Extreme Contest! Comparison Of American And YOUNGOR Business Models

Comparison of American and YOUNGOR business models

After 10 years of development of China's garment manufacturing industry, garment enterprises began to develop in the two opposite directions of "all of their own" and "only brand". Among them, Ningbo's YOUNGOR and Metersbonwe, which were originally moved to Shanghai in Wenzhou, are the extreme poles in two directions.

But what is more interesting is that the direction of development is quite different. They have the same goal in information technology.

The smaller the bag company and the bigger the clothing giant.

In 1994, the Chinese casual wear market just started, and Zhou Chengjian, a businessman from Wenzhou who started jackets, began to create his own clothing brand, Metersbonwe.

But in the rapidly expanding casual wear market, Metersbonwe's limited capital soon became the biggest "bottleneck". To meet the market demand, it was necessary to multiply the purchase of machines and expand production. Metersbonwe at that time could not have done this at all.

Zhou Jiancheng, who thought ahead, decided to rely on external forces to realize his leaping development. Metersbonwe adopted the strategy of licensed production, and established long-term cooperative relations with more than 100 production enterprises in Guangdong and Jiangsu, and made fixed production for the company. If it were invested by Metersbonwe, it would need 300 million yuan.

With the production capacity, Metersbonwe also needs smooth marketing channels, but it needs at least 200 million yuan to open stores to the whole country, and Metersbonwe is good at "using external force" to adopt the franchise mode.

Now, Metersbonwe's 1000 stores have opened to the whole country, only 20% are direct store brand image shops, and the remaining 80% are franchised chain stores.

At the beginning of 1995, Metersbonwe's practice has been doubted in the industry and even considered by others to be a "bag company". Production and sales are all done to others. What other people do not cooperate with you on that day?

Zhou Chengjian does not think so, why foreign brands are so expensive. Brand and design are the high value-added parts of clothing. If the high value-added brands can provide good profits for the upstream and downstream enterprises, they will not worry that others will not cooperate with you under the action of the market. Metersbonwe has limited its resources to these two blocks. From the celebrity endorsement to the three-dimensional market activities, Metersbonwe has built ten of the best young brands in China in the past ten years, and in the design, it has set up a Shanghai design center with the cooperation of Italy and France.

Over the past 8 years, Metersbonwe headquarters, which is getting smaller and smaller, has only more than 200 people. But it has exploded 300 times the scale. When it was founded in 1995, it had an annual revenue of about 5000000 yuan, and it was already 1 billion 500 million yuan in 2002.

When outsourcing production and sales was gradually accepted by the garment enterprises in Jiangsu and Zhejiang, Ningbo's YOUNGOR started a "surprise" move. YOUNGOR, which owns the largest clothing production base in Asia, began to expand in the upstream and downstream of the industrial chain.

In the lower reaches of the industrial chain, YOUNGOR will invest heavily in major cities to buy 7 billion of the land and buy 500 stores.

In the upstream, YOUNGOR and Japan (joint-venture) jointly set up a joint venture to establish a washing and dyeing plant which mainly deals in garment printing and dyeing. Because of its promising fabric prospects, YOUNGOR also invested 100 million US dollars in partnership with several Japanese companies such as Itou Tada (strain) association and Nissin textile company to set up the textile industrial city.

In this way, from fabric, clothing to sales, YOUNGOR's apparel industry is getting longer and bigger. YOUNGOR has become a garment giant with more than 20 thousand employees, more than 40 branches, and involved in clothing, textile, distribution, finance, real estate, foreign trade and public facilities construction. Its annual revenue is 5 billion yuan, exports 300 million dollars, and profit is 500 million yuan.

Whether enterprises should be bigger or better? This is a problem that management academics have been discussing all the time, but different choices depend on different situations.

Outsourcing most of the business is concentrating resources on core businesses with limited resources, and outsourcing non core businesses to collaborative enterprises who are good at these businesses.

