Home Articles NRF 2014 Interviews: ecVision
NRF 2014 Interviews: ecVision

NRF 2014 Interviews: ecVision

44
0

ecVision 1

In the first of our exclusive, cross-site vendor interviews from last month’s NRF show in New York City, our Editor talks with Gary Barraco of ecVision about supply chain transparency, sustainability, and the future of collaborative materials management.

Ben Hanson: Firstly, how has the show been for you, and do you think the trends you see here are indicative of trade shows in general?

Gary Barraco (pictured far right): I like to tell everyone that these kinds of shows really mirror the industry as a whole. So here on the expo floor, we’re a supply chain solution provider, and the focus is not really on us.  The focus for the attendees this year is on retailing, and all of the aspects of customer experience, including how to deliver the right products into the hands of the consumer.

Our role, instead, lies in getting those products from design to receipt into the warehouse and the store. So although we do play an important role in the process of getting things to retail, we haven’t seen the traffic for supply chain buyers like we did last year.

We had three very quiet years here, and then last year’s show was incredible, with retailers lining up to make appointments and see us.

BH: Appointments, I presume, you could keep without necessarily having to have a booth in the first place?

GB: Exactly. And I believe the organisers here at NRF see the whole industry that way, with the focus shifting according to what retailers want at any given time.  I think in terms of exhibiting at shows like NRF we’re happy to go along with these ebbs and flows, and then when something unfortunate happens or there’s shift in the emphasis and needs of retailers, we’ll find the focus is back on the supply chain again.

Now, that doesn’t mean that our business is slowing down at all – in fact the opposite is true for us.

BH: It’s interesting that you think of things that way, because I think it’s fundamentally true that a lot of what people see as “trends” year or year are actually just the different facets of modern retail coming to the fore, and that’s bound to be cyclical.  So, apart from today’s event, how have the last twelve months been for ecVision?

GB: Remarkable – particularly in our primary area of product safety and product testing, and facility compliance. That’s been the area where we’ve had the most attraction and the most demand, and where we’re doing the most in new projects. Which tells us that it’s now come to be painful enough for the brands and the retailers to say, “let’s make an investment”.

We launched ecVision Comply earlier this year, which is a point solution – low cost, turnkey – and focused on testing and compliance. We’re doing well with that.  Slow, but well, because it’s for the mid-tiers and the mid-tiers tend to think that, “well if I want to bring in a solution, then I need to stop what I’m doing and actually bring in a solution, and I can’t do that because I don’t have the people available to do it”.

Major brands, though, are embracing anything for compliance.  Our Dick’s Sporting Goods implementation this year was very successful, and a lot of our existing clients are now adding on product safety, product testing, and compliance.

BH: In the case of Dick’s and companies like Dick’s, have they integrated their supply chain and compliance systems into their PLM solutions?

GB: Yes – everything we’re doing is integrated into ERP and the PLM. They’re not actively replacing anything with our solutions – they’re filling an identified gap with a specific collaborative solution, and that’s where the value is.

BH: Typically there’s a compliance module, or there ought to be a compliance module, in all of the major PLM solutions. Do you find people turning to ecVision’s solutions instead of handling their compliance directly in PLM, or because the facility to do so just doesn’t exist within their PLM solution?

GB: It varies.  NGC, for example, has a module for compliance and testing, but it really doesn’t go as deep as our products do. The value for us is that we are capturing PO data and BOM data; when you marry those two, you find you now have full visibility and traceability that was limited otherwise. If you don’t have a PO, for example, then you’re looking at materials and labour and so on in isolation. You need to actually see what order is affected by this problem, what supplier made the product, who the raw material supplier is, and what the components are before you can think about declaring yourself completely compliant.

I’m doing an event in February, in Hong Kong, that’s focused strictly on that.  Over there they don’t benefit from the same trade association education that people in the US are exposed to more frequently, so there’s a need for the Asia-side of the business to learn more about compliance and testing processes that just isn’t there.

