(Filed Under wholesale Lingerie News). BODY editor-in-chief Nick Monjo interviews Dreamgirl president Christopher Scharff about his purchase of an extensive inventory management software system.
Monjo: Recently DG announced an investment in the Logility system. I understand this was a sizeable expenditure, in the six figures. Can you elaborate and explain why this was necessary?
Scharff: We felt it was imperative to improve our fill rates to our customers, and at the same time manage our inventory to acceptable levels. It is easy to improve fill rates by carrying more inventory, but of course this requires more financial resources invested in inventory. So, we needed a system to help us manage inventory levels to have more of the “right” inventory on hand to fill customer orders. The system does both demand planning, to help us develop a more accurate sales forecast, and it also does MRP which helps us to place orders with our vendors at the appropriate times so the inventory is available when the demand is forecasted.
Monjo: What about the previous case history experience of this company convinced you that this was the software system for DG?
Scharff: Other users include Williamson-Dickie (Dickies) which is a half billion company specializing in work wear. The work wear/uniform industry is characterized by having thousands of skus which must have 100% fill rates so this is a perfect application to be translated to the lingerie business.
Monjo: With the new system, what kind of delivery goals and in-stock goals can and will you be achieving? Can you walk us through an example of how the system works?
Scharff: Too elaborate on the MRP portion (Material Resource Planning Portion) it uses many inputs including the demand plan (sales forecast), on hand inventory, future orders, work-in-process, safety stock levels, vendor lead times, fill rate targets, etc. The system uses all of these inputs to come up with recommendations of when new purchase orders should be issued to our vendors. We have targeted 95-97% fill rates as our goal using the system, compared to previous fill rates which ranged from 75% to 92% depending on the time of the year.
Monjo: The sexy lingerie industry as a whole has been somewhat loosey-goosey when it comes to shipping complete orders. Why is DG making such a big deal about this?
Scharff: We feel this can be an important point of difference for us versus our competitors. Meeting customer needs by shipping on-time and complete is a way that we can please our customers and improve our competitive position in the marketplace.
Monjo: Can you explain how Logility has helped with your Diamond collections?
Scharff: This will enable Dreamgirl to ship Black Diamond and Always in Stock at a 96% Service Level Rate and the rest of the Diamond Collection at a 93% Service level rate while maintaining 1000’s of sku’s in our collection.
Monjo: In earlier days I remember at least one year when you made a point of providing expedited UPS services to get Halloween merchandise to customers on time -- at your expense. Is this part of the same concept and philosophy? Are there other examples, besides Logility, of this commitment?
Scharff: Yes, Dreamgirl is located in a state of the art warehouse which enables us to ship same day or next day to many of our customers in lingerie and also to ship costumes rapidly at peak shipping times of the year which include August and September in the run up to Halloween.
Monjo: What prompted the Logility move? Was it overall growth? A particular shortfall of inventory?
Scharff: We have had our ups and downs in terms of fill rates over the years and we wanted to become much more consistent so that our customers can count on us to deliver on-time.
Monjo: Is there anything ELSE about supply chain, warehousing or Logility that you would like to add?
Scharff: When we moved to our new facility in Bell, Ca. approximately two years ago, we made another significant investment in a new facility which included a warehouse management system with a pick module and conveyers and a fully racked warehouse environment. This was approximately a $1.8MM investment.
Monjo: What kind of growth does DG expect for 2012? I remember you said 2011 sales approached $50 million. What part of this growth can be attributed to Logility?
Scharff: We anticipate growth in lingerie and a decline in Halloween costumes due to an entire industry decline in costumes owing to the fact that Halloween occurs on a Wednesday this year. Overall, we should be relatively flat to 2011. At the same time, our lingerie business will continue to grow rapidly owing to the increasing US and international demand and our sudden ability to ship at an increasing fulfillment rate which will be well over 90% given the implementation of the Logility System.
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