Friday, October 8, 2010

Younger's Quickstep



Scale has passed, completing the vertical structure of the Younger chain, is trying to speed up the linkage between upstream and downstream of the "dance"

In Asia's largest garment production base Younger, one of China's garment industry, "Elephant." The China National Commercial Information Center recently announced the first national brand apparel market ranking, Youngor to more than 10% of the market share of tied for first place comprehensive.

A notable fact is that in the past few years, Younger in the initial fabric, garment manufacturing and trade sales of the three links have dropped more than 500 million yuan respectively, the huge amounts of money, thus starting a large-scale structure vertical industrial chain. Apparel industry analysts generally believe that this is "Younger" shirt for 9 consecutive years won the national market share of the first comprehensive, suits are atop the main reason for 3 consecutive years.

However, substantial benefits in exchange for large-scale production has passed, when overcapacity, the market's balance gradually tilted to the buyer, the real decisive factor is the time, the product needs to be in the right time to enter the market. For the Younger, the upstream and downstream in the use of capital controls, but also had to face the test of ability to control the supply chain.

How to expand the scale at the same time, enhance the responsiveness of the supply chain? Today, the Younger this "elephant" are trying to speed up the linkage between upstream and downstream of the "dance."

River water

Big or do fine? In business management areas, it seems forever. Material from upstream to retail end-all by yourself, so that clothing companies have only a handful in the world. Even the head of Li Rucheng Younger, also admits this "is walking a tightrope, risking a lot."

However, from another point of view, this risk is the choice of Younger had to do.

Like their counterparts in China, fabric production was also a weak link in Younger, because the gap between the quality of a considerable part of the high dependence on imported fabrics, this way, not only the purchase cost of natural high and a long cycle. "Younger fabrics every year about 56 billion procurement, of which 10% rely on imports." Younger logistics manager, said the Department of Chen Zhenglong, a suit part of the time spent on fabric sourcing needs 45 days, or nearly 2 months, the fabric in place, through the production of mining, to the finished product storage, a process that usually takes a month, the whole process about 3 months. "We can say that the procurement part of the smooth or not, to a large extent affect the progress of the whole process."

Controlled by others for not purchasing, select the tracing and the Younger to the upstream water.

October 2001, Younger and Japan, "strain" Huang Li washing plant joint venture, started his business clothes dyeing, washing, design, manufacturing, processing and other fields, declared the construction of the vertical chain project start; in June 2002, Younger spent 100 million U.S. dollars the city broke ground on construction of textile; in September 2003, the Japan-China textile printing and dyeing Co., Ltd. Ningbo Younger production, Younger involved in yarn dyeing, weaving, dyeing, finishing and production business, joint venture partners Nissin is one of Japan's largest textile finishing of textiles and clothing, one of the other joint venture partners Itochu holds a wealth of information and resources to downstream customers; a month later, the Younger should Accessories Industrial City Branch inaugurated in Ningbo industrial city gathered a group of manufacturing companies, for the Younger matching accessories to provide high quality products; in May 2004, Youngor and Itochu of Japan and Hong Kong City International Holdings Co., Ltd. established a joint venture in Ningbo Younger Wool Textile Dyeing and Finishing Co., Ltd., Youngor textile factory located in the city is expected to be completed by the end of equipment installation commissioning, which means, Younger will have its high-end wool dyeing and finishing of textile production base, its upstream industry chain and further extension.

With the power of foreign technology and capital, Younger is gradually upstream control. Youngor clothing company, according to Jordan Chan, at present, Youngor fabric used in the proportion of their production is still small, most of the outside procurement. Yarn-dyed shirts for example, about 30-40% of their production, only about 10 percent wool suit. "But even so, the procurement advantages are already evident." Jordan Chan said, compared with outside procurement, production process ourselves, as necessary, but the links in the fabric, after all, for some time.

Moreover, the Younger by intra-group transactions, successfully reduced the production cost of clothing, save a lot of financial costs, transaction costs and transportation costs. Myself textiles, Younger is not only able to control quality, keep up the market, but also the domestic fabrics market. "Although the fabric to bear the risks, but some of the logistics to reduce intermediate links. Such enterprise's own master, when to use what kind of fabric. Because of the upstream have to grasp, when the production of clothing in the course of something, the upstream can immediately respond. in response to changing market needs, we can strive for faster response. "Jordan Chan in the phrase.

Clenched channels

"The sales channels into their own hands, is the Younger to expand downstream industry chain apparel industry an important part." According to Li Rucheng ideas, today's Younger, not only manufacturers or distribution companies.

Currently, the labor advantage has always been based on the Chinese garment industry has entered a marginal profit. With the increasing circulation and opening up, the influx of international clothing brands have significantly narrow channels. Although the local garment enterprises in China has its own marketing system, marketing system, but in general small-scale level is not high, stability is not enough, control is not strong, the efficiency is low, reflected in the brand power and market expansion tension obviously not enough.

Younger Since 1995, the building sales channels, today, already have the largest marketing network of clothing. Layout from the marketing point of view, the self-Younger nearly 600 stores, nearly 700 franchise stores, and close ranks with the major shopping malls more than 1,100 sales terminals. In sharp contrast with domestic counterparts, in all implementation of the "franchise" and will sell clothing to the professional sales, the Younger in 1997 after it spent 11 million to buy a large number of shops, adhere to marketing channels firmly in their own hands.