From the perspective of business operation, the business structure of small and whole enterprises has been criticized because it is too uneconomical. If the non core businesses can not scale, there will be no economic benefits, because enterprises can substitute lower cost products in the market.

However, the expansion of YOUNGOR is another case. The largest marketing channel in the country has become one of YOUNGOR's core competitiveness. The 2200 largest stores in the country have already achieved benefits. The marketing network can not only sell YOUNGOR's own suits, but also have foreign brands wishing to use these channels to enter the Chinese market.

Different strategic positioning determines the business structure of enterprises. Metersbonwe only focuses on brand marketing and design capabilities. YOUNGOR has positioned its core competitiveness in six aspects: marketing channel, brand, production and distribution system, and the ability to develop new products.

"Virtual management" and "drinking mode"

Whether it is "design dominant" or "clothing giant", YOUNGOR and Metersbonwe have encountered the same thorny problem -- inventory. After the shortage economy has completely passed, the clothing market has begun to show its market characteristics after the clothing market has been pferred to the buyer's market. The market demand has changed rapidly with the seasonal and fashion changes. The traditional look like order in the clothing industry is like this.

Headquarters can only go to production, from the preparation, production to distribution of a process often takes 70 days, when the peak season has passed.

And the traditional logistics mode of garment industry is like this. The goods produced by the processing factory are sent to the material center of the company, and then distributed to the distribution centers or branches of the whole country.

In each warehouse or logistics center, there will be turnover inventory, that is to say, if there is only one piece of goods, there may be 5 items for this shipment.

This huge inventory is stripped across the garment enterprises.

A "bag company" and a "costume giant", how do they solve this problem and solve this problem?

Although Metersbonwe's franchise is a self financing entity, but the backlog of inventory is in the channel, the blocked channels will no longer be stocking up with headquarters. From 1993 to 1997, the inventory problem caused by the "no chain" information of chain stores has once brought Metersbonwe's "bag company" model to the most painful test.

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Wang Quangeng, who entered the Information Department of Metersbonwe market in 1995, mainly works to collect all kinds of information of the company's sales department and the clothing market. A simple warehouse information management system has made the products of Metersbonwe increase rapidly in the financial, warehousing, pportation and sales reports and so on.

Since then, Metersbonwe has begun to explore the way of business mode reform with IT.

The reason for the formation of inventory is because the information and reaction between the head office and the franchisee are slow and slow. Wang soon realized the essence of the relationship. In March 1997, Wang Quangeng began to promote the use of the cash register system in this store.

Slowly from the cashier system to business and management systems, by 1999, Metersbonwe opened three or four hundred stores across the country, and each store was under this chain of information management systems.

This simple system solves the problem of unsmooth and untimely report information in the stores, and also makes Metersbonwe spend the most difficult period.

After E became a monopoly store, Metersbonwe saw that the reaction between itself and the production plant should also be accelerated. The production process took up the longest period from order to clothing listing. Metersbonwe began to spend money on processing plant ERP, and then it was fully promoted after testing several key factories. After the ERP of the factory, Metersbonwe learned at any time the production schedule of the factory, greatly reducing the risk of the original information opaque.

Many people do not understand why Metersbonwe has to spend its own money for processing plants and agents. In fact, if there is no connection to the upstream and downstream systems, Metersbonwe may have died in competition because of its slow inventory and slow response.

Now Metersbonwe's information system consists of three parts: the ERP of the processing plant, the internal management system and the information system of the exclusive store. After the three systems have been opened, a "virtual enterprise" emerges, and more than 40 people at the headquarters command such a huge "virtual enterprise".

The agent orders Metersbonwe through e-commerce website, Metersbonwe orders the factory through the system, the headquarters plan management office and the marketing department command the whole supply chain.

The plan management department knows the sales situation of each specialty store, and changes the production orders according to these figures. At the same time, the market department constantly optimizes these figures.

It can be said that using information system to connect upstream and downstream, forming "virtual operation" is one of the core competitiveness that Metersbonwe has successfully increased 300 times in 8 years. The inventory of the entire supply chain is managed by information system and reasonable logistics system, so that Metersbonwe avoids the huge market risk.

