Visit KAPPA's Fashion CIO

Gu Ke wears KAPPA's new red sports jacket and dark purple T-shirt to get out of a group of beautifully dressed colleagues. As the manager of the information department of Beijing Dongxiang Sports Development Co., Ltd. (hereafter referred to as the company), although he claims that he does not understand fashion, he is already aware of how to make the color of a company with a fashionable sports brand such as KAPPA. Wear a fashion sense without cheesy. In order to tie this bright shirt, he put on black water-cut jeans and high-top boots sneakers. This makes him look different from most of the behind-the-scenes CIOs, with a little more dazzling star flavor.

KAPPA does not require employees to wear their own brand of clothes, but for Gu Yu, it has become a habit to wear such clothes. “I would scare people if I would wear a formal dress occasionally.”

KAPPA is an Italian sportswear brand. In 2006, China Dongxiang (Group) Co., Ltd. obtained the full rights of KAPPA brand in China and Macau through acquisitions. Its subsidiary, Beijing Dongxiang Sports Development Co., Ltd. was thus acquired in mainland China and Macau's exclusive franchise. In 2008, China Mobile acquired the title of KAPPA brand in Japan.

Since 2004, the company has begun to vigorously promote its differentiated brand strategy of “sports fashion” in the Chinese market. At that time, China's sportswear market was dominated by Nike and Adidas. KAPPA products quickly opened the market with stylish and dynamic shapes. As the operator of the KAPPA brand in China, the company has started to grow at an annual rate of more than 150% since 2005, and even created sales that quadrupled its sales in one year in 2006. In 2008, China Dongxiang Group's annual sales reached 3.32 billion yuan, an increase of 94.2%; net profit hit a record high of 1.37 billion yuan, an increase of 86.4%. The KAPPA brand contributed 84.3% of sales, and sales in 2008 increased by 70.3% to 1.16 billion RMB.

"In the past, KAPPA's fashion style was mainly reflected in the design, but in the future, this kind of fashion competitiveness is more reflected in the rapid response of the supply chain system to market demand." Gu Wei said that he is leading the team to use the information system to build A set of supply chain systems that meet the characteristics of the fashion industry.

Differentiated expansion

There are consumer reviews, Nike and Adidas are worn by people who love sports, and KAPPA is worn by people who pretend to love sports in fact. These brightly-coloured, stylishly designed garments entered the Chinese market and quickly attracted the attention of sports fans. They also have the same appeal to other consumers who are catching up with the trend of healthy life. A clothing industry source said that when consumers walked through the clothing store, it was only 7 seconds influencing their decision whether or not to buy a piece of clothing, and KAPPA's eye-catching colors and changing design are undoubtedly in this 7 seconds. The clock played a key role.

In the first seven years of development of KAPPA brand in China, the fashion design undoubtedly constituted the brand's core competitiveness. At present, KAPPA has a design team composed of more than 30 young designers from China, Japan, Korea, Italy and other countries. , Design and R & D center occupied a whole office building.

While establishing the core competitive advantages in design and R&D, the company also quickly brought this fashion brand to market by vigorously developing sales channels. Since 2004, KAPPA has been blossoming in China. The number of specialty stores grew from more than 200 in 2003 to more than 1,500, becoming a dark horse in the pan-sports industry.

“The company’s business has been growing rapidly. As sales volume has increased and channels have expanded, many management problems have also emerged.” Gu Zheng said that the company coexists from the initial distribution system and the consignment sales model. Later, with the rapid expansion of the market, The channel strategy for the distribution system was finalized and KAPPA began to develop steadily. At this time, the KAPPA brand's sales have exceeded RMB 1 billion. Management needs more rigorous data to support it when making decisions, and we hope to have a good data model for analysis. In 2006, Gu Yong recommended to the company and introduced a new set of ERP systems to support the company's management changes.

For companies such as Dongxiang Company that manages fashion brands, Gu Xin believes that the most important responsibility of the Ministry of Information is to cater to the sales characteristics of such fashion products, and timely obtain relevant market sales indicators, such as inventory turnover rate and dealer's sold out rate. Such key data, through systematic analysis, allow the company to quickly make replenishment, transfer or discount sales and other business decisions and seize sales opportunities.

Currently, the company's business process is supported by two major management systems, one is the company-level ERP system, and the other is the DRP (distribution resource planning) system for external management dealers. The two systems through the data integration of the BW (business warehouse) system help the company monitor the inventory and sales of dealers, and master real-time sales data to support leadership decisions.

Every day, the distribution system collects store sales data for aggregation and analysis, so that different management knows how many pieces of each item are sold in each store every day, and statistics sales. Analyzing these data from different dimensions leads to different conclusions. “There are some phenomena that are very interesting. For example, the same T-shirt is not sold well in a certain city in the north, but it may be particularly popular in the south.”

If the actual sales in the first month of the store are lower than expected, the company will not only stop the production of the corresponding models, but also monitor the inventory of the dealers through the system and let the dealers return the unmovable goods. Go to other stores where there is sales demand. "There are seasonal restrictions on the sale of clothing, winter clothing can be sold in the north, if not sold well, can be transferred to the south to sell. Summer is the same." Gu Wei said. This approach has reduced the amount of inventory in the entire supply chain. In the past few years, KAPPA brand products have maintained a relatively low inventory level.

