Breaking Down Borders
Consumer Goods Technology, May 2001 - By Kim Ann Zimmermann, Assistant Managing Editor

In the early ‘90s, much of the communication with overseas manufacturers was handled by fax. Due to time differences, it was the most efficient way to communicate. But it wasn’t really conducive to collaboration. In addition, it meant that if the overseas factory producing a garment had a question about a spec, things came to a grinding halt until someone was in the office back in the U.S.

But back in 1993, companies that were thinking globally, like VF Corp., were already looking for ways to digitize the process, and in 1993, Consumer Goods Manufacturer wrote about how the apparel maker was transmitting patterns via satellite that could be viewed on screen. As NAFTA took hold in the latter part of the ‘90s, it became even more attractive to bring manufacturing outside of the U.S. and to Mexico in particular.

On the flip side, more and more U.S. based companies were supplying retailers around the world, and they were hungry to speed up the process. There was a move toward an international version of Quick Response.

“British and German retailers seem to be among the most accepting of international QR,” Lynn Hazlett, VP of business systems for VF told Consumer Goods Manufacturer. The problem back then, Hazlett pointed out, was that there was no single, common communications standard. EDI was emerging, but could hardly be called a standard.

In its role as both a manufacturer and a retailer, Wilsons was looking to streamline the sourcing process to cut lead times. In 1995, CGM reported that Wilsons was expanding manufacturing to into Indonesia, India and China. Back then, Wilsons overhauled its sourcing process to cut lead times in half using EDI. By contrast, in 2002, CGT reported on Wilsons’ Web-based sourcing and supply chain management system from New Generation Computing.

In September of 1996, CGM wrote about about how integrated import control systems were improving supply chain performance. Nike, for example, was using LOG-NET to provide product visibility from the factory door on a worldwide basis. Procter & Gamble was booking ocean shipments electronically and receiving updates from freight forwarders to track shipments globally.

CGs were also struggling to get their various international divisions working on the same systems. “When we started in 1996, we had about 200 order management systems around the world,” says Duane Cook e-business process manager for Kodak. The company is working to use SAP as its global standard within the company, Cook says.

By 1998, export documentation requirements became more rigorous and there was the need to provide more information electronically as to the contents of the shipments. CGs such as Unilever, which had products manufactured in the U.S. and abroad, implemented systems for planning the sourcing of goods globally and for tracking import/export activities.

Compliance checking, once left to freight forwarders, was now falling squarely on the shoulders of the CG's.

The benefits of operating in a more global economy were pointed out in a Kurt Salmon Associates study that was reported in CGM in 1998. The research firm projected that implementation of Quick Response and streamlined supply chain management would yield $102 billion in savings.

Some of the first bidding wars for import and export services over the Internet were starting to take place in 1997, and that made it much easier for companies who did business globally to attain the best prices and service quality.

In April 1998, CGM reported that, “CG companies can substantially reduce direct product manufacturing costs, especially labor costs, with global sourcing. But they have to run hard to outrun the costs of financing, inventory handling and transportation. So it’s worth a fortune to shorten response times in global sourcing.” Blinco Systems, QRS and Retek were among the companies offering sourcing applications.

In 2000, the push was on to develop global compliance standards through the Global Commerce Initiative, a consortium of CGs, including Coca-Cola and P&G, and retailers, including Ahold and Marks & Spencer. Ralph Drayer, VP of efficient consumer response for P&G, noted that in the 130 companies P&G operated in at the time, there were 16 different EDI standards.

While most of the global discussion centers around sourcing, CGs also face barriers when exporting their products to other countries. In the July/August 2001 issue, CGT wrote about the challenges Brown & Williamson faced in exporting cigarettes to the Japanese market and the company used Web-based systems for global trade management.

Today, companies like Société Bic operate so seamlessly on a global basis that people view it as a U.S., French and Italian company.

For related information, please go to:
3rdwave Retail Sourcing & Distribution
3rdwave CGD (for Consumer Goods Distributors)