To achieve global scale, companies need to design their supply chains to buy globally but execute locally. Not many companies have cracked this code. One company that has developed a unique approach to this challenge is Carter's Inc. (also known as the William Carter Co.), a U.S.-based manufacturer of children's clothing, gifts, and accessories. Sold under the Carter's and OshKosh B'gosh brands, the garments are merchandised at 600 company-owned retail stores as well as at thousands of department stores and some of the country's largest retailers.
The company's operations are complex. To satisfy demand, Carter's operates out of five domestic and international distribution centers, handling approximately 31,000 stock-keeping units (SKUs) at each location. It ships approximately 400 million selling units consisting of 700 million manufactured units per year. The company leverages global sourcing strategies to buy products at a lower cost, while deploying some unique process logic to drive mass customization during the assembly processes. Because of its success, Carter's was recognized as one of 15 companies in Supply Chain Insights' 2016 list of "Supply Chains to Admire."
To meet the criteria for the 2016 Supply Chains to Admire list, for the period 2009-2015 companies needed to score better than their industry peer group's average on the performance metrics we call "Supply Chain Metrics That Matter": growth, inventory turns, operating margin, and return on invested capital (ROIC). They also had to show a higher level of improvement than two-thirds of their industry peer group and have driven a high level of shareholder value, expressed as "price to tangible book value." As shown in Figure 1, Carter's Inc.'s scores for the "Supply Chain Metrics That Matter" are significantly better than those of its peer group.
To learn more about how Carter's earned its spot on the Supply Chains to Admire list, we interviewed Peter Smith, the executive vice president of supply chain.
Q: You were recognized as a winner in the 2016 Supply Chains to Admire. What drove Carter's to achieve the level of improvement it did? A. Necessity is the mother of invention. We manufacture 700 million pieces of clothing and service every channel in the U.S. along with international markets. The diversity is rising. This drove a need for complexity management and mass customization like I have not seen elsewhere. This market demand has spurred Carter's to create strategies, systems, and processes to focus on low prices and competitive marketplace distribution.
Today, we do not have a single, all-knowing, all-seeing, and seamless world-class information technology (IT) system. It just does not exist. This is not a place where one great "killer app" or technology has slayed the dragon, but the systems are malleable. Driven by the business, our teams in information technology/information systems ... found creative ways to invent solutions. Is it elegant? No. However, it is really effective for our processes.
In my experience, technologies like SAP are rigid. They are too inflexible for us. We need agility. As a result, Carter's runs an assemblage of systems focused on agility. They are modified collectively to deal with our complexity. For example, we created a bit of magic by repurposing our ERP dimension code to carry information about final retailer specifications in addition to style, color, and size. ... [The Carter's dimension code carries information on the pack size, retailer assembly instructions, and late-stage customization, It is assigned at a lot level when the product is cut to be assembled. This is months after contracting for third-party manufacturing.] This allows us to get the benefit of leveraging our purchase orders of 1 million units and manufacturing efficiency [while also using] dimension codes attached to the style defining the retail unit. We can purchase in large lots, postpone, and then pack out based on dimension codes. This gives us both economies of scale and flexibility.
Let me explain how this works. When the units come off the final assembly line, the third-party manufacturing company applies the value-added services like tagging and packaging, and then packs them based on the retailer's shipment-ready requirements. We pack once for the destination, and 90 percent of the units are never touched again. Customization [such as providing tagging, wrap, boxing, labels and hangers and more] happens as part of the manufacturing process, not in domestic distribution centers. We pull off this level of efficiency every day.
Q: How do you manage complexity? A. It is a combination of strategy, people, processes, and systems. We are an international company supplying international trade. We desire and work toward postponing decisions about the allocation of finished units among our wholesale customers, our own 700 retail stores, and Carter's e-commerce [channel] to optimize inventory utilization. Once you have put on our retail tags, you have locked in the inventory. We do things downstream to improve flexibility and inventory-utilization efficiency. Multichannel distribution requires getting the most visibility possible. Our processes strive to recognize the uncertain demand in the world we live in and make the best of that reality.
Q: What is your next-generation supply chain strategy? A. There is a significant amount of distance that we [still have to] go. ... We would like to get ever more granular through better postponement.
We are also trying to embrace all of the data around us. We have migrated planning and forecasting from big Excel spreadsheets to a cloud-based environment [in order] to process more data and data elements. We are in the early stages of using this "big data" environment. I am advocating that the organization lean into and embrace the cloud platform and tools. Ultimately the most efficient use of inventory relies upon being able to optimize the use of [our] units from the individual store shelf (at a wholesale partner's store or in our own retail store) all the way back up the chain so that we never miss a demand signal wherever and whenever it presents itself. We looked long and hard at packaged tools and concluded there's not enough flexibility, scalability, and speed ... in the packaged tools on the market. We are now in an incredibly powerful system [that is] scaled for demands larger than I think we'll throw at it, but [this system] will never limit us.
The strategy is simpler to say than to execute, but in a nutshell, it is better decisions, lots of postponement, mastering ever-increasing complexity in a leveraged way, and using all the data that we can get our hands on. .... I believe in the Internet of Things and see great opportunities to "connect the dots" of data that may impact demand and create opportunities for the companies that are agile enough to respond.
