35yrs_and_counting by pengxuebo


									                                                               VOL. 27, NO. 3   M AY / J U N E 2 0 0 3

                                                                                                              THE   BUSINESS
                                                                                                                    BUSINESS   OF
                                                                                                                               OF   FASHION

                                        35 YEARS
                                        NYGÅRD FOCUSES

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                                                                                                                        A BADGE OF HONOR?
                                                                                                                           THE A TO Z OF IMB
                                                                                                         CASUAL, DECONSTRUCTED, SPORTY
                                                                                                                     MENSWEAR TRENDS FROM CPD
                                                                       Peter Nygård: 35

                                                                       years and counting
                                                                       By Martin Cash  His flamboyant lifestyle may get a lot of press but his
                                                                       company’s stellar growth over the past 35 years proves Peter works
                                                                       every bit as hard as he plays

                                                                                                                                                       But that is logical because Nygård has used
                                            Peter Nygård and Beverly Peele                                                                          technology, along with a relentless attention
                                                                                                                                                    to the needs of his customers, to build his
                                                                                                                                                    company into the largest womenswear manu-
                                                                                                                                                    facturer in the country and the third largest in
                                                                                                                                                    North America.
                                                                                                                                                       In an interview at the company’s corporate
                                                                                                                                                    headquarters in the north end of Winnipeg,
                                                                                                                                                    Nygård reflected on 35 years of growth. You can
                                                                                                                                                    still detect a trace of a Finnish accent when he
                                                                                                                                                    speaks, inherited from his parents who immigrat-
                                                                                                                                                    ed to Deloraine, Manitoba when he was a young
                                                                                                                                                    boy. And you can still feel his passion for the
                                                                                                                                                    clothing business when he talks about his almost
                                                                                                                                                    unbelievable good fortune.
                                                                                                                                                       Nygård marvels that his company now works
                                                                                                                                                    with American retailers like Dillard’s, the US$8
                                                                                                                                                    billion Arkansas-based chain where Nygård’s
                                                                                                                                                    style, value and selection provide an impor-
                                                                                                                                                    tant solution for their 30-plus businesswoman
                                                                                                                                                       In May, Bill Dillard and some of his senior
                                                                                                                                                    staff flew to Winnipeg to meet with Peter and
                                                                                                                                                    tour his design studios and production facilities.
                                                                                                                                                    Nygård is already doing millions of dollars worth
                                                                                                                                                    of business with the department store chain,
                                                                                                                                                    producing four different private label lines. But
                                                                                                                                                    there is potential for more.
                                                                                                                                                       “A meeting like that with Dillard (who is
 Photos: John H. Bartelings/Nygård Int’l

                                                                                                                                                    chairman and CEO) is like meeting with The
                                                                                                                                                    Bay, Sears and the old Eaton’s combined, in one
                                                                                                                                                    shot,” said Nygård. “We have hundred million
                                                                                                                                                    dollar meetings now with some of our clients.
                                                                                                                                                    Just to think that you could sit down at a meeting
                                                                                                                                                    that could end up generating that much sales in a
                                                                                                                                                    matter of two years… To us country boys here, it
                                                                                                                                                    is mind boggling.”

                                           T   here was a pivotal moment, 25 years ago, when Peter Nygård realized
                                               the future of his company could be leveraged by technology.                Celebrating 35 years of success
                                              “I had just bought my first Radio Shack computer and I wanted to run           Nygård’s family and staff toasted the business icon, who looks much as
                                           the whole company off it,” said the flamboyant entrepreneur, celebrating       you would expect Peter Nygård to look — suntan, expensive blue jeans and
                                           35 years in business this year. “I had no idea what I was getting myself       cowboy boots, a soft leather jacket over a simple blue sweater, and the fa-
                                           into and, of course, after a while I realized it wasn’t quite as simple as I   mous blond locks — at a Winnipeg gala in early April. It was a family affair,
                                           imagined it would be.”                                                         with son Kai narrating the audiovisual portion that his eldest daughter, Bi-
                                              More than $50 million later, Nygård operates the most technologically       anca, helped produce. Another daughter, Alia, is an up-and-coming member
                                           sophisticated apparel company in the country. He still invests $10 million a   of his design and merchandising team. The evening’s festivities featured a
                                           year in IT and the man who once prided himself on his intimate familiarity     fashion show of Nygård styles from the ‘60s to the present.
                                           with every one of his company’s 2,800 SKUs now concentrates more of his           Nygård’s affinity for celebrity garnered a live performance from ‘70s
                                           energy on designing computer systems.                                          recording artist Freda Payne, runway work from supermodel Beverly Peele

