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| Issue date:01/08/2007 |
| ATA Journal for Asia on Textile & Apparel - Aug 2007 Issue |
| Source:Journal for Asia on Textile & Apparel |
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| Developing a custom approach for each client so as to best suit their respective market segments is the Crystal Group's success formula, Michelle Phong reports |
As a strong garment supplier to the world market, the Hong Kong-based Crystal Group does not stick to any standard strategy when dealing with its clients.
The best strategy lies in the resiliency to collaborate with the clients' own strategies, said Andrew Lo, Deputy Chief Executive Officer of Crystal Group. Such flexibility is essential for today's apparel suppliers in Asia due to the fast-moving retail market in the fashion business worldwide, he said.
"Each retailer has its own priority when it comes to speed, quality and cost. One retailer may regard speed and cost as top priority in the decision-making process, while the others may place more emphasis on cost or other factors," he continued. "The Crystal Group would tailor-make its products accordingly to meet the needs and concerns of various clients."
Andrew Lo |
Founded in 1970, Crystal Group is one of Asia's largest garment manufacturers for original equipment manufacturing (OEM) and original design manufacturing (ODM). It produces more than 180 million pieces of garment each year, including sweaters, cotton knits, woven and intimate garments.
In 2006, the group's turnover reached US$900 million, most of which came from sales of casual wear and about 10% from intimate wear. Today, the group has a workforce of around 30,000 people in 12 production facilities located in China (Dongguan, Nanjing and Zhongshan), Morocco, Sri Lanka and Vietnam.
Custom solutions
The group offers different levels of services to its customers, from pure OEM to full-range service comprising design, manufacture, logistics (factory-to-shore or even factory-to-store) and marketing.
The extent of service would depend on various factors, such as: what a supplier can offer, how much a client (often a retailer) would like to control, and the level of mutual trust.
A factory of Crystal in Dongguan, China |
Mr Lo said Crystal Group was mainly engaged in providing custom solutions from design to manufacture. The group started to flex its designing muscles 10 years ago when a European client, delighted with the group's garment manufacturing quality, threw a challenge to Mr Lo: "I want you to excite me with your own design." Mr Lo then hired in-house designers for the first time, yet did not formulate the right thing until two years later in 1999, when the same client felt impressed finally.
Since then, Mr Lo has been co-developing apparel from concept story, product design, coloration to commercialization, though the depth of cooperation varies with clients. As the collaboration gets deeper, Crystal Group has been focusing on a relatively small number of customers to not only better understand the needs of the clients, but also get familiar with the marketplace they are competing in.
Today, the top five key customers represent about 70% of the aggregate sales Crystal Group earns. About 85%-90% of the company sales were generated from collaboration with the top 10 customers, including Ann Taylor, Gap, Hennes & Mauritz, JC Penny, Lands End, Levis, Marks and Spencer, Next, Uniqlo, and VF Corporation.
Right products for the shelf
Apparel manufacturers in the post-quota era are facing fierce competition as retailers source globally for the best possible deals. Some manufacturers have resorted to lowering price, but Mr Lo believes that adding value to products should be the direction for long-term development. "We aim at providing the right product at the right price, which can benefit the clients," he said.
With the right product that has market potential, the client will have a higher chance of success and increase sales per each square foot of the store floor area. It also meant a smaller percentage of products would be marked down later, leading to an improvement in net profit margin, said Mr Lo.
Offering the right product will also enhance the brand image of the retailer. Its customers will return to the store when they need a new piece of garment or just feel like shopping, he added.
But what makes a product "right"? Firstly, Mr Lo explained, the product needs to have a trendy design. "The collaborative design often starts with a concept from a client, say, from the United States, and the design will be modified according to the fashion trend information we have collected, and realized with the help of our strong technical support in Hong Kong.
A denim factory of Crystal in Zhongshan, China |
"Then, new fabrics are introduced to the clients. Our technical innovation leads to novel special effects in the area of printing, dyeing and finishing treatments. New techniques of jeans finishing are also good examples."
Strong IT infrastructure
In addition to the right product at the right price, short lead-time is always an issue. Compared with two decades ago, when the lead time from concept to store was about eight to 13 months, retailers nowadays expect to have the apparel on the store shelf within five to nine weeks after a new idea is conceived for the fast turn products.
For this reason, efficiency is one of the key factors. By 2005, the company started to use SAP to improve in speed, productivity and communication in the supplying process, and to reduce operating costs. An integrated, real-time information management system with the SAP solutions was established to manage the documentation of sales and distribution, material management, production planning, finance and controlling. The group was able to build up a modern enterprise resource planning (ERP) system, which links up internal staff in offices and factories with its clients.
Early this year, the group invested in the Fastreact system, a planning software solution to cope with a growing number of quick response orders and to reduce lead-times. The project started in August 2006 was tested in the group's cotton knit division. With increased information transparency and sharing, the company was confident in meeting short lead times without sacrificing profitability and long-term growth.
Internally, Crystal Group employed the Windows and Office platforms, with SQL Server as the central database for its intranet to further improve efficiency and productivity. With the multi-lingual support, it minimized compatibility issues with its suppliers and customers in Hong Kong and around the world. This IT solution allowed access and exchange of critical information among departments and countries. Staff members are able to call up detailed order information, track them, and check status, significantly reducing the need of international calls.
Speed up sampling procedure
To make further progress, Mr Lo believes that it is crucial to bring together the designers and related officers from both the manufacturing and retailing sides so as to perform sampling more efficiently.
Currently, it takes 6 to 12 weeks to finish the sampling process. Physical samples are needed to ensure the design concept is being executed correctly, but the process is lengthy involving various rounds of samples being courier from Hong Kong to US or Europe.
To speed up the production schedule, US-based Sigrid Olsen chain store of womenswear, for instance, has relocated some of its designers to Hong Kong, so that a few rounds of adjustments and fine-tuning could be done within a week.
"Co-location" of sampling is nevertheless difficult to some retailers who have as many as 30 vendors for each product category, Mr Lo said.
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| Copyright © Adsale Publishing Limited. Any party needs to reprint any part of the content should get the written approval from Adsale Publishing Ltd and quote the source "ATA Journal for Asia on Textile & Apparel", Adsale Textile English Website - www.AdsaleATA.com. We reserve the right to take legal action against any party who reprints any part of this article without acknowledgement. For enquiry, please contact Editorial Department. |
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| Copyright © Adsale Publishing Limited. Any party needs to reprint any part of the content should get the written approval from Adsale Publishing Ltd and quote the source "ATA Journal for Asia on Textile & Apparel", Adsale Textile English Website - www.AdsaleATA.com. We reserve the right to take legal action against any party who reprints any part of this article without acknowledgement. For enquiry, please contact Editorial Department. |
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