But, with so many steps and hurdles being added to the quality assurance process – conflict minerals, RSL tables, California Green Chemistry – that’s certainly not exclusive to Asia.  We’re talking today about getting down to the absolute nuts and bolts, going down to the fifth or sixth tier of suppliers and asking questions like, “your work is fine, but where did you get the powder to coat this buckle?”.

And that’s a difficult question to answer when your information just doesn’t go that far.  It’s a question that even major brands that have unique raw materials might not know the answer to, because their compliance information stopped short of knowing anything beyond the fact that they bought a buckle in the first place.

The value in what we offer lies in allowing retailers and brands to capture that kind of data from end-tier suppliers and report on it.

BH: What you’re talking about there is very different to the kind of compliance (or rather non-compliance) that hits the headlines.  That tends to be broad-brush stuff, driven by catastrophic breaches like the Rana Plaza tragedy.  Is this kind of exhaustive detail in compliance driven by the need to avoid negative publicity, or to comply with regulation?

GB: In a way, it’s both.  There’s legislation behind these things now, but the legislation isn’t always punitive. It’s more about leveraging public perception against the brands. So Californian Green Chemistry, for instance, has no fines associated with it. That’s a new law that California came out with, and they haven’t even said yet what products and what chemicals they want to evaluate. What they have said, though, is “we’re just going to put your name on a website, so that everybody knows that you’re not environmentally or socially consious.  And then we’re going to let the consumers have at you.” So although there are regulations that do impose actual fines, the impact of those fines tends to be quite minimal in comparison to brand protection – instead, the regulators are playing with something much larger by putting the reputations of brands on the line.

BH: The flip side of that is that when brands have the kind of exhaustive visibility you’re talking about, that’s something that they can trade off. If negative brand perception is the punishment, then positive brand reinforcement for doing it right is surely the reward.

GB: Exactly.  Sometimes the brands might feel that it is easier to pay the fine and continue on with their business.  But, if it gets to be a matter of brand perception, that’s something money can’t fix. And that’s what we’ve seen with other raw materials issues like goose down, Uzbeki cotton, and sheep wool. They’re probably the three that still continue to plague retailers, because, for example, lots of them are still using cotton from Uzbekistan, and just hiding the fact, whereas the ones that aren’t can parlay that into a positive talking point.

BH: So, compliance becomes a different kind of marketing in a way – a chance to stand up and say “we do it right”?

GB: It’s huge. And it’s going to continue to be huge as new legislation and regulations are introduced. We’re getting a lot of traction there.

BH: I guess you see that shaping the next twelve months as well?

GB: I think it’s going to be evolving forever. I don’t think its ever going to slow down. I think the people in charge are just going to keep adding more regulations as we go, restricting materials and forcing retailers and brands to respond.  Chinese GB standards are the new thing, and right now they change every two weeks and are complicated even further by province. We’ll be focusing on REACH and China GB for a long time to come.

BH: I know we’ve touched on mobile applications last year, but I’m curious to see how much of this extensive compliance work is reflected in your mobile strategy.

GB: As I showed you last year we have an application specifically for factory audits as well as finished garment testing and inspection, in which you can capture images with the device’s camera and then mark up. One of the newest things that we added to that mobile app is the ability to connect to Google Maps, and actually pull a grid coordinate of the factory that you’re in so you know that audits weren’t conducted somewhere else.

We were asked by FTRA this year to build them an app for HTS [Harmonized Tarrif Schedule, in the USA] classification. Their members can now snap a couple of pictures and fill out this form (with questions and characteristics of a shoe) and send it to the lawyers at FTRA to help them with their HTS classification.

Building these mobile apps is a great concept for us – we give it to them for about $40 a year and we give 70% of that to FDRA. We’re not really making money off it; it’s more for exposure. And it gives our guys great practice at building more mobile apps for niche applications that, sooner or later, may go on to be applicable to something larger.

BH: As legislation goes on to get more and more specific, there will be more and more opportunities to do that sort of thing on both a niche and broad level, I suspect.

GB: This year we want to focus on sustainability apps as well.  Higg Index 2.0 is done, and we want to get that onto a mobile app, also to use at the factory level.

BH: Given the detail we’re going into here, I’m sure I’m safe to assume that the more obvious things like labour practices are covered?