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and videotaped testimonials and telegrams from cable TV mogul Ted Rog-
ers, novelist Arthur Hailey, Robin Leach of Lifestyles of the Rich and Famous,
Jean Chretien and Jari Kurri.
   However you look at it, Nygård is quite a success story. The company has
annual sales approaching $500 million. Nygård himself has a legendary
track record with the ladies, has been called a “hedonistic workaholic” by
no less than Peter C. Newman, chronicler of Canada’s elite, and has been an
outspoken advocate for the industry.
   “Say what you want about Peter, but he can always be counted on to
jump on a plane and head to Ottawa to help make the case for the indus-
try,” said one member of the Winnipeg garment industry.
   And, while other design houses occasionally veer off message to chase
new and trendy markets, Nygård has remained loyal to his customers — and
they have rewarded him for it.
   “They are so focused on their customer and they change with the cus-
tomer and that is very rare in the business,” said Ed Matier, group vice-presi-
dent of apparel for Sears Canada. “They also spend a lot of time listening to      «The Board»: Denis LaPointe, Peter Nygård, Jim Bennet, Art Pemberton
both the customer and the retailer. They spend lots of time analyzing sales
data and they are very receptive to retailers’ input.”
                                                                                  tion in Taiwan and Macau. He also has sales offices in Toronto, design studios
   Nygård has used technology to cut pennies off unit costs and has led the       in New York and a massive new distribution centre in southern California.
way to offshore production, with the result that it can legitimately claim to
                                                                                     “China is big enough to manufacture all the clothing for the whole
be one of the lowest cost producers in the business.
                                                                                  world,” Nygård said. “And with the elimination of quotas every single
   “All through history our industry has been protected by quotas and duties      developing country in the world is going to be setting up export garment
and then to have them lifted off and have to fend for yourself, that changes      businesses. We are rolling the dice and hoping to be on the right side of
everything. It is dramatic,” Nygård said.                                         whatever the situation turns out to be.”
   He said the elimination this year of quotas and duties for apparel imports
from the Least Developed Countries and the elimination of all quotas at the
end of 2005 will be significant events for the industry.                          U.S. sales now exceed Canadian volume
   In addition to two production factories and a major distribution centre in        Nygård’s U.S. sales, mainly private label for Dillard’s, J.C. Penney, Kohl’s
Winnipeg (with total employment of about 900 people in his home town and          and Belks, now exceed the company’s Canadian numbers. In Canada, the
1,500 across Canada), the company has gone overseas with joint venture fac-       company operates a chain of 210 stores under the Nygård, Tan Jay, Alia, Tan
tories in China, Indonesia, Sri Lanka and Mexico and a lower level of produc-     Jay-Alia, Jay Set Clearance and Jay Set & Co. banners. It plans to open 50 to

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    Nygård expects sales to hit the billion-dollar mark within about five
years and, while virtually all of the company’s growth has been organic, it
is likely that the company will make some acquisitions in that time frame.
    Most recently the company made a pitch to acquire the Cotton Ginny
chain when it was in receivership. “Not getting Cotton Ginny was a bitter
pill,” Nygård said. “But I am semi-glad it did not happen.”
    Not one for false modesty, Nygård’s says the reason his company has
not made many acquisitions is that it always looks so much better than
the prospective purchases.
    “I have never found a reason to buy someone else’s problems and over-
pay for their profits,” he said. “We don’t have enough hours in the day to
run our own business, with all its potential. And we are sitting on potential
every day.”
                                                        continued on page 15

