Kahn Made to Measure - Kahn Made to Measure WSJ Sep 2003...

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Kahn, Made to Measure, WSJ, Sep. 2003. “Made to Measure: Invisible Supplier Has Penney's Shirts All Buttoned Up From Hong Kong, It Tracks Sales, Restocks Shelves and Ships Shirts Straight to the Store.” By GABRIEL KAHN On a Saturday afternoon in August, Carolyn Thurmond walked into a J.C. Penney store in Atlanta's Northlake Mall and bought a white Stafford wrinkle-free dress shirt for her husband, size 17 neck, 34/35 sleeve. On Monday morning, a computer technician in Hong Kong downloaded a record of the sale. By Wednesday afternoon, a factory worker in Taiwan had packed an identical replacement shirt into a bundle to be shipped back to the Atlanta store. This speedy process, part of a streamlined supply chain and production system for dress shirts that was years in the making, has put Penney at the forefront of the continuing revolution in U.S. retailing. In an industry where the goal is speedy turnaround of merchandise, Penney stores now hold almost no extra inventory of house-brand dress shirts. Less than a decade ago, Penney would have had thousands of them warehoused across the U.S., tying up capital and slowly going out of style. The new process is one from which Penney is conspicuously absent. The entire program is designed and operated by TAL Apparel Ltd., a closely held Hong Kong shirt maker. TAL collects point-of-sale data for Penney's shirts directly from its stores in North America, then runs the numbers through a computer model it designed. The Hong Kong company then decides how many shirts to make, and in what styles, colors and sizes. The manufacturer sends the shirts directly to each Penney store, bypassing the retailer's warehouses -- and corporate decision makers. TAL is a no-name giant, the maker of one in eight dress shirts sold in the U.S. Its close relationship with U.S. retailers is part of a power shift taking place in global manufacturing. As retailers strive to cut costs and keep pace with consumer tastes, they are coming to depend more on suppliers that can respond swiftly to their changing needs. This opens opportunities for savvy manufacturers, and TAL has rushed in, even starting to take over such critical areas as sales forecasting and inventory management. On the weekend Ms. Thurmond made her purchase, the same Atlanta store sold two sage-colored shirts of similar size but of another Penney house brand, Crazy Horse. That left none of this size and color in stock at the store. Based on past sales data, TAL's computers determined that the ideal inventory level for that brand, style, color and size at that particular store was two. Without consulting Penney, a TAL factory in Taiwan made two new shirts. It sent one by ship, but to get
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one in the store quickly, it dispatched one by air. TAL paid the shipping but sent a bill for the shirts to Penney. Instead of asking Penney what it would like to buy, "I tell them how many shirts they just
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This note was uploaded on 08/09/2010 for the course INTB INTB 3351 taught by Professor Walker during the Summer '10 term at University of Houston.

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Kahn Made to Measure - Kahn Made to Measure WSJ Sep 2003...

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