Silverstone Fashions International Inc (SFI) is a leading, privately held, Canadian apparel manufacturer, selling primarily to commercial concerns such as large department stores and independent retailer chains. Manufactured garments are sent to its distribution warehouse in Montreal where orders are assembled and shipped.

Success in the clothing industry is closely tied to the number of times inventory must be replaced per year as it is sold. It is essential not to have unsuccessful inventory or lack required inventory. A retailer must maximise the return on investment (inventory) by maximising his in-store return per square foot. In Canada the average inventory turns between one or two times a year, but the most successful retailers turn their inventory six to eight times a year.

The Problem

SFI's owner remembered what was said to him when he first entered the apparel business - "Help the retailer make money and you'll make money yourself."

The retailer's lack of inventory management was the stumbling block. Therefore SFI Trouser Co. needed to find a way to control the inventory held by retailers. In order to succeed itself, SFI Trouser Co has to ensure that retailers succeed. Understanding the principles of turning inventory and maximising returns stems from SFI's close relationship with the British retail giant Marks & Spencer (M&S) as the sole supplier of men's trousers in the early 1970s. M&S was turning inventory six to eight times on a higher quality product selling at a lower price and was still making 10 per cent profit.One of the key practises M&S had in its buying department was to have a selector identifying the items to be sold in a particular store and a merchandiser deciding on the quantities to hold or replenish. This merchandiser would establish the rate of sales of an item and, in effect, monitor inventory.

The Outcome

While many large department stores and independent chains were quickly realising the benefits of traditional "retailer imposed" EDI for their operations, SFI Trouser Co was in no position to impose this on its clients. If a retailer did not want to go on line with an EDI system out of SFI's offices. due to their "backwardness" or the high cost of implementation, that retailer would simply drop SFI's trouser lines.

SFI realised that it had to avoid the traditional route of EDI implementation which passes to onus onto the supplier and reverse the process so it could send the information to itself. The idea was simple and the process even more so - put bar codes, scan the inventory held in each store on a regular basis, download the data and generate reports.

By automating the process, SFI:

• Reduced data collection time and personnel input
• Eliminated data collection errors and data processing errors
• Reduced data collection costs as less skilled staff were required
• Provided accurate data the sales team could pass on to retailers

The pilot scheme was performed using a successful small clothing chain, with stock counts being done every two weeks rather than every two months. With the scanning technology, electronic inventory forms were generated, complete with graphics and charts. When the retailer was provided with this information it had no option but to adopt the system as the evidence proved the system was making them money.

The impact was immediate. Sales increased dramatically by 30, 40 and even 50 per cent in units. Now, with the scanned data sent to SFI over a modem link, lost sales due to stock shortages are eliminated because SFI has all the necessary information to manage the entire supply chain.