The garment industry has always been notoriously cost competitive. In fact some might say the phrase “time to market” was invented by this highly competitive business sector. In the constant search for better margins, manufacturers long ago began moving their operations offshore to lower production costs. However, the price that had to be paid for increased profits was a more complex and delay-prone supply chain.

In today’s rag trade, every second counts. Seeking to reduce the time it takes to get apparel from the cutting room to retail outlets, manufacturers are now putting every vendor in their supply chain under enormous pressure to pare down lead time.

Paxar Corporation is one company that has been seriously affected by the domino effect in the supply chain. An industry leader in identification and tracking systems for the garment industry, the company has seen order lead time for its carton labels, shelf or bin labels, woven or printed product identification labels and swing tags reduced in some cases from 10 days to 24 hours.

Paxar knows only too well that if it cannot meet its customers’ exacting demands there will always be a competitor who can. That’s why the company places a huge focus on using technology to manage and streamline its business, shorten lead times and increase customer satisfaction. In particular, they look to new IT opportunities to gain a competitive advantage.

The turning point

Headquartered in New York and listed on the NYSE, Paxar’s worldwide business is separated into three geographies - the Americas, Europe Middle East and Africa (EMEA) and Asia Pacific. The company recorded revenues of US$670 million in 2002. Although currently the smallest contributor, Asia Pacific has been growing fast, and for the last three years the region has seen double-digit growth under the leadership of Paul Chu, Asia Pacific President of Paxar.

“When I joined the company’s Asia Pacific headquarters in early 2000,” said Chris Jan, Paxar’s Director of Information Systems, “Paxar occupied seven floors in one Hong Kong factory block and employed around 500 staff. In just over three years we have doubled both floor space and staff. Today, we employ about 1,000 people in Hong Kong and another 1,000 in mainland China. We have manufacturing facilities in many countries of the region, including Hong Kong and China, which together represent approximately 70 percent of our Asia Pacific business.”

A 75-year old company, Paxar has grown both organically and by acquisition. While this strategy has led to a highly successful business - which serves many of the world’s leading apparel brands and retailers - it has also led to its own fair share of headaches.

“Part of the problem is that when you acquire a company, you acquire its IT,” said Chris Jan. “This means you can end up with a mix of different systems that don’t communicate with each other. When I joined Paxar we were still using 10 to 20 year-old legacy systems that were completely outgrown. We didn’t have an enterprise resource planning system at all - we ran the business by tapping people’s experience and using whiteboards and Excel spreadsheets.

“To get around the inadequacies of the systems, we resorted to manually re-keying data from one to another. This became one huge paper chase. We desperately needed an ERP system, and that meant a complete overhaul.” When Chris arrived at Paxar, the corporation had decided to roll out an ERP system on a global basis. However, due to differences in culture and business requirements, the company decided to give Asia Pacific a free hand in choosing its ERP system.

With this in mind, Chris, with a team of IT and business managers, embarked on an exercise to evaluate ERP offerings. Finding that there were countless options, they began by approaching the Hong Kong Productivity Council.

“Our starting point was the HKPC,” he said. “We reviewed the ERP vendors that they see as the top 20 currently being used by manufacturers in Asia. We also made use of the web to research the ERP market and considered the non-biased views of consulting firms like Gartner.”

“Our evaluation covered a wide range of categories including functionality, ease of use, ease of modification, the company’s presence and support in Asia Pacific and, of course, price,” said Chris. “Microsoft’s Axapta came out on top.”

The hardware platform was also a key part of the equation. Chris decided to use Dell’s Intel platform as part of the total solution.

Having made these vital, basic decisions, Chris and his team worked closely with Microsoft’s consulting group to determine the ideal configuration. He initially favoured an 8-way server, but he also wanted to install industry standard off-the-shelf hardware that was proven and tested. Chris was quickly convinced by the power of Dell’s scale-out strategy and opted for the improved performance of a multiple 4-way server solution, finding it more than adequate for Paxar’s short-to-medium term needs.
But the acid test was in benchmarking the system.

The power of ERP

According to Chris, the system initially needed to support around 600 concurrent users. Paxar provided this information along with its requirements in terms of the transaction volumes and response times - and with it, a big surprise

“The performance was considerably above our expectations,” he said. “We usually receive around 5,000 to 6,000 sales orders a day. In the benchmark environment we were processing 60,000 an hour! Even if you change this by a factor of five - to account for the fact that our sales orders are more complex than those of the standard unmodified Axapta we were benchmarking – that’s still way beyond our needs.”

Response time was equally impressive. Benchmarking 600 concurrent users, the system processed each sales order line in under a second. In addition to that, while the benchmark was running, two of Paxar’s OE staff were tasked with entering orders. There was no marked degradation in performance.

“For good measure, we also threw 100,000 lines of EDI-based orders into the system for processing,” said Chris. “Although these orders are relatively simple, this task would normally take us three to four hours. With the benchmark running, it was finished in less than 10 minutes.

“Of course doing this in a lab rather than a production environment is bound to be different. But it would be acceptable at half the speed.”

Paxar is currently mapping out and re-engineering its business processes. Once completed the pilot project will be rolled out. The goal is to have Hong Kong go live in January 2004, followed by China in the second half of 2004.

In what Chris confidently believes is the largest deployment of Axapta in Asia Pacific, he sees a number of immediate benefits. Not the least of which is Paxar’s ability, for the first time, to be able to present a single face to its customers.

Previously, its systems were set up by product, not by customer account. As a result, customers ordering multiple products were unable to deal with just one customer service representative, nor could they receive one consolidated invoice. Not surprisingly, this led to various complaints and in some cases to lost business.

“This project has been a challenge but the rewards are almost too many to mention,” said Chris. “We will eliminate the labour-intensive, error-prone paper trail. We will be able to analyse accurate, up-to-date data to see where we can gain efficiencies - something we have never been able to do. We will be able to generate reports on demand and, importantly, we will be able to close month-end in 24 hours - this usually takes 4 days. With improved planning and scheduling we should be able to meet the shorter lead-times that are now critical to our continued success.”