pressure but reductions in throughput times have resulted in greater product

Pressure but reductions in throughput times have

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pressure but reductions in throughput times have resulted in greater product variation and an increase in fashion-sensitive items. Following the diffusion of logistical best practices, the retail sector underwent con- centration and organizational improvements during the 1990s. In fact, the retail sector accounted for much of the productivity growth in the US in the 1990s, with firms such as Wal-Mart driving out competitors and ramping up their own distribution efficiency (Foster et al ., 2002). However, since much of this concentration, especially in the US and the UK (Taplin & Winterton, 1995), was a result of mergers and lever- aged buy-outs, it left many stores with high debt-to-equity ratios at a time of rising interest rates. Consequently, many retailers looked for ways to significantly lower their operating costs and were able to do so by further squeezing suppliers. By increasing the number of fashion seasons and reducing the quantity of goods supplied for each season, they were able to compress the time between ordering and sale of items and thus lower their inventories. This required manufacturers to supply fewer and more varied items throughout the year, necessitating a departure from the
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250 IAN MALCOLM TAPLIN standardized mass-production system that had been beneficial to them in the past (Sels & Huys, 1999). Innovations in information technology have also been a crucial factor behind retail- ing changes. Electronically linking cash registers to scanners together with credit card processing machines has enabled stores to increase sales and service without adding to staff (Sieling et al ., 2001). Scanners also enabled firms to modify prices quickly and cheaply, thus tracking individual product-pricing strategies, as well as track inven- tory levels. Improved monitoring of sales through electronic data interchange (EDI) systems enabled stores to reduce inventories, placing orders to match product demand (Taplin, 1997), thus increasing their responsiveness to consumers. This throughput rationalization and channel integration increasingly became the industry norm because of the competitive pressures created by large retailers such as Wal-Mart that compete across many categories (McKinsey, 2001). For such retailers, whose strategy has been to provide low-cost products to consumers, this was a way to compel manufacturers to rethink their distribution, forecasting and production systems and take more responsibility for managing supplier relations. It became part of a system known as lean retailing, which would lead to significant performance improvements for those firms that could best implement it, as well as transforming channel relations in the broader textile–apparel–retailer chain (Abernathy et al ., 1999). The consequence of these changes has been twofold. On the one hand, some domestic manufacturers sought ways of rationalizing their own production systems to meet retailer imperatives, especially in more fashion-sensitive segments. In other instances, increased pressure on product pricing and shortened life cycles resulted in
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