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Quick Response: new systems spur creation of stronger retailer-supplier ties - Quick Response inventory control systems - HomeMarket Trends

QUICK RESPONSE New Systems Spur Creation of Stronger Retailer/Supplier Ties

The beauty of Quick Response is that it promises to usher in a new era of cooperation along the entire consumer product distribution pipeline. "Quick Response is a planned program, not opportunistically responding quickly. All three partners--retailers, manufacturers and textile fabricators--need to be involved and in unison in order to understand what is needed because they are all interdependent," points out Roger Milliken, chairman and chief executive officer of Milliken & Company, the giant textile manufacturer.

A common misunderstanding among industry executives is that Quick Response is solely a technology issue. Rather, QR combines several different technologies (electronic data interchange, Universal Product Code marking and point-of-sale scanning, shipping container marking) with a totally different business philosophy that views vendor relationships as corporate alliances.

The technology allows information to flow smoothly to the manufacturers and their sources of raw materials in order to speed the replenishment of merchandise to the retailer--resulting in a better competitive position for manufacturers and improved bottom line profitability for retailers through increased inventory productivity and more efficient operations.

Viewing QR in this way, it's easy to see why Milliken, an outspoken proponent of QR, believes that cooperation between retailers, manufacturers and textile fabricators is so crucial to the success of this new way of doing business.

"QR capability at only one of the stages [retailer, manufacturer, fabric maker] is meaningless in that it would be like having the only telephone in the world and, therefore, not being able to call anyone else.

"If a retailer knows what is selling, he needs to communicate that to his manufacturers and textile mills who then are in a better position to respond promptly and help the retailer keep rounded stocks with less money tied up in inventory," Milliken told HMT.

Milliken is sometimes called "The Father of Quick Response" because of his pioneering efforts in promoting the development of standardized technologies and the necessary change in corporate philosophies.

"I believe the fundamental inspiration for Quick Response was the realization by the United States soft goods industry that `time' is one of our greatest assets," said Milliken. "With the proximity of the U.S. industry to the U.S. market and, therefore, the ability to listen to what the consumer is telling us by tracking what is selling; and, secondly, with the ability to have a short delivery response, the U.S. industry has one of its most valued assets, that is, the ability to provide Quick Response."

Nevertheless, the value of QR is just now being realized by many industry leaders. The VICS (Voluntary Interindustry Communications Standards) committee has been working since June of 1986 on standardizing technologies to EDI linkage between apparel and domestic vendors and retailers. TALC (Textile Apparel Linkage Council) was formed in May 1986 to establish similar standardization between apparel and domestic vendors and their mills.

"The U.S. industry is still implementing QR," he said, "but the progress that's been achieved is truly remarkable."

Milliken points to the recent VICS Chief Executive Officer meeting, which attracted 300 attendees in Dallas, and the subsequent Quick Response '89 meeting, which drew 1,200 attendees, as evidence of broad interest and activity within all stages of the U.S. soft goods system.

"The accelerating momentum to broaden the concept is testimony that, although there were some skeptics to begin with, the benefits far overshadow any difficulties."

The commitment of top management to achieve the benefits of QR is the first, and possibly, most important requirement for implementation of a QR system. This includes creating the environment within their organizations to implement the multifaceted requirements for achieving true QR capability.

Milliken stresses that management dedication to the concept must be communicated throughout their companies.

"Implementation requirements go well beyond a systems issue. Management leadership must foster the dedication and motivation within each organization such that all functional elements are working to implement QR," said Milliken.

The forming of partnerships through communication and establishing trust with textile supplier, apparel manufacturer and retailer is crucial to achieve ongoing QR benefits, according to Milliken.

Beyond top management dedication to the concept, smoother implementation of QR can be achieved by having all elements of the industry participate in the various voluntary network organizations, such as VICS, TALC, SAFLINC (the organization for suppliers of sundries and findings to the apparel industry), and FASLINC (includes suppliers of fiber, yarn, dye, chemicals and other materials to the fabric industry).

By communicating regularly through these networks and with their QR partners, Milliken believes all companies can achieve a faster understanding and implementation of QR. Such communication requires ongoing educational effort both internally across all functions within an organization as well as externally with suppliers and customers.

For retailers and manufacturers interested in getting involved in QR, Milliken suggests that, first, they form partnerships and then communicate via EDI the results of point-of-sale tracking via machine-readable UPC-A preticketed merchandise. To further facilitate QR, the partners also need to be operating on a real time merchandising schedule with the manufacturer and the textile mill having access to all POS information so they can adjust their short cycle manufacturing and distribution systems.

Milliken also emphasized that QR will eventually benefit retailers and manufacturers of all product categories, not just home furnishings retailers, apparel manufacturers and textile fabricators.

The Quick Response Costs and Benefits study, conducted by Andersen Consulting, revealed that firms involved in QR can reap an annual savings of $9.6 billion, after an initial investment of $3.6 billion. Yet, Milliken is fond of pointing to other more intangible values of QR implementation, such as more innovation and improved customer service and satisfaction, which will lead to improved market share.

"The positive relations that are established in successful partnerships also generate a healthier supportive environment that affords additional opportunities and enhances a company's overall image and morale," said Milliken.

QR will encourage merchandising innovation through its ability to style test products. Through style testing, new products can be developed with minimum exposure and risk, and immediate consumer feedback.

Furthermore, QR may be the salvation of many companies that are highly leveraged due to widespread merger and acquisition activity.

"Although generalization is risky," he said. "I would suggest that even when resource availability is limited, QR becomes more of an imperative because it really is the best route to profitability and improved cash flow via lower inventory costs."

Regardless of a company's financial position and resources, the overriding reason for a retailer, manufacturer or textile mill to be involved in QR is survival. "Or, to respond positively, to enhance market share and long term profitability," said Milliken. "Is there really an alternative strategy that can provide such well-documented results of increased sales and inventory turns with reduced stockouts, markdowns and other expenses that can improve bottom line performance?"

Milliken told HomeMarket Trends that he is reluctant to speculate on what might be the next major technological advance after QR because he believes there is so much that can be done with existing hardware and systems.

"I believe it is not a technology advance that will improve supplier/retailer relations," he said. "But, rather the dialogue of the partners and improved flexibility that can take place now by greater use of existing technology.

"The maximum benefit of QR will be realized when U.S. retailers are fully operational with point-of-sale scanning and UPC-A preticketed merchandise based on the VICS standards and when the same retailers are sharing this sales information with both their manufacturers and textile mill partners via EDI."