Q: How do you define supply chain excellence? A. When I think of supply chain excellence, I believe that [it means] we never miss demand. Excellence occurs when there is minimal inventory ownership ... but the company never misses demand. Strategically, I have declared that as Carter's continues to grow, it is my responsibility every year to consume a smaller and smaller percentage of sales. If the supply chain total cost of ownership of sales is x, I want a downward tilting line for supply chain costs. Survival means that we must invest in big data analytics, customization, and postponement.
Q: Any insights on how to build next-generation supply chain talent? A. We live in a world where the rate of change is the fastest I have ever seen. To stay current, we do "reverse mentoring" here. I am lucky because I have reverse mentoring with my 20-something[-year-old] kids. So I get a double dose of insights into millennial thinking.
One of the distressing things about [the apparel] industry is we are not [as] mature ... [in] career mapping and organizational development [as] I believe other fast-moving consumer goods companies [are]. I think the Procter & Gambles of the world "manufacture" their next-generation leaders. I have not seen this done well in the apparel industry.
The supply chain is so diverse in the things that we do, [but] as an industry we are poor practitioners of building next-generation leaders. Too many people get stuck in silos. Although they become subject-matter experts, they are "a foot wide and a mile deep." ... In my estimation, future supply chain leaders need to be subject-matter experts, or nearly so, in multiple disciplines. That happens by luck and chance or by great career mapping. I like the certainty of the latter.
Manufacturing the next generation of great supply chain leaders is expensive and requires commitment. I think this dedicated approach to building manufacturing leadership drives winning strategies, and I hope to continue to make it come to life within Carter's.
Q: If you could wave a magic wand and get anything you want, what would it be? A. It would be a dedication to talent development, as I spoke of before. This should start early. I am fond of the apprentice programs used in Europe and the opportunity to get exposure in business they provide.
In a totally different vein, a year ago there was the buzz about the Internet of Things. We suffer from buckets of data that are not easily accessible or usable in different venues. It's still hard to get, collate, and standardize information for forecasting. Data is hard to get, hard to believe, and hard to use. [We need] real-time, accurate data ranging from what is happening in my factories and my distribution networks to [what is happening at] the customer point of sale. If we could connect all these dots seamlessly and in real time, we'd wring a lot of waste out of our industry. EDI (electronic data interchange) is a failed dream in my estimation. The Internet of Things holds hope.
Our take
Companies that aggressively make the pivot to buy globally and aggregate buying power can leverage lower-cost strategies. The key is using some mechanism like attribute-based forecasting, attach-rate planning, or postponement. The item-master and SKU-based logic used in most off-the-shelf software solutions is too restrictive and constraining. Carter's use of the dimension code and the rationalization of retailer platforms into a standard code allows the company to gain both economy of scale and flexibility to differentiate for the retail channel.
If you'd like to hear more about Carter's strategy and achievements, plan on attending Supply Chain Insights' Global Summit in Lake Oconee, Georgia, September 5-8, 2017. Peter is one of the three confirmed speakers. We will start accepting registrations in January and will release the full program in February. I hope to see you there!
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The Raymond Corp. has expanded its energy storage solutions business with the opening of a manufacturing plant that will produce lithium-ion and thin plate pure lead (TPPL) batteries for its forklifts and other material handling equipment. Located in Binghamton, N.Y., Raymond’s Energy Solutions Manufacturing Center of Excellence adds to the more than 100-year-old company’s commitment to supporting the local economy and reinvigorating Upstate New York as an innovation hub, according to company officials and local government and business leaders who gathered for a ribbon cutting and grand opening this week.
“This region has a rich history of innovation,” Jennifer Lupo, Raymond’s vice president of energy solutions, supply chain, and leasing, said in welcoming attendees to the ribbon cutting ceremony Monday.
Lupo referred to the new factory as an “exciting milestone” in Raymond’s history and described it as the next step in the company’s energy storage solutions business, which began nearly 10 years ago with the development of a lithium-ion battery to power its “walkie” pallet jack. That work has expanded to include larger batteries and other technologies to support battery-electric equipment.
“We’re not just keeping up with the electrification movement,” Lupo said. “We’re leading it.”
Raymond, a business unit of Toyota Material Handling, has been building forklifts, pallet jacks, and other material handling equipment at its nearby Greene, New York, headquarters since 1922. The Binghamton factory supports local efforts to boost manufacturing and innovation in New York’s Southern Tier, which was recently designated as a regional technology and innovation hub by the Biden Administration.
Raymond is leasing the 124,000 square foot facility at 196 Corporate Drive, situated in an established industrial park. The manufacturer is currently utilizing just 10,000 square feet of the space to produce its 8250 lithium-ion battery, which can power Raymond’s class 1 and class 2 fork trucks, as well as a smaller TPPL battery for powering pallet jacks.
The Binghamton factory employs 15 people, but the company expects to scale up quickly in space and personnel, adding 12 to 25 employees next year and ramping up to 60 employees by 2027, according to Jim Priestly, battery manufacturing manager for energy solutions at Raymond.
The Binghamton facility also represents Raymond’s larger commitment to helping develop greener, more sustainable supply chains, according to company President and CEO Michael Field.
“We recognize energy’s critical role in shaping our future,” Field told attendees at the grand opening, adding that Raymond is seizing the opportunity to participate in the clean energy transition locally and beyond.
“This facility is just the beginning,” Field said.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).