This decision gave Younger bring a lot of victories. For example Younger main rival in China Shanshan Group, before and after 1998, gradually dissolved the previously established 35 distribution companies and replace them with brand-new franchise mode. But next time, Shanshangufen revenue and profit began to decline, but a matter of course to get the Firs Youngor give up their room for growth.

Younger's self-built networks, led the sales, the data show that more than 35% of current sales Younger benefit from its own marketing network construction. In addition, the marketing network has become an international fashion brand wants to use the target market. "This not only prevents domestic competitors 'aggressive', but also forced the international garment enterprises to see you. With the channel to control the exchange channel with their weight." The words from Jordan Chan is not difficult to find today's Younger , has its own channel as one of its core competencies.

However, with the risk and reward. Excessive self-built network, made of actual stock Younger increase, the maintenance of the network, building, then engulfs the large number of enterprises profits. Each seasonal backlog in the Younger in the suit store around the country, we should discount prices down to sell shirts. In 2001, the Younger on the accumulated backlog of only a shirt on the billions of dollars lost every year more than 100 million yuan. In the industry view, the sale of resources Youngor large but scattered, not formed between the network communication transparent, as long as this problem is not resolved, companies can not get rid of the extra load.

In 2002, Younger invested 10 million yuan Cooperation with Anderson Consulting, adjusted for the channel to begin restructuring its marketing network. Younger final decision is that by choosing different marketing mix, direct-to-market. In major cities, mainly to self channels, franchise and sales of supplement shopping. Through the existing network of more than 2,000 business integration, closing some small stores with poor profitability and franchises, to the elaboration of 1000-2000 square meters of building large stores, for which Li Rucheng also proposed to "build 500 flagship stores. " In addition, two, three markets, the appropriate dealer to find some co-operation.

Younger's intent is obvious. Hopes to build a large but not "stupid" network system, to avoid risks, to the maximum extent seize the market initiative. The end of 2003, Li Rucheng for the next 5 years, the marketing channel construction, approved a 50 billion yuan in the planning.

Transparent glass

Younger front becomes longer, forming a long vertical chain. But since 2000, with the Chinese clothing market shift from a seller to a buyer's market, the apparel industry as the volatility and cyclical companies, clothing companies are followed by large-scale manufacturing to mass customization, customized changes, Ya Gore breaking the chain faces growing risks.

Under normal circumstances, Younger ordering process is this: start with lower self-stores and franchises come calls orders, orders to production headquarters. However, from the preparation, production to distribution, a process often down nearly 3 months, this time changes in market demand and long sales season may be over. Improve the production and marketing rate, and improve responsiveness to market changes, has become the most prominent faces Youngor problem.

The logistics model has also led to a huge inventory, it also makes Younger overwhelmed. Chenzheng Long said: "production of goods sent to the completion of the company's logistics center, then our distribution, Yun to the Gegepeisong center Huo Quan Guo Pei-fat branch, or through third parties logistics Zhijie sent. In this process, each warehouse or logistics center will have a revolving inventory. That is, if only one goods, may order that a shipment of inventory to generate 3-5 times. "

Since 2002, Younger investment of nearly 100 million yuan, began to build an information platform, aims to complete the group of digital engineering and software design, and subsidiary to 161 logistics management information system construction and start 150 stores Digital Management Project. Younger hope that through this platform, will be scattered throughout the De Xu Qiu, Resource and Inventory data integrated with, the use of information Wangluo open up the apparel supply chain of Meiyihuanjie, then Tuidong 鏁?article supply chain integration.
Jordan Chan said: "This work consists of two parts. A walk down from the logistics of marketing system, to branch management system has to store the POS system. Another walk up to the production of the factory's ERP , to the fabric suppliers. Now we come to the factory at this stage is up, go smooth the upward to the fabric supplier. "He hoped that, after system integration can be done automatically generated replenishment proposals to raise the forecast program accuracy, so that the entire supply chain Youngor through by the positive demand-pull operation.

In the downstream, Younger marketing system has been running for some time. "For the market reaction speed consideration, we need to understand the market first-line product sales every day, so most end shops in the market information system construction is the most direct way." According to Jordan Chan introduced to the system on the terminal every day feedback some information, which is the basic unit shipments, sales, inventory numbers and value. In the headquarters, hand every day to do the latest statistics system data and analyze the formation of statements on the appropriate link to make adjustments. This allows the most accurate forecasts and coordination in the supply chain flexibility and speed to achieve maximum production and market changes in order to achieve the greatest degree of agreement between.

Chenzheng Long cited the following example: "in a transparent glass in order to know how much wine left, or else pouring again. We need to do now is to Younger are all made of transparent glass store, and through our network system to see how many stores where goods or not to continue to supply, for the number of goods. "
Jordan Chan to reporters about the Younger, a new business is being carried out: the city's flagship clothing store, customers can choose fabric through a computer, a suit for their custom. Attendants had customers in the amount of height, waist circumference, the first data entered into the computer, the system will send data to the Younger in the production workshop. Days, the factory will be semi-customized to the customers allowed to try on a suit sent to the store. "If not appropriate, can be modified."







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