Dynamics of Change

An Industry in Hustle Mode to Meet Customer Needs.

Textile executives may be forgiven if heard mumbling a little nursery rhyme ditty under their breath this summer as the “Jack be nimble, Jack be quick,” phrase comes easily to mind in the current industry atmosphere. Doubtful any exec will be caught jumping over a candlestick, but it might just feel like that in today’s hustle to keep pace with market conditions.

Nursery rhyme aside, staying afloat, let along thriving, in business these days is anything but child’s play. There are issues aplenty to contend with as the industry emerges from the doldrums of the past two years and enters a phase of slow economic recovery.

Executives rattle off a handful of challenges facing global business: discerning banks and tight credit, fickle forecasting, price pressures, on-time delivery and lean inventories.

The result is a compressed supply chain that
requires companies to be flexible and quick on their corporate toes.

While innovation and capital investment play a role in the current state of the market – new products are trickling into the pipeline, and R&D is humming so that when the economy revs up another notch, management is ready – managers say top of mind concerns revolve around supply chain issues. Launching newness is a tough right now.

The demise of Dow Fiber Solutions serving as a perfect example. (See related story on page 38.)
According to reports from leading textiles firms, however, 2010 looks to be a pretty good year.

After a rough stretch of about 18 months,
companies such as Polartec, Clark Textiles, Concept III, PrimaLoft, Unifi and Cocona are staying the course. These companies continue to move forward with appealing products for categories ranging from active apparel to workwear.

“People are coming out of survival mode,” surmised Nate Simmons, Polartec. “2008 was abysmal, 2009 was conservative, but turned out better than expected. 2010 is crunch time. People are hustling to refill orders for Fall ’10 and scrambling to make fabric. Cutters are hustling, too. There’s a crunch at the global apparel supply chain.”

David Parkes, Concept III, agrees the supply chain is stressed. “Constriction is putting more pressure on pricing. Inventories are being managed very carefully. Banks are more challenging to work with regarding credit.”

Dave Clark, Clark Textiles, says there’s a simple cure: “more business.” But in the meantime he admits, “Ordering is tight. Everyone is nit-picky, wanting to keep the prices low. Everything is getting pressed and things are starting to leak.”

The Inventory Issue

The economic tumble in Fall of 2008 set this supply chain squeeze in motion. That sudden, and severe dip in the world markets, had a ripple effect throughout the entire textile supply chain. Now that business is picking up firms are facing a new dynamic. And the inventory issue is at the crux of the matter.

“The marketplace right now is so crazy with planning,” says Brad Poorman, Cocona. “Every order is exactly what sells, no one is inventoring goods and the feeling is we’ll need to cut this as close as we can.”

This is the five year mark in Cocona’s history, three years at retail, and Poorman says there is a lot of pressure to be organized.
Parkes, of Concept III, agrees that managing inventories has become increasingly tricky. “Managers are in a tough spot. For example, if at the end of a season you’re left with $1 million inventory, you’re fired. But if you don’t have the inventory ready, then you’re fired. There is a lot of pressure to get it right so people are working on a very tight timeline.”

The Delivery Issue

While price is still very important in today’s marketplace, execs say that delivery is now gaining significance. Conversations that once revolved totally on price point are shifting focus.

“In the past it was price, price, price. That dynamic has changed. Now on-time delivery is talked about. Before, delivery was a given,” says Roger Berrier, Unifi.

He says flexibility is key to being able to respond quickly and meet customer needs on a dime. “We are seeing the increase in volumes as we are ramping up production to 100 percent, and even expanding capacity,” says Berrier. “2009 was at about 70 percent capacity. Depending on the market, we are on average in the 90 percent production range.”

“Delivery has become such an important issue because people don’t want to commit,” Clark states.

As a result ordering has changed from big orders across the board to smaller lots. “We use to see large runs of one type of fabric, but now the trend is smaller runs of different fabrics. Customers want you to be more efficient, but it is hard to be efficient in this kind of order climate,” says Clark.

He believes this challenging atmosphere inhibits innovation. “There are some businesses willing to try new things but often the volume is not there. It is a matter of scale,” says Clark, who mentions Nike, Adidas, Lole and Orage as innovators. However even these firms are limiting new developments. “Everything is not all new every year.”

The Lead Time Issue

“The customer wants to buy as late as possible so not to commit money. And they expect you to find a way to produce in a shorter amount of time,” says Parkes. “You need to be nimble.”

Companies are keeping a closer eye on the end consumer to stay one step quicker. “We have been watching leading indicators so we can be more responsive and learn how we can quantify what will resonate,” explains Cindy McNaull, Cordura brand manager and marketing director. She says they conduct market research for in-house use that taps into today’s consumer. The survey looks at everything from retail trends to outdoor participation to weather patterns to determine what consumers really need and what they really want.

“What happened is the strong survived and now there are fewer people to work with in the value chain. And everyone goes with these few companies. It has gotten condensed and compressed,” says McNaull, who nonetheless senses an upbeat attitude in the marketplace. “There is light at the end of the tunnel.”

The tight supply situation with nylon – resulting from increased military surge and those who cut back not wanting to replenish – has caused a big shift in development. “Now it’s “build to a specific price point” rather than “build to a certain tech spec.”

The Forecasting Issue

The lack of inventory in the supply chain and the rollercoaster of ordering is adding to forecasting axiety. In the past firms could predict better because sales and orders had a consistency and were across the board, but now companies are faced with a dynamic situation.

“Forecasting is always difficult. We try to stay really close to the customer. But now the window for delivery is smaller than ever making forecasting extremely difficult,” says Eileen Berner, PrimaLoft.

She explains that PrimaLoft pre-built some inventory of popular weights and was conservative in approach. Berner also notes that parent company Albany International was well-prepared for the economic downturn. “Cost saving measures had been implemented and we were already doing more with less. We were as lean and mean as possible.”

However, price pressures have had ramifications. “We are feeling the power of generics,” says Berner, who refers to the world of generics as “the wild, wild, west – there are no guarantees on quality.”

“There is price pressure forced on all of us and there’s a lot of synergy across the board. We are all struggling at the same pace. Everyone from ingredient brands to vendors to brands, we’re all in the same boat,” says Berner.

Comments: