SESSION III HOW INDUSTRY EXPERTS ADDRESS SUPPLY OPPORTUNITIES MODERATED BY CHARLIE GILBERT CHARLES GILBERT ASSOC., INC. PANELIST • TED TAYLOR - VP TARGET SOURCING SERVICES/AMC TARGET/AMC • STEVE DI BLASI - VP MFG. LANIER CLOTHES DIV. OF OXFORD IND. • ROGER MCDIVITT - COO HORNY TOAD RANK THE FOLLOWING • Initial and Final Cost • Service Level & Impact on Inventory • Demand Cycle • Hemisphere • Direct Ship to Store • Political Risk • Any other WHAT IS YOUR PLAN “B”? • FOR THE FAILED LOGISTICS LIKE: – SHIP SINKS – DOCK STRIKES – POLITICAL UPHEAVAL – EARTH QUAKE – TSUNAMI – HURRICANE QUOTE FROM CARLOS ARIAS OF KORAMSA “If buyers are rewarded for first cost, Central America doesn‟t have a chance. On the other hand if buyers are asked to look at GMROI, we‟re enormously competitive.” TED TAYLOR – VP TARGET SOURCING SERVICES/AMC • THE THIRD LARGEST SOURCING ORG. IN THE WORLD • HAS A 90 YEAR HISTORY OF PRODUCT DEVELOPMENT, SOURCING, & QUALITY ASSURANCE • 55 OFFICES WORLDWIDE • SOURCE FOR TARGET, LORD & TAYLOR, BLOOMINGDALE‟S, BON TON, BOSCOV‟S, TJX, SAKS, THINGS REMEMBERED, LINEN SOURCE AND OTHERS • TED GRADUATED FROM LASALLE UNI. STEVE DIBLASI – VP MFG. LANIER CLOTHES DIV. OF OXFORD • CURRENTLY RESP. FOR GLOBAL SOURCING AND MFG. OF TAILORED CLOTHES; BOTH BRANDED AND PRIVATE LABEL • HAS SERVED IN A NUMBER OF CAPACITIES AT LANIER OVER 15 YRS. • AT ONE TIME OWNED A TAILOR SHOP IN PHILA. AND IS A 3RD GEN. TAILOR ROGER MCDIVITT – COO HORNY TOAD • BEGAN HIS CAREER MAKING ALPINE CLIMBING EQUIP. FOR THE PREDECESSOR OF PATAGONIA(30 yrs) • INSTRUMENTAL IN DEVELOPING FAIR LABOR ASSOC. • HELPED CARHARTT START THEIR SOURCING ORG. EEC/AAFA Conference January, 2007 Associated Merchandising Corporation History 1916: Founded by Lincoln Filene, inheritor of Filene‟s Department Store in 1901 and co-founder of Federated Department Stores in 1929, to establish an association in which retailers could work together to exchange ideas and information. The cooperative concept became a reality called the Retail Research Association (RRA) 1918: The Associated Merchandising Corporation is formed 1920s: AMC goes international, opening buying offices in Shanghai, Paris, London, and Berlin 1998: AMC is acquired by the Dayton Hudson Corporation 2006: Target Sourcing Services/AMC: 3rd Largest Sourcing Organization with over $3 billion in shipments Department Store Group DEPARTMENT STORES CATALOGUE/INTERNET SPECIALTY STORES Target.com OFF PRICE STORES MASS MERCHANTS Target Sourcing Services/AMC Worldwide Offices MILAN, ITALY POLAND FLORENCE, ITALY SEOUL, SOUTH KOREA UNITED KINGDOM TIANJIN, CHINA MINNEAPOLIS, USA FRANCE QINGDAO, CHINA NEW YORK, USA ISTANBUL, TURKEY PORTUGAL SHANGHAI, CHINA PAKISTAN GUANGZHOU, CHINA SPAIN DONGGUAN, CHINA CAMBODIA DENIZLI, TURKEY SHENZHEN, CHINA THAILAND GUADALAJARA, MEXICO HAITI EGYPT TAIWAN DUBAI HONG KONG ISRAEL NEW DELHI, INDIA GUATEMALA COLOMBIA PHILIPPINES JORDAN BANGALORE, INDIA HANOI, VIETNAM EL SALVADOR KENYA SRI LANKA HO CHI MINH CITY, VIETNAM HONDURAS ACCRA DHAKA, BANGLADESH NICARAGUA CHITTAGONG, BANGLADESH INDONESIA BRAZIL SINGAPORE SWAZILAND MAURITIUS MALAYSIA DURBAN LEGEND OPERATING LOCATIONS – 51 Evolving Sourcing Strategic Sourcing Criteria • Raw Materials • Apparel • Home Furnishings • Labor Force • Infrastructure • Political • Banking • Logistics • Speed to Market • Trade Relations • Global Balance Global Sourcing in Today‟s Environment Where in the world are my clothes? Sourcing Matrix Product Political Process Stability Cost Compliance Factory Cycle Capacity Time Trade Fabric Agreements Sourcing Product Product 3 Dimensional Expression Silhouette Factory Detail Process Product In-Line Quality Audits Process Statistical Quality Audits Marking / Grading Systems Factory Electronic Data Interchange Inventory Controls Compliance Product Oxford Terms of Engagement Process Environment, Health, Safety Fair, legal labor practices Compliance Factory WRAP Customer Audits Conflicting Requirements C-TPAT Certified Capacity Product Multi-Line Product Process Quota charges Compliance Quota Limitations Factory TPL Capacity Fabric Sourcing Product Vertical operation Process Close proximity Compliance Reduce cycle time Factory Capacity Fabric Sourcing Trade Agreements Product Duty Free Process Quota Elimination Compliance Short Supply Factory Details, Details, Details Capacity Trade Fabric Agreements Sourcing Cycle Time Product Faster is Better Process Hemisphere Integrity Compliance Transit Time Factory Inventory costs Cycle Capacity Time Speed has a price Trade Fabric Agreements Sourcing Cost Product Program Cost Process FOB Cost Compliance Investment Factory Direct Ship Cycle Capacity Time Terms Trade Fabric Agreements Sourcing Political Stability Product Political Process Stability Experience Cost Compliance Lower risk Factory Relationship Cycle Capacity Time Trade Fabric Agreements Sourcing Plan „B‟ • Pre-Approved Compliant Facilities • Multiple facilities in various locations • On going approval process • Strength of Oxford Contingency Re-Cap • Low Risk countries • Excess Capacity • Pre-Approval • Multiple Carriers Lanier Clothes Global Sourcing Product Political Process Stability Cost Compliance Factory Cycle Capacity Time Trade Fabric Agreements Sourcing QUESTIONS • If looking for high tech or Perf. Characteristics of fabric does that change your sourcing decision? • Have you sourced anything in Far East and had problems that caused you to come back to this Hemisphere? • Do you see pricing pressures from raw material, labor, etc in Far East? • What is your process for making a decision to switch your sourcing strategy from East to West or West to East?