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      Replenishment program sets up a win-win scenario
      By Brian Dunn              ARTS2 improves efficiency, lowers costs and keeps the customer happy

      N     ygård’s current success can be partly attrib-
            uted to the high tech reorder and distribu-
      tion program, nicknamed ARTS2.
         ARTS2 is the company’s ‘Automatic Reorder to
      Sales continuous replenishment program’ that
      links the manufacturing process to a network of
      Nygård stores and major retail accounts in order
      to keep customers fully stocked at all times.
         ARTS2 is housed in a 60,000-square-foot pants
      manufacturing plant in Winnipeg, head office of
      the Nygård empire, where 250 people work over
      two shifts. The unique modular manufacturing
      process, which resembles a car assembly plant
      more than a traditional sewing operation, sets
      Nygård apart from the competition.
         For example, when a store like Dillard’s in
      the U.S. sells a Nygård product, the model, size
      and color are transmitted to the ARTS2 facility,
      which automatically reorders fabric and begins
      manufacturing a replacement, which is shipped                                                                                                           Ernie Chavess, director of logistics
      the same day.
         The company, with annual sales of over $500
      million, 40 per cent of which is generated in the
      U.S., is prepared for any contingency, such as a
      shipment of fabric that arrives late. Above the
      stockroom door a sign reads: “Go to stock when
      the truck gets hit by a moose,” a common excuse
                                                            Photos: John H. Bartelings/Nygård Int’l

      of late truck drivers.
         The way products are made at ARTS2 is also
      unique. Computerized spreaders roll the giant
      bolts of fabric back and forth along a long table
      according to the order size.
         “We try to use 100 per cent of the fabric by
      inputting information into a computer which
      picks out the best pattern before it gets cut,”
      explained Ernie Chaves, director of logistics and                                               on the workers. It’s designed to maintain an equal         “Like FedEx, we know where the garment is
      26-year company employee. “It used to take two                                                  production output throughout the entire manu-           in transit. But we go a step further because we
      weeks to cut for a purchase order. The computer                                                 facturing process. And in an incentive- and bonus-      know when the shipment will arrive, because
      does it in seconds.”                                                                            based company, nobody wants to fall behind.             we build in transit time based on lead time”
         The Gerber cutting table is tied into Nygård’s                                                  Once the pants are finished, they’re put back        said Chaves.
      IBM AS/400, which downloads purchase order                                                      on the trolley, which takes them to be pressed.            If the manufacturers have been certified and
      information such as the number of units and the                                                 From there, they move on to be inspected and            audited by Nygård, their goods are fast-tracked
      different elements required for each garment.                                                   fitted with hangtags. Everything is individually        through the distribution centre. For others, if there
         The entire process is designed to eliminate                                                  scanned to update its availability for sale.            are six or more defects per 80 units randomly
      inventory and to speed up the manufactur-                                                          In the adjoining shipping department, each rack      selected out of a shipment of 1,000 units, the com-
      ing process, said Chaves. He added the plant                                                    or rail is assigned a SKU and orders are scanned        puter sends a 30 per cent charge to the supplier.
      produces up to 75,000 pairs of women’s pants a                                                  and shipped to customers according to the pur-              “It means the entire shipment must be checked,
      week. Another, less automated, Nygård plant in                                                  chase order. If a rack is empty or almost empty, it’s   which compromises the promised delivery date to
      Winnipeg manufactures about 10,000 fashion                                                      a signal that something is wrong in the reordering      the customer. And if we scan the order for the right
      items a week for the Tan Jay and Nygård labels.                                                 process and the problem is quickly tracked down.        quantity and the variant is more than two per cent,
         The Gerber cutting table at ARTS2 moves on                                                      In 1986, Nygård’s pick, pack and shipping            we send another charge,” said Chaves.
      a track and the cloth is separated into panels                                                  process cost 45 cents per unit. Today it is                The company guarantees 100 per cent ship-
      and numbered. All components required to                                                        down to eight cents and the objective is to get         ping accuracy with its electronic failsafe system.
      make a pair of pants, including panels, tags and                                                it down to four cents.                                  Each order is picked by store, which is already
      zippers, are loaded onto a moving hanger-like                                                      The company’s main distribution centre is            in the computer system. The computer looks for
      trolley and deposited at the appropriate cell or                                                located at head office, about a 10-minute drive         the UPC scan and determines if the correct UPC
      unit of four or eight sewers.                                                                   from the ARTS2 plant. Its holding capacity is one       has been scanned against the order. If the scan
         Above each unit hangs what looks like an                                                     million garments and 150,000 are shipped out            does not match the UPC, Nygård computers
      electronic scoreboard, giving the efficiency rating                                             each week. About 75 per cent of the garments            do not allow the shipping label to be printed,
      or output of each team of sewers. But this is no                                                arrive on tiered hangers from Nygård operations         which guarantees that each shipment will be
      Big Brother type of monitoring system that spies                                                around the world, with four garments per hanger.        100 per cent accurate.

