www.SupplyChainQuarterly.com [QUARTER 1/2017] CSCMP’s Supply Chain Quarterly 53
better than those of its peer group.
To learn more about how Carter’s earned its spot on
the Supply Chains to Admire list, we interviewed Peter
Smith, the executive vice president of supply chain.
What drove Carter’s to achieve the level of improvement it did?
We manufacture 700 million pieces of clothing and
service every channel in the U.S. along with international markets. The diversity is rising. This drove a
need for complexity management and mass customization like I have not seen elsewhere. This market
demand has spurred Carter’s to create strategies, systems, and processes to focus on low prices and competitive marketplace distribution.
Today, we do not have a single, all-knowing, all-see-ing, and seamless world-class information technology
system. It just does not exist. This is not a place where
one great “killer app” or technology has “slayed the
dragon,” but the systems are malleable. Driven by
the business, our teams in information technology/
information systems ... found creative ways to invent
solutions. Is it elegant? No. However, it is really effective for our processes.
In my experience, technologies like SAP are rigid.
They are too inflexible for us. We need agility. As a
result, Carter’s runs an assemblage of systems focused
on agility. They are modified collectively to deal with
our complexity. For example, we created a bit of magic
by repurposing our ERP (enterprise resource plan-
ning) dimension code to carry information about final
retailer specifications in addition to style, color, and
size. ... This allows us to get the benefit of leveraging
our purchase orders of 1 million units and manufac-
turing efficiency while also using dimension codes
attached to the style defining the retail unit. We can
purchase in large lots, postpone, and then pack out
based on dimension codes. This gives us both econo-
mies of scale and flexibility. [Note: Carter’s dimension
code carries information on the pack size, retailer
assembly instructions, and late-stage customization.
It is assigned at a lot level when the product is cut to
be assembled. This is months after contracting for
Let me explain how this works. When the units
come off the final assembly line, the third-party man-
ufacturing company applies the value-added services
like tagging and packaging, and then packs them based
on the retailer’s shipment-ready requirements. We
pack once for the destination, and 90 percent of the
units are never touched again. Customization (such as
providing tagging, wrap, boxing, labels, and hangers)
happens as part of the manufacturing process, not in
domestic distribution centers. We pull off this level of
efficiency every day.
How do you manage complexity?
It is a combination of strategy, people, processes, and
systems. We are an international company supplying
international trade. We desire and work toward postponing decisions about the allocation of finished units
among our wholesale customers, our own retail stores,
and Carter’s e-commerce channel to optimize inventory utilization. Once you have put on our retail tags,
you have locked in the inventory. We do things downstream to improve flexibility and inventory-utilization
efficiency. Multichannel distribution requires getting
the most visibility possible. Our processes strive to
recognize the uncertain demand in the world we live
in and make the best of that reality.
What is your next-generation supply chain strategy?
There is a significant amount of distance that we still
have to go. ... We would like to get ever more granular
through better postponement.
We are also trying to embrace all of the data around
us. We have migrated planning and forecasting from
big Excel spreadsheets to a cloud-based environment
in order to process more data and data elements. We
are in the early stages of using this “big data” environment. I am advocating that the organization lean into
and embrace the cloud platform and tools. Ultimately,
the most efficient use of inventory relies upon being
able to optimize the use of our units from the individual store shelf—at a wholesale partner’s store or in our
own retail store—all the way back up the chain so that
we never miss a demand signal wherever and whenever
it presents itself. We looked long and hard at packaged
tools and concluded there’s not enough flexibility,
scalability, and speed ... in the packaged tools on the
market. We are now in an incredibly powerful system
that is scaled for demands larger than I think we’ll
throw at it, but this system will never limit us.
The strategy is simpler to say than to execute, but