Metersbonwe successfully managed the supply chain with IT system and formed a "virtual enterprise".

But after the capital integration upstream and downstream, YOUNGOR has brought enormous pressure to the development because of the poor supply chain information.

YOUNGOR has the largest clothing production base in Asia, but there is no room for maximum profit, because production can not keep pace with the rapidly changing market. Every season, the suits and shirts that are backlog in YOUNGOR stores across the country will be sold at a discount price. In 2001, YOUNGOR only accumulated a billion yuan of shirts, which lost more than billion yuan a year.

Although capital integration and upstream and downstream, YOUNGOR has not yet enjoyed the scale effect. Instead, they feel the pressure, the overcapacity of the garment factories, and the inventory problem of the downstream YOUNGOR marketing network is serious. How should we solve this problem?

YOUNGOR executives invited foreign famous consulting companies to diagnose themselves. The conclusion was that the supply chain reaction was slow. YOUNGOR, which already had the foundation of IT, decided to give itself a good medicine.

In order to ensure that their information system can adapt to their complex group needs, YOUNGOR and CAS jointly established the Sino Ya software company. YOUNGOR produced hundreds of millions of yuan of funds. Han Yongsheng, academician of the Chinese Academy of Sciences, served as deputy general manager of YOUNGOR and general manager of Zhongya software.

The vision of the two sides' cooperation is to promote the integration of the entire supply chain of YOUNGOR group with information technology.

Zhongya software designed the "drinking mode" for the downstream supply chain of YOUNGOR. The manager of YOUNGOR consulting department, Li Xing Shen, explained the meaning of "drinking mode" for reporters. For example, people often go to restaurants to eat. After ordering, they find that some vegetables are not enough to eat, but some vegetables do not move. They eat what everyone likes to eat. This is because the ordering is not in conformity with the actual demand. The ordering mode is just like the old mode.

But drinking is different. When you drink beer, the waiter can see how much wine you have left through a pparent glass. If you want to pour it on you, there will be very little left to drink, just like YOUNGOR has sold the western style clothes in the exclusive store through the Internet, and then decide whether to supply or not.

The "drinking mode" should extend to the entire supply chain. In the future, YOUNGOR's information system should get through every aspect of the suit production, from fabric, production, distribution to sales, and YOUNGOR boss Li Rucheng should be able to see the production and sale of every suit in his office room, the sales situation of every store and the distribution of each suit.

YOUNGOR's informatization construction is in progress. Zhongya software company has undertaken the development of modules such as POS system, logistics system and planning system.

But YOUNGOR will consider the possibility of introducing a large ERP system.

All roads lead to SCM

In fact, Metersbonwe's "virtual enterprise" and YOUNGOR's "drinking mode" are the same in ideological essence. With information network to open up every link in the apparel supply chain, we can make the most accurate prediction and coordination from the perspective of the entire supply chain, so that the flexibility and speed of the supply chain can be maximized, and the maximum degree of convergence between production and market changes can be achieved.

Now, Metersbonwe is recognized as a well established enterprise by SCM, while YOUNGOR is making full efforts to build SCM, and the two garment enterprises that are back and relaxed on the business structure have reached the same goal in information technology. One has achieved the control of the "virtual enterprise" by means of IT, and the other has controlled the upstream and downstream with capital control. It still has to use IT system to get through. What does this show? Our clothing industry has entered the era of competition between supply chain and supply chain from the time of competition between enterprises and enterprises. In this era, informatization has become the core competitiveness of garment enterprises, whether it is "virtual enterprise" or "clothing giant".

Today, different garment enterprises in China have different choices in the industrial chain. Some of them put their core competitiveness in production, some in sales, others in brand marketing, some in "big" development, some in "fine" development, but although different choices are made, the use of information technology is closely related to the supply chain. The upstream and downstream businesses are the same. If you use an old advertisement, do you have IT?