GB: That’s all been done. Now, we want to get deeper into the specifics.

BH: Beyond this passion for sustainability, is there anything else you want to touch on for the coming year?

GB: Collaborative material management is the next big thing.  Having best practices and intelligence in place at the point of material reservation, or allocation at the brand level, gives you better value. It enables you to pre-position materials and guarantee their availability.

This was important in the cotton crisis in 2010/11 when the prices skyrocketed, and people had to reserve material because China was hoarding it. Now the cotton crisis has levelled out, but the principles are still the same.

I’ve been talking to materials experts, and they know that by managing your materials intelligently at a buying level, you can maintain a desirable price point for a long programme.  Denim brands, for example, is always going to buy a lot of denim, so they can go ahead and reserve their fabric at the mill level, but monitor it to see whether their prices fluctuate.  What we’re doing is giving brands the ability, through reporting, to do fibre cost analysis compared to usage at the seasonal or line level.

For example, say I’m the guy who looks at the prices of cotton derivatives over time, and then says, “well I can do better in China or Vietnam than with my current supplier.” If my Spring 2014 line uses 40% cotton across every material across the entire line, for example, I can use effective reporting to figure out whether I obtained 40%, 50% or 60% of my cotton from one raw materials provider will cause my prices to go down.

BH: Presumably, in that scenario, you can use that kind of short-term intelligence to minimise wastage?

GB: At that point we get into liability. How much material am I using?  I reserve this much, I use this much. Other vendors can do this, but they can’t do all of the additional reporting that we can: vendor performance; performance by material type; performance by delivery time.

Because we have the raw material purchase order visible, when the raw material is shipped out of the mill it’s checked. That gives us the ability to track vendor performance where materials are concerned at a really micro level, and allows us to negotiate from an informed perspective on things like materials lead times.

Of course this is a very detailed process, so it’s only going to be for your key materials, and for long programmes.

BH: It would be overkill for anything with a faster turnaround, I imagine.

GB: You simply wouldn’t be able to collect the data for it. Many of our customers are  doing a lot of raw material management with us, for example, but they also have some prouducts that they only make one or two thousand of. They have a bag that’s made of some sort of fur, and that’s an $8,000 bag. Of course, they go to one shop in Italy for the fur – and they’re only buying enough for 2,000 so they don’t need to manage that material.

But when we look at larger brands that might use a lot of cotton as an example. that kind of intelligence really starts to come into its own.  And of course we have mobile applications planned to go with all of this, which is definitely enough for one year!

BH: You’ve talked a lot about compliance and supply chain management that’s either driven by the hunt for better margins or by regulation.  These are all reactive things – these are scenarios where an issue arises and retailers scrabble to keep up.  How much of your business comes from that sort of reactivity, would you say, versus how much comes from retailers and brands who are planning ahead?

GB: I’m going to use a hypothetical example for that one.  Say we work for a brand, and suddenly we’re seeing massive demand for this one wash of jean. I need more of them, so I suddenly need to know what my lead-time is for that material, because of all the washes that are involved in that jean it might take some time to get hold of it, and I need an answer as to whether I can get it. If I have the opposite, and that particular wash falls completely flat, I need to know whether I can re-use that material for something or whether I have a liability on my hands.   So there’s a lot of information that goes into making these decisions, and whether they’re predictive or reactive, the need is the same.

So when we’re at a retail show and people ask what we do for retailing?  The answer is right there, but it’s way back.  What we do factors into the consumer experience but it’s conceptual, and it’s so far back in your supply chain that it’s only really understandable at the executive level.

BH: It does directly contribute to the customer, but at several removes. So if NRF is fundamentally a retail show, that perhaps explains why interest in your products here is so changeable – because it’s driven from the executive level down.

GB: I asked some of the people who stopped by our booth this year what they were buying, and I heard a lot of, “well we aren’t buying anything. We’re looking to see what’s out there.”

This is now a technology show, and for the time being at least the focus is on technology that will make the store experience better and that’s palatable to the IT user rather than the business user.  But our target is the business user too, because it’s the business that has these problems.

(44)