"After the company sells the goods to the distributors, it will continue to pay attention to the performance of the products in the channel system to see if they really sell them to consumers or become distributors' stocks," said Gu Wei. The system will support the dealers' operations and help them to control the purchase and sale of stocks. Each week, the company conducts data analysis for the past week to make decisions on whether goods need to be replenished or promoted. The system controls the overall supply process and helps dealers seize sales peaks on Fridays, Saturdays and Sundays. Trends to help distributors implement comprehensive support and management, such as setting up distributor credit alert in DRP systems used by dealers. If distributors still have debts, the system will automatically query when dealers place orders again. Arrears record and give delivery decisions for the distributor. The calculation of the profitability of products is also done automatically by the system. "I hope the system will have a predictable future sales situation so that it can guide business decisions and make the company respond to the market quickly enough."

In 2008, China Mobile opened 800 new KAPPA stores nationwide. This year, China Mobile's Chairman Chen Yihong stated that it will continue to add KAPPA brand stores in provincial capitals, first-tier cities, and high-potential second and third-tier cities, further consolidating the Group's presence in China. The market's retail network. The rapid expansion of the channel scale also benefits from the support of the system. The IT system will calculate the ping effect for each store—that is, how much sales it contributes per square meter, and the company can determine how large stores should be opened in the local area based on the size of the store’s sales. “In general, the larger the store opened, the better the sales, but when the store area exceeds a certain value, the store sales are reduced, and the store is not very profitable. All of these must be analyzed by the system. ”

In the first half of last year, the company completed the construction of the second phase of the OA system provided by Digital China on the basis of the two major business systems. This helped the company realize the full control of the dealer's approval of shop opening, and also increased the speed of opening stores. After the third phase of the OA system is on the line this year, it is expected that the opening time of KAPPA will be shortened from the previous two months to one month. "At that time, the approval of dealer purchase orders, supplier access, price approval for seasonal orders, and internal rebate approval procedures will all be completed within the OA system."

Gu Jie’s idea is to integrate the three major systems of ERP, DRP, and OA into a unified enterprise portal in the future to form a core data chain that supports the internal management of the company. "The company's processes are divided into business processes and management processes, in which the management and control of business processes are implemented in ERP and DRP systems, and the management processes are implemented in OA systems. Only by integrating the systems can they be used to their maximum potential. The value of data helps managers make business decisions.” At present, each company moving to the company is concerned about the operation of the product through the IT system, replenishing different products, or deploying inventory between different stores, the system helps them to do Invoicing management, to assist dealers to receive goods, distribution and delivery.

Supply chain drive

The differentiated brand strategy and rapid expansion in the channels have caused KAPPA's products to be in short supply in the past few years, but this situation will be more or less affected by the financial crisis. Chen Yihong said that 2009 will be a good opportunity for the company to improve its internal management.

"When the sales are good, the whole company's business is driven by the market, and after the economic crisis brings about sales pressure, the operation will depend on the supply chain to drive the market share," said Gu Wei.

In the past few years, KAPPA seized the market with its unique and eye-catching fashion design. Sales were basically in a state of insufficiency, and there was very little inventory and backlog of goods. In the rapid growth of sales, the management pressure of the company is how to better complete the production arrangement of the distributor's order quantity, and the management mode is in a market-driven state. “The implementation of this operating characteristic into information systems requires that the system be able to respond quickly to market demands and support business decisions.” Now, with the gradual saturation of the market and the impact of the financial crisis, the pressure on management has begun to shift towards Different products favored by consumers are produced in batches, and market demand is more accurately grasped by rapid scheduling and replenishment. Gu Ke believes that the future KAPPA business model will become a supply-chain driven state. “The current IT system can well support decision-making, but it is really necessary to make decisions, and it is more difficult to do without supply chain support. If it cannot be accurately calculated, The supply chain responds to the speed, and it is very likely that the replenishment decision will become inventory due to a missed sale period at the time of delivery."

When each new sales season is approaching, KAPPA will promote new fabrics and color series to the market, or try some new ones. The company will determine whether the corresponding models will increase orders or stop production immediately based on the first month's sales of these new products. “For example, the company asked this new product to sell 20 pieces in the first month of each store. However, the actual situation is that 30 pieces are sold in the first month. Then the company needs to mobilize the supply chain to add orders to the store. Sales may be lost, and if only 5 are sold, production will be halted quickly and the raw materials will be put into other production lines."

From the time of ordering to production, and then sent through the logistics link to various stores of each dealer, the warehouse needs to experience long or short supply chain response time. Costume design using different production techniques and craftsmanship will often bring different supply chain response speeds, such as the same pattern. If printing is used, it will be much faster than the embroidery process, and if it is necessary to add personalized craftsmanship to the clothes, then It may take another two weeks. The characteristics of the fashion industry require the company to have a faster supply chain response speed. Gu Ke believes that this management model must rely on a clear process and a suitable system. “We must have a good tool to tell the decision maker how long it will take from the time of order to production to delivery to the store.” KAPPA's managers must know before ordering the factory. How fast the product's supply chain responds depends on the system's accurate knowledge of the supply chain's speed. "If the response speed of a clothes supply chain is three and a half months, then when the clothes are done well, they have exceeded the market's sales period. This single can't be released." A key project Gu Jie is developing is to put the system on the channel. The management has been extended to the supply chain management field, so that the KAPPA brand's fashion features have a strong management background to support.