Behind the Scenes at Fashion Week: Companies Look to Get the Right Inventory Mix

Luxottica and Pompea turn to ToolsGroup solutions for inventory optimization to drive business success

Luxottica and Pompea turn to ToolsGroup solutions for inventory optimization to drive business success

New York  February 11, 2005  With New York gripped by Fashion Week of late, all eyes have been on the new collections. And soon after the models leave the runway and the parties end, those eyes will turn to the stores to find the latest fashions.

In advance of the shopping spree, fashion manufacturers and distributors will have decided on the right inventory mix for the retail shelves and distribution pipeline. Different sizes and colors make these decisions difficult and risky. Increasing the challenge: Short selling seasons and even shorter demand windows (in which products go in and out of style). Getting it wrong can be costly in lost revenue, increased markdowns and damaged customer loyalty.

Software company ToolsGroup said that many of the leading fashion manufacturers and distributors have turned to the solution provider's inventory optimization application to determine the right inventory mix. One measure of ensuring that the right products are on the shelves is customer service levels, and ToolsGroup said it helps companies achieve targets of 97 percent or higher.

Maintaining High Service Levels at Luxottica

Eyeglass giant Luxottica and lingerie leader Pompea are just two companies on ToolsGroup's fashion industry client list, which include Diesel, Marcolin and Best Manufacturing. All use ToolsGroup's solution, developed for the logistic needs of the fashion industry, including inventory planning for large quantities of highly seasonal products and short lifecycles.

With annual sales of more than $3 billion, Luxottica Group is the world leader in the design, manufacture and distribution of eyeglass frames and sunglasses. The company's 23 brands include Bulgari, Chanel, Ferragamo, Prada, Ray Ban, Versace and Emanuel Ungaro. Luxottica distributes its products in 120 countries around the world and is the retail market leader in North America, with more than 2,500 stores, including LensCrafters and Sunglass Hut.

Luxottica uses ToolsGroup to manage all its products in a network that includes 26 distribution centers. With ToolsGroup, Luxottica reached and now maintains high customer service levels, while keeping minimum stocks and short time-to-market for all its products, according to ToolsGroup.

In the first six months of the implementation, Luxottica reduced inventory by 10 percent while progressively increasing its customer service levels. With the success of this implementation, Luxottica has now extended the ToolsGroup solution to its spare parts operation, where service levels have reached 98.5 percent with no increase in inventory levels.

Reducing Stockouts at Pompea Group

With more than $260 million in annual turnover and 2200 employees, Pompea Group is the leading lingerie manufacturer in Europe, producing more than 95 million socks, stockings and pantyhose and 22 million pieces of lingerie each year.

Pompea implemented ToolsGroup's software to optimize and plan its logistics network, emphasizing the improvement of fulfillment levels (or customer service levels) for its large-scale distributors. Pompea uses ToolGroup's fashion methodology to perform forecasts and determine inventory targets based on "fashion seasons." Pompea is also performing subcategory planning, in which last year's collection is mapped to this year's collection.

Gianluigi Alberici, Pompea group manager, explained, "Following the implementation of [ToolsGroup's Distribution Planning Model solution] in July 2004, the company has achieved a 16 percent reduction in stockouts and a 25 percent reduction in letters of complaint, without a relative stock increase."

For an in-depth look at how agribusiness Syngenta is reducing inventory while maintaining customer service levels by building a demand planning process based on a collaborative forecasting solution, see the article " Forecasting Processes from the Ground Up ."

Demand planners at glove manufacturer Wells Lamont have put their finger on a way to bring new value to the company by leveraging technology that allows them to plan by exception. Read their story in the article " Planning by Exception," in the December 2004/January 2005 issue of Supply & Demand Chain Executive.