples made by referring (sketch /original sample) Samples to be cut (combo no. Fabric description. After this all the processes from the endorsement till the payment is to be followed up by the shipping. Nature of sample made. this has to be ensured. Packing list is to be secured inside a.
buyer's representative undertakes inspection only after certification of which the goods can be endorsed for exports. Shipping and documentation Some technical terms used in the process: 1. But this is to be instructed to the packaging department with proper sketch. Depending 28 . Finishing and packaging Eaches: Prepack: Case pack: Pack SKU Carton marking: It is the merchandiser's duty to get proper carton and marking approvals and communicate the same to purchase.004 mm. Less than standard quantity. Packing list. Pre-pack. A copy of the inspection certification sheet has been attached. No GOH product is to be prepacked or casepacked. Otherwise tapes are to be used. Carton Containing Marking Packing list. Heat sealing is the preferred way of seating polybags. No mixing of styles. A commercial invoice should contain an itemized list of the merchandise with the complete description of goods with their unit value and extended total value. Case-pack Other very important things that the merchandiser must ensure are: Each purchase order is being packed separately.Final inspection certification: After the final packaging of goods. colors. dye lots. Commercial Invoice: Receipt for a transaction and or goods purchased (invoice) indicating the sender or seller and the receiver or purchaser. Outer polybag's color must be transparent. Pre-pack Cartons. Garments are generally packaged in two ways: Flat packed Garment on hanger (GOH) Prepacks and case-packs apply only to flat packed merchandise. All garments must be individually packaged in polybags. shades or sizes within carton has been done unless the purchase order specifies the garments to be pre packed. All prepacks require an outer polybag which should be of a minimum thickness of . Case-pack Cartons.
most frequently from one ship to another." 6. Certificates of Origin are commonly certified by an official organization in the country of origin such as a consular office or a chamber of commerce. Certified by a consular official. or in accordance with certain specifications immediately prior to shipment. per carton No. The tools available with the merchandiser: 8. Certificate of Origin A document containing an affidavit to prove the origin of imported goods. Bill of Lading (B/L) A document issued by a common carrier to a shipper that serves as: A receipt f6r the goods delivered to the carrier for shipment. which details exactly what. consignee. 4. 29 . and nature of the shipment 4. Clearing and forwarding agents name Buyer's name Date of shipping the merchandise. 3. and value of the shipment. Shipping document request form: It includes: Country of destination Order quantity Pcs.The transfer of a shipment from one carrier to another in international trade. statement or clauses that must appear as well. A definition of the contract of carriage of the goods. Consular Invoice A document required by some countrie describing a shipment of goods and showing information such as the consignor. A Document of Title to the goods described therein. Inspection Certificate A document certifying that merchandise was in good condition. 7. 5.on the Customs requirements of the destination country. This document is generally not negotiable unless consigned "to order. Letter of credit: A document issued by a banker instruction by a buyer of goods authorizing the seller to draw a specified sum of money under specified terms. a consular invoice is used by the country's customs officials to verify the value. of cartons Gross and net weight of the cartons. Packing List A document prepared by a seller/shipper. It is used for customs or foreign exchange purposes or both. Transshipment: . quantity. there may be additional requirements. is in each package shipped by commercial invoice line item.
Type of fabric 6. Consumption comparison chart: This is a follow up on the order that what was the planned consumption and the actual consumption is compared to calculate the excess or shortage of the fabric. balance shortage of the fabric. Attached is the exhibit It includes info about the fabric requirement. 3% of wastage at the cut stage and 2% after the shipping is under accepted limits.During sending instructions for documents preparation the merchandiser must ensure ending following information to avoid any hence of miscommunication: 1.Purchase Order Number 2. 10. 7. actual consumption as per the pieces cut and also the consumption as per the pcs shipped. if any. Knit or woven 5. we actively seek business associations with those who share our concerns. Terms 10. Fiber content in % by weight 4. This is information to the shipping dep -artment about the number of excess pieces being sent to the buyer. Gender of the wearer. issued to the factory. our goal is to create. model facilities that not only provide good jobs at fair wages. Port of loading 9. 30 . Name of item. Therefore. Country of destination 8. It also documents the reasons for shortage of the fabric. Fabric control statement: Attached sheet of the fabric control statement shows how the merchandiser follows up with the shipping department about the fabric status for a given lot. fabric received from the supplier. Rate of the goods shipped 9. VENDOR COMPLIANCE Guidelines for Vendors While respecting cultural differences and economic variances that reflect the particular countries where we and our vendors do business. but which also improve conditions in the community at large. and encourage the creation of. 3. It includes the follow up on purchase consumption ( consumption calculate d at the of purchase including the wastage).
sexual orientation. benefits. age. Harassment and Abuse: 31 . particularly those pertaining to hours of work. social or ethnic origin. on the basis of gender. salary. whichever is greater. Vendors must observe all legal requirements for work of authorized minors. religion. discipline. advancement.Legal Requirements: We expect our vendors to be law-abiding citizens and to comply with any and all legal requirements relevant to the conduct of their business. We will not do business with any vendor who utilizes forced labor whether in the form of prison labor. We will seek vendors who respect the legal and moral rights of their employees. especially for younger workers. race. termination or retirement. We encourage vendors to support night classes and work-study programs. bonded labor or otherwise. disability. nationality or. including hiring. Forced Labor: We will not be associated with any vendor who uses form of mental or physical coercion. indentured labor. wages. minimum education and working conditions. Nondiscrimination: We will not do business with any vendor who discriminates in employment. Child Labor: Employees of our vendors must be over the applicable minimum legal age requirement or be at least 14 years old or older than the age for completing compulsory education in the country of manufacture.
at least the minimum wage required by local law or the prevailing industry wage . Employees should be allowed at least one day off per seven-day week. Freedom of Association: Employees should be free to join organizations of their own choice. Employees 32 . Employees shall be compensated for overtime hours at the rate established by law in the country of manufacture or.Vendors must treat employees with respect and dignity. in those countries where such laws do not exist. No employee should be scheduled for more than sixty hours of work per week and we will favor vendors who utilize workweeks of less than sixty hours. Hours of Work: While permitting flexibility in scheduling. and who provide all legally mandated benefits. psychological or verbal harassment and/or abuse. Health and Safety: Employers shall provide a safe and healthy work environment to prevent accident and injury to health.when available. we will only do business with vendors who do not exceed prevailing local work hours and who appropriately compensate overtime. sexual. at a rate at least equal to their regular hourly compensation rate. whichever is higher. Wages and Benefits: We will only do business with vendors who pay employees. Vendors should make a responsible contribution to the health care needs of their employees. No employees shall be subject to any physical. as a floor. Vendors shall recognize and respect the right of employees to freedom of association and collective bargaining.
Environmental Requirements: We are committed to the environment and will favor vendors who share this commitment. We require our vendors to meet all applicable environmental laws in their countries and to nurture a better environment at their facilities and in the communities in which they operate. Our goal is to engage our suppliers. BIBLIOGRAPHY: 33 . contractors and business partners in the implementation of these standards. Commitment to Communities We will favor vendors who share our commitment to contribute to the betterment of the communities in which they operate. PVH has been committed to the enforcement of these standards and has an on-going approval and monitoring system.should not be subjected to intimidation or harassment in the exercise of their right to join or to refrain from joining any organization.