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   All pickers are equipped with walkie-talkies for quick response in case
a problem arises. Each problem has to be resolved within a minute or a
deduction is made from the employee’s pay.
    “We also videotape each order in case there is a dispute with a cus-
tomer. The order is put in a box and shipped to the retailer. We tell them
not to count the contents manually because that’s when human errors
tend to happen,” said Chaves.
   There is also video surveillance at the loading stations to record which
employee did the loading at what time and on what truck as another way
to guarantee accuracy. The system is so efficient that Nygård is exempt
from charge-backs from Dillard’s, The Bay and Sears Canada.
   About 25 per cent of goods coming from the Far East are pre-packed by
store by the manufacturers. Chaves visualizes the day when the offshore
manufacturers will do most, if not all distribution, improving lead times
by one to two weeks.
    “The process is backing up to the manufacturers. We have the technol-
ogy to enable the manufacturers to pick and pack for individual accounts
and for our dedicated stores, which would reduce our distribution costs by
about 80 per cent.”
   Peter Nygård’s vision has earned the praises of his colleagues, including
fellow Winnipegger Bob Silver, president of Western Glove.
   “He has done an exceptional job and I would love to emulate him and
I’m trying,” said Silver. “His ARTS2 is indicative of someone who takes a
vision and sees it through to the end.”
   Silver said a lot of people were talking about just-in-time delivery in the
early 1990s, but mostly for heavy industry. Nygård was the first to bring it
to the clothing industry, he said.
   “We’ve all tried to improve our through-put time, but he put ideas into
action where others would have given up long ago.
   “Peter (Nygård) has spent 35 years building his company and it is a
testament to hard work and dedication. After the free trade agreement
was signed, he realized where his future lay and went after it.” 

continued from page 13

  Nygård has consistently shied away from buying businesses just to
provide greater numbers. Although known for his love of the spotlight,
Nygård said he would never let his ego determine a business deal.

Making IT a priority
    Considered one of the most technologically sophisticated and operation-
ally efficient manufacturers in the business, Nygård can beat just about any
competitor on price, which he attributes largely to the company’s commit-
ment to computerization.
    “There is no doubt Nygård has spent more money on technology than
any other company in the garment trade in Canada,” said Mike Stevens,
president of the information technology practice of The Exchange Group,
a Winnipeg chartered accounting and consulting firm with a significant
garment industry practice. “Not only has he spent money on technology
when others haven’t but he encourages the rest of the industry to use
technology to increase efficiency and competitiveness.”
    Nygård himself makes no bones about the fact that he is much less
involved in the on-going design process (the company generates close to 300
new items every year) and much more involved with the company’s IT needs.
    “My contribution to the company now is called ‘systems’,” he said. “For
the past five years I have been designing what is ultimately a new way of
doing business.”
    Already, he said, every item made at all the factories around the world
is individually scanned into the system at source. “Our tracking system is
better than Fed-Ex’s in my opinion,” Nygård said.
    The stereotypical playboy is probably better known for his jet-set
lifestyle and his 150,000-square-foot Bahamas pleasure palace, but over
three-and-a-half decades of high living his company has developed and
matured into a world-class success that is both stable and poised for
continued growth. 

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