Oxford Industries Improves Planning Efficiencies, Reduces Markdown Exposure and Increases Forecast Accuracy with JDA Software.
Founded in 1942, Oxford Industries focus on profitable, long-term growth has led to a transformation in recent years from its historical domestic manufacturing roots to a focus on designing, sourcing and marketing apparel products bearing prominent trademarks. Today, Oxford Industries is an international apparel company that features a diverse portfolio of owned and licensed lifestyle brands, company-owned retail operations and a collection of private-label and licensed-apparel businesses. In 2003, Oxford Industries acquired the island-inspired Tommy Bahama operations as part of its brand-focused business strategy, followed by the 2004 acquisition of Ben Sherman a well-known London-based brand made famous by the popularity of its button-down shirts among British rock stars.
Oxford Industries legacy business consists of its Lanier Clothes and Oxford Apparel lines. As one of the leading suppliers of mens tailored clothing to retailers, Lanier Clothes designs and markets branded and private-label suits, sports coats and suit separates that span a wide range of price points. Licensed brands include Geoffrey Beene, Kenneth Cole and Dockers to name a few, and the divisions clothing is sold at national chains, department stores, specialty stores and discount retailers. Oxford Apparels products range from dress shirts and western wear to suit separates and golf apparel. The clothing line encompasses private-label customers such as Lands End, Federated Department Stores and Mens Wearhouse.
Globalising Supply Chain Operations
Like many of todays apparel manufacturers, Oxford Industries legacy business divisions operate complex global supply chains. Much of the product is purchased on an order-by-order basis from offshore third-party producers across the globe. Due to manufacturing complexities, some of the companys product is acquired on a cutmaketrim basis. In this case, Oxford Industries supplies some or all of the raw materials and contracts with third-party producers to cut, sew and finish the apparel product, or it manufacturers the product in its own factories.
Turning to Technology
In the late 1980s and prior to tapping into compelling lifestyle brands with the acquisition of Tommy Bahama and Ben Sherman, Oxford Industries realised that it needed to bring its business divisions up-to-speed with the latest technology. After completing the implementation of a company-wide enterprise resource planning (ERP) system, the manufacturer contracted with an independent consulting firm to determine where it should invest time and money to further increase operational efficiencies and performance. The result of the in-depth study ultimately led to Oxford Industries selection of JDA Softwares Demand and Master Planning solutions to improve and streamline its global supply chain planning processes.
Improving Collaboration with Retailers
Prior to implementing JDA Demand, Oxford Industries relied on its retail customers demand forecasts for its private-label products, as well as information provided by the companys own sales associates. If too much or too little product was created based on the retailers or the sales associates forecast, both Oxford Industries and that customer paid the price via lost sales or markdowns.
The JDA Demand solution offered us the opportunity to significantly improve our forecast accuracy, said John Baumgartner, chief information officer, Oxford Industries.
JDA Demand enabled the manufacturer to better understand consumers evolving requirements and current trends along with historical buying patterns, resulting in the ability to create accurate forecasts and synchronise demand for replenished product with sources of supply. Oxford Industries can now compare forecasts with those of its retail customers to ensure that the right amount of product is manufactured, leading to improved collaboration and service levels with its trading partners.
Baumgartner gives an example in which a key customers seasonal demand forecast for a particular style was considerably higher than the forecast Oxford Industries generated using JDA Demand. During one of the companies regular collaboration meetings, the retailer agreed to use a middle-of-the-road forecast at the start of the season and to monitor actual results in order to determine which forecast was more reliable.
In that situation, our forecast to produce less product turned out to be more accurate, and the retailer agreed to use our forecast for the remainder of the season, Baumgartner explained. Without our ability to offer a statistically sound forecast, we would have manufactured at least 10 to 15 percent more product, forcing the retailer to eventually mark it down. In addition to the direct impact on that customer, there is also a collateral impact across the entire organization. Since production capacity is finite, producing those unnecessary units would have meant that some other order would have been late or short of meeting that customers needs. Using JDA Demand better positions us to collaborate with our customers, enabling us to make the right amount of product at the right time, and that benefits everyone.
Tailoring Plans to Accommodate Constraints
At the time Oxford Industries acquired JDA Master Planning, a meaningful amount of its product was sourced through a combination of owned and contract factories with much of the product serving to replenish its customers inventories as needed. For all of Oxford Industries owned and many of its contract factories, it was vital that each factorys capacities be an integral part of the supply plan from an overall perspective, as well as from a sub-capacity perspective for products requiring matched plaids or special features that call for specialized sewing skills and equipment. Additionally, Oxford Industries had to take into consideration raw-material availability, as well as manufacturing and customer lead-times. To increase production complexities, much of the product being manufactured had a two-level size/dimension aspect for example, dress shirts with neck and sleeve measurements, tailored clothing with chest and coat-length sizes or slacks with waist and inseam dimensions.
For just one trouser style with four different colour options, we might be managing a combined SKU count of more than 100, Baumgartner said. Manually, the best we could do is plan at the colour and style level using only total manufacturing capacities.
Once that process was completed, the company would attempt to determine if all of the other constraints could be satisfied, including raw-material availability and manufacturing sub-capacities. According to Baumgartner, the companys planners would spend Monday through Thursday each week compiling the plans. Any issues that were identified throughout the process would have to be resolved on Friday for the following week.
The implementation of JDA Master Planning leveraged the solutions automated functionality to compile product information and production constraints to generate weekly sourcing and inventory plans from style to the SKU level. The solution also simultaneously considered factory capacities including special features, raw-material availability, and manufacturing and customer lead times. Since Master Planning generated a first version of the supply plan by noon each Monday, Oxford Industries planners had four and a half days to resolve any issues to accommodate unplanned demand, which translated to an 85 percent improvement in planning efficiency.
With Master Planning, we have the capability to plan at the style, colour, size and dimension level something that was not possible to do manually, Baumgartner explained. The solution really changed the supply planning process within our legacy businesses from a planning activity to truly managing the critical issues.
Although the companys sourcing model has since shifted from a typical manufacturing process to a purchase process, manufacturing and customer lead times, SKU-level decisions and some capacity constraints still need to be factored into the supply planning process.
Master Planning provides the tools to let managers manage instead of serving as data-entry technicians, Baumgartner added.
Ensuring Success with Demand & Supply Planning
Regardless of whether a company manufactures or purchases its own branded products, or produces private-label products for another company, demand and supply planning are key requirements for success.
Businesses that are good at demand planning will be more effective at removing risk from the equation and raising the probability of higher sales and profits, Baumgartner said. In terms of supply planning, a company that can master the management of SKUs across the sea of supply chain constraints will optimise its inventory management processes and increase customer satisfaction.
The flexibility and scalability of JDAs Demand and Master Planning solutions can serve to improve the demand and supply planning processes for any company, and provide the opportunity to increase sales and reduce operational costs through better inventory management at the wholesale and retail levels, he added.