Intentia: Stepping Out With Fashion and Style Part Four: Movex Case Study Continued With User Recommendations

Introduction

We are surrounded by fashion. In fact we come into contact with it so often that we tend to take it for granted. However, if you are in the business of fashion, you know that people's tastes are extremely fickle and ever changing. Your enterprise-wide software has to be nimble enough to turn on a dime. It also must be able to anticipate more often than to simply react.

This research note explores industry characteristics and trends and resulting software challenges. After getting an understanding of the fashion marketplace and competition, we will look at Intentia's Movex software offering. Movex's functions and features that will allow you to cut, sew, and package your products efficiently before they are out of fashion.

And, while you may not be into haute couture or consider yourself a fashion plate, you may find how the fashion world solves problems similar to those found in your industry. For sure, you will have a better appreciation of what it takes to put that shirt or skirt on the shelves and not so quick to say it costs too much.

With an understanding of the characteristics, trends, and challenges facing the fashion industry, the remainder of this research note looks at how one developer, Intentia, has designed its software offering, Movex, to respond to the industry's needs.

The remainder of this note examines more of the important features of Movex to include

• Sales Order Processing
• Production Planning and Control
• Inventory and Distribution Management
• Financial Management

This is Part Four of a four-part note.

Part Three provided an overview of Intentia and initiated the discussion of Movex's functions and features.

Part One discusses the characteristics and trends in the fashion industry.

Part Two discusses the challenges facing software in the fashion industry.

Sales Order Processing

Just as color, size, and style combinations generate a large number of stock-keeping units (SKU), they also generate orders with a large number of order lines. As you might expect, there needs to be a method to simplify the order entry process to reduce keystrokes and ensure accuracy. Movex satisfies this twofold objective.

As illustrated in figure 1 below, at order entry time a template is created that includes the key attributes of the item such as color and size. Creating an order is as simple as entering the quantities corresponding to the customer's requested colors and sizes.

Figure 1

As a software product in support of the fashion industry, this would be the minimum expectations for efficient data entry. Movex provides additional assurances to create the "perfect order". Tailored to a customer's specific needs and historical ordering patterns, potential inconsistencies can be avoided. Rules established with the customer can be enforced. As shown in figure 2, this customer has predefined certain percentages and distributions that must be satisfied or you cannot ship the order. Such behind-the-scenes checks and balances will eliminate your customer's dissatisfaction and the consumer's frustration. Nothing annoys a consumer more and kills repeat business than being out of stock of common colors, sizes, and styles.

Figure 2

As has been repeatedly stated, seasonality and delivery constraints can be critical to the success of a merchandizing program. Within Movex you can tag SKUs as being seasonal or non-seasonal. Additionally, the appropriate seasons can be attached to SKUs. For example, a coat can be designated as summer, be delivered in the spring months, and on the racks during the summer months. With such designations and associations, seasonal relationships can be validated at order entry time based on the ordering and delivery dates. Is the order valid for the season? Is the requested delivery date valid for the season? Furthermore, seasons can be divided into delivery windows such as the first available or allowable ship date or the last allowable ship date to ensure product arrives on time and on schedule.

Movex supports flexible pricing and discounting practices that are common in the industry. In addition, commissions, royalties, and retrospective discount payments are automatically calculated during the order entry process but can be paid based on shipment of the order or receipt of customer payment. Accepting ordering data from point-of-sale devices or via the Internet through web-enabled software, Movex offers a robust array of statistical reporting by season, attribute, or other parameters. It also provides an easy-to-use module for custom reports.

Production Planning and Control

Good planning and effective use of production capacity are essential in fulfilling customer orders and meeting delivery schedules. From a planning perspective, Movex supports a company with multiple sites after which the individual plans can be consolidated into a central plan for the entire corporation. By encompassing distribution resource planning (DRP) objectives, Movex tracks and accounts for lead times by vendor and by SKU or location.

Additionally, on-line modeling gives you the ability to "tweak" different inventory scenarios to easily examine the impact of change on service and inventory levels. Being constraint-based, planning motivates an organization to focus on resolving the bottlenecks, specifically the processes and resources which tend to be in limited supply but continual demand. Planning exceptions generate action messages and e-mails ensuring the most appropriate personnel are notified at the earliest point in the production line. Standard aggregated and multi-level planning views are provided by style, color, size, and SKU with the ability to create custom views.

Movex permits you to aggregate orders sharing common resources and routing, thereby providing simple one-step reporting and on-line management of production orders. This reporting can also include subcontractor processes performed off-site yet critical to the production run. Employing aspects of a manufacturing execution system (MES), each step of the production process can include integration with a quality control function to minimize seconds or to ensure prompt notification so that the line can be restocked and expected yields still achieved.

In a sewing plant, cut garment pieces for a number of garments are usually wrapped together and travel down the sewing line in a bundle. Tools are incorporated throughout Movex to enable easy working at a grouped level such as by style, style and color, and works order. The software also simultaneously facilitates detailed bundle management in a production environment. Incorporated in Movex are automated bundle split capabilities, and bundle level reporting and tracking functions.

Inventory and Distribution Management

As has been emphasized repeatedly in this article, the unique nature of fashion is the high turnover of SKUs. Consumer tastes continually change, which marketing departments usually encourage. Consequently, freeing up inventory slots and locations for new product is essential. Equally essential is the ability to store goods in both bulk and pick-face locations, and to pick efficiently from these different locations depending on the nature of the orders being picked. Movex supports system directed putaways, cross-docking, and picking strategies that reinforce this philosophy.

