Sarah Nickle
MA FINAL PROJECT
What Will Be Covered • Company Overview • Denim Market Overview • Hemp • • • • •
Strategy and Initiatives Country Reports Top Suppliers Logistics and Warehousing Future Outlook
Company Overview
Company Overview • Established in 1968 • Created by Calvin Klein and Barry Schwartz • Current headquarters in Manhattan, New York • Strong American heritage in brand identity
“Calvin Klein is a global lifestyle brand that exemplifies bold, progressive ideals and a seductive, often minimalist aesthetic.�
Company Overview • Owns and operates 200 doors • 450 Macy’s around the United States • Digital e-commerce site • E-commerce platform covers over 35 countries and accounts for 10% of the company’s sales
Core Values
1
Individuality
2
Partnership
3
Passion
4
Integrity
5
Accountability
Strategic Priorities
1
Consumer Centric
2
Drive
3
Develop
4
Gain
5
Sharpen
Ten Commitments
Sourcing Guidelines • Code of Conduct • Terms of Engagement – Transparency – Accountability – Responsible Sourcing
• Factory Authorization Policies
Denim Market Overview
Denim Market • Global retail sales • 513 denim mills worldwide • Leading countries: Bangladesh, China, Mexico & Italy
Market Drivers • "Millennial customers care about value and values." – Levi’s CEO, Chip Bergh • More than 9-in-10 millennials would switch brands to one associated with a cause • Strong want of sustainable products
DENIM SUPPLY CHAIN
Introducing Hemp
Hemp History • Earliest plant used to cultivate a fiber – Over 10,000 years ago
• China has the longest history of cultivation – Over 6,000 years ago
Hemp • Over 25,000 uses – Including clothing, textiles, paper, biodegradable plastics, paint, biofuel, food, insulation and animal feed
Hemp • Can be grown in a range of climates • Crop takes 70-90 days to be harvested • “Bast fibers” are then removed from the wooden core • Cleaning and matting process does not use chemicals
Hemp Pros
Cotton Cons
• 1/3 less water usage
• Uses 25 % of world pesticides
• No pesticides required
• Depletes soil nutrients and ability to support crops
• Processed with 50% less water • Proven to stabilize and improve soil conditions • Can grow on same soil for over 20 years • Produces 250% more yield than cotton
• Less sustainable overall
Hemp Benefits
• Porous, breathable, and eco-friendly • Textile is cheaper • Four times more durable than cotton – Due to difference in length of fibers
• Anti-microbial properties eliminate up to 99% of germs – Cotton assist the growth of bacteria
• Fibers are mildew resistant and soften with age – Cotton fibers eventually wear with age
Hemp Laws
• Not always illegal in the United States • Founding fathers grew it in their back yard • First draft of the declaration of independence was drafted on hemp paper • Current negative stigma of hemp associated with marijuana
Hemp Laws • 1950’s – industrial hemp growth stopped in the United States completely • No current and large-scale production of industrial hemp • Only for research purposes
Strategy & Initiatives
Business Issue • Calvin Klein’s unsustainable practices and negative press • Chemical releases into Chinese waterways • Inadequate policies for disposing and managing resources • Lacking eco-friendly materials • Falling short on promises to reduce carbon emissions
Initiative • Reduce overall waste and carbon footprint for Calvin Klein by creating denim made from industrial hemp – Creative alternative resource – Competitive differentiation
Strategy
P
I
C
A
Strategy P
artnership
C
ollaboration
I
ntegrity
A
ccountability
Deliverables
• Customer Profile • Denim Line • Country Report Analysis • Top Supplier Identification • Placement Plan • Logistics • Warehousing • Fulfillment • Future Outlook
Customer Profile • • • • • • • • •
Ezra Gender: Male Age: 26 Marital Status: Single Children: None Occupation: Sculptor Annual Income: $100,00 Location: Portland, Oregon Hobbies: Welding, Reading, Drawing, Yoga, making art for and attending Burning Man, Going on dates, Fashion
Denim Line
What ensures that Hemp is just as comfortable as cotton? • Enzymatic Processes allow for same comfort as cotton • More breathable • Sweat wicking • Superior Insulation Index
COUNTRY REPORTS
SRI LANKA • Current production location • Government strongly supports growth of textile industry • Strong focus on sustainability throughout country • Trained work force builds on value rather than cheap production • No free trade agreement
Tunisia • Current production location • Top industry is the textile industry with cheapest manufacturing costs • Over 250 external companies manufacture in Tunisia • No free trade agreement
India • Current production location • Working towards an “open market economy” • Government supports foreign trade • Top textile industry • No free trade agreement
CHINA • Prospect Location • Current political tension – Decline in exports
• Current apparel and textile industry struggling to secure financing • Farthest location and highest manufacturing costs • No free trade agreement
Mexico • Prospect Location • 7th largest denim jeans exporter in the world • Close proximity to the US • Hijacking • Strong R&D • Free trade agreement
Top Suppliers
Hirdaramani Group • Current Calvin Klein Manufacturer • Industry benchmark • 5,000,000 units per month • 3-4 week lead time • Highly sustainable practice • Current laser integration
Manifattura Italiana Curcirini • Current Calvin Klein Manufacturer • 1,000,000 units per month • 3-4 week lead time • OEKO-TEX certified and multiple ISO quality certifications • Uses 100% natural cotton
Shahi Exports • Current Calvin Klein Manufacturer • 3,000,000 units per month • 3-4 week lead time • OEKO-TEX certified and multiple ISO quality certifications • Not as known for their sustainable practice
Hemp Fortex Industries • Specialize in eco-friendly fabrics • 240,000 units per month • 3-4 week lead time • OEKO-TEX certified • Patagonia, Prana, H&M, tom’s shoes, etc.
Global Denim • Ability to produce any garment made from denim • 600,000 units per month • 3-4 week lead time • OEKO-TEX certified and multiple ISO quality certifications • Levi’s is a top client • Recycled water programs, recycled yarn, etc.
FUTURE PLACEMENT STRATEGY 97.14% Margins Sri Lanka Tunisia Mexico
India China
Logistics & Warehousing
Logistics • Calvin Klein’s current provider • Highly innovative and sustainable • Superior on time delivery and costs • Provide supply chain solutions • 24 hour turnaround
WAREHOUSING
Fulfillment & Replenishment • Sold in select Macy’s and online • Important to ensure transparency and on time delivery with Macy’s and on-line shoppers • Suggested RFID tracking • Working with Macy’s to ensure ample time for replenishment of products
Future Outlook & Conclusion
Introduction to Market • Working with marketing team at Macy’s to execute a roll out and testing period • Opportunity for strategic pricing
Future Outlook • Future of scaling from 500,000 to 1,000,000 • Partnering with Mexican government to grow industrial hemp • Work with cone denim mill in Mexico to establish infrastructure • Produce close to home in order to ensure close to home supplies • Depends on US Farm Act
CONCLUSION • PICA helps to solve business issue • Ties into brands strategic priorities • Strong American Heritage • Hemp better manages risk and uncertainty • Room for future growth
Thank You!