When suggesting a putaway location, maximum effort should be made to lessen the degree of wasted space. Movex accomplishes this by maintaining and matching incoming goods with an open inventory slot. To increase the efficiency inside the warehouse, Movex automatically suggests which locations to use for cross-dock or put-away whenever goods receipts are to be reported. Movex offers many different variables to control suggested locations such as fixed, preferred reserve, and dynamic. These variables include pick frequency, slot location accessibility and dimensions, and bulk versus pick-face areas.

Cross-docking is where a receipt of product is automatically designated for shipment to a customer. The software recognizes the inbound receipt of product, correlates this fact with a customer's order, and uses the receipt to fulfill said order. The importance of cross-docking is that putaway and picking functions are essentially eliminated. Behind the scenes, the receipt is matched with the purchase order, invoice payment is scheduled, the bill of lading is generated, and the customer is invoiced. Time is saved, redundant processing minimized, and effective use made to newly arrived product. It's a win-win-win situation.

Movex offers fulfillment and picking strategies to increase the efficiency of the warehouse and maximize the use of space. For companies with multiple distribution centers, efficient sourcing of an order can be established based on a set of rules which is defined in a supply model. So, where a particular distribution center may normally be used for a particular delivery location, the supply model may indicate that a specific order can be more efficiently fulfilled from a different distribution center. This change may be necessitated because there is no availability in the normal distribution center or because the required quantity constitutes a large order which should be shipped from a central distribution center. Once inside the four walls of the warehouse, goods are selected for pick based on the FIFO concept, and also taking into account bulk and pick-face picking rules. The FIFO concept can assist in ensuring that locations will be fully cleared before moving on to pick goods from another location. Additional picking efficiency can be achieved by rule-based sequencing of the pick lists.

Referring back to the skirt and belt example, kitting is a common operation in the fashion industry. Kitting is where you combine two SKUs and sell them as third SKU. The belt is kitted with the skirt; a blouse is kitted with a pair of slacks; or a men's tie is kitted with a shirt. Typically, kitting involves a two-pick process. The first pick moves the individual SKUs to a forward pick area. The second pick marries the two SKUs from the forward pick area for order fulfillment and shipping. Movex's software supports kitting and the forward pick area.

Movex provides the capability to track usage of particular locations and reports can be generated indicating location utilization and SKU turnover. These reports can be used as the basis for manual slot consolidation.

The delivery and distribution functions supported by Movex include the automatic calculation of the customer receipt and delivery time based on logistic and transport planning, which can support less than truck loads (LTL) and third-party freight carriers. Additionally, the software can produce a load planning schematic or, after the fact, support a manual load. To complete the delivery cycle, Movex includes a proof of delivery and returns processing components.

Financial Management

Again, given the global nature of the fashion industry, you would expect the software to support multiple foreign currencies, gain and loss due to currency translation, and restatement of financials based on the default currency of the corporation. Movex does provide this flexibility and functionality. Accounting is fully integrated with the other modules of the software such as invoicing, cash receipts, payable distribution, and inventory evaluation. Movex includes several costing accounting methods to include standard, actual, and average costing to facilitate the switching between methods.

Factoring is a common practice in retailing. Factoring is where you sell your receivables to a third party at a discount and receive payment immediately. Movex supports a fairly robust factoring process. First, a factors credit limit is established for the bill-to customer. If sufficient credit exists based on the factoring credit limit, the order is approved and processed for factoring. A separate and more standard credit limit can also be established for the bill-to customer to allow an alternative method for approving the order. Movex can also handle letters of credit.

Summary and User Recommendations

We have seen that characteristically the fashion industry is confronted with long lead times to develop products with a short life cycle. Due to the combinations of colors, sizes, and styles there are large number of SKUs compared to a relatively small number of items. The suppliers and subcontractors are spread worldwide, making visibility of the supply chain difficult and time to react to change and unexpected events exceedingly long. The seasonality of items places additional constraints on the supply network and make abiding by the delivery schedule critical.

The challenges facing the industry are the need for the fast setup of new items to counteract the large number of SKUs. A corollary to the large number SKUs is that customer orders also tend to be large in terms of order lines. Consequently, processes to enter orders must minimize the amount of keystrokes via a matrix-driven approach. A product mix includes mostly make-to-order SKUs with some standard make-to-stock SKUs. Further complicating this mix is the seasonality issue. However, it is not a case that a SKU can be held for the next season. With consumer tastes constantly changing and the need for something different, a fashion item will, at best, last for a single season and there may even be several collections within a season. The constant in the fashion industry is that there are no constants.

Intentia's Movex provides ample tools to respond to the trends and challenges of the fashion industry. While Intentia needs to continue to work to get its financial house in order, based on its functions and features Movex deserves to be on anyone's short list of vendors able to competently compete in the world of fashion.

This concludes Part Four of a four-part note.

Part One discusses the characteristics and trends in the fashion industry.

Part Two discusses the challenges facing software in the fashion industry.

Part Three provided an overview of Intentia and started the discussion of Movex's functions and features.

About the Author

Joseph J. Strub has extensive experience as a manager and senior consultant in planning and executing ERP projects for manufacturing and distribution systems for large to medium-size companies in the retail, food & beverage, chemical, and CPG process industries. Additionally, Mr. Strub was a consultant and information systems auditor with PricewaterhouseCoopers and an applications development and support manager for Fortune 100 companies.

He can be reached at JoeStrub@writecompanyplus.com.