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Posted Date: 4/2/2010

WHY PRIVATE LABEL BRANDS ARE TURNING TO TECHNOLOGY FOR COMPLIANCE MANAGEMENT

contributed by Gary M. Barraco, Senior Manager, Marketing and Alliance Development, ecVision,
gbarraco@ecvision.com

Last June, Greenpeace released "Slaughtering the Amazon," a three-year investigation into deforestation in the Brazilian Amazon. Greenpeace claimed that people were taking over-protected lands in order to expand their cattle ranches. This was not only illegal, but large quantities of greenhouse gases were being released into the atmosphere as a result of the rapidly depleting forests.

Greenpeace used its extensive network and the power of the Internet to target retailers and brands. Within a three-day period, Timberland, adidas, Nike and Tesco received more than 500,000 complaints from consumers, flooding their customer service lines and disrupting operations worldwide. Following this unpleasant incident, these brands have made commitments to their customers to cancel the related supplier contracts unless their products are guaranteed to be free from sources that contribute to Amazon destruction.

Recently I was at a meeting with retail social and environmental compliance managers. When a presenter talked about the Greenpeace report and the ensuing results, the brand manager sitting next to me was feverishly taking notes about the details of the report. I leaned over and whispered to her, "Did you have an issue with this campaign?" She replied, "I think we get some of our belt and shoe leather from Brazil, but I'm not sure. Once I get back to the office I need to talk to our sourcing teams and see if we can track the source of our raw materials before this becomes a problem for my company."

- If you were put in this situation would you be able to track every order back to the trading partner community (factory, vendor, mill, tannery, etc.) that produced each item for your company?
- Can you ensure that 100 percent of every factory is compliant with all of the laws and regulations?
- Do you have visibility into the compliance process?

Private label development teams are very much dependent on the partners that form every link in the supply chain. Globalized sourcing operations increase the likelihood of risk or disruption at every turn. Fierce competition and tight cost margins can further magnify the impact of a supply chain failure on a business. With the demand to increase the mix of private label products to increase profitability, brand owners also bear the burden of managing the quality process.

In the Apparel Magazine/AMR Research Inc. January 2010 report, "Top Technology Trends in the Apparel Market," the respondents to this annual survey point to "global risk" as a major concern that can be controlled through software applications that increase supplier collaboration and visibility. The report endorses the use of supplier scorecards and dashboards to measure quality and compliance as an excellent strategy to mitigate risk, while enabling the private label company to "control their own destinies more closely as they differentiate their product assortments, respond to market trends in a manner consistent with the brand, and deepen customer loyalty."

Managing Risk with Technology

Risk to your sourcing and supply chain operations comes in many forms and involves organizations at each point in the product lifecycle. Risk can be classified into Regulatory and Brand risks. Regulatory risks include social, environmental and product safety elements. Brand risks encompass image, quality and consistency. Of course, there are other risks that can't be controlled or forecast -- such as natural disasters like those we have seen in the Asia Pacific and Haiti or civil unrest we have seen in Africa and along the Ivory Coast. In the end, it is the retailer or brand owner's responsibility to the customer to ensure compliance on all levels. Private label retailers need to focus on legitimately collaborating with their supplier networks to manage risk on all levels if they want to differentiate themselves from the competition.

Compliance has become more critical due to globalized sourcing operations, but a coordinated supply chain solution that connects the trading partner community with product data and retailers' orders in a unified application can achieve better results. Private label retailers that utilize technology as a risk mitigation strategy are the leaders in today's economy.

Like the Greenpeace initiative, economic, social and political trends have introduced a new set of product development requirements that are being actively enforced by government (in the form or regulations), other agencies (in the form of research reports that draw consumer attention), and by brands (in the form of product and raw materials purchasing standards). Safety, environmental and social responsibility standards and regulatory practices must be enforced to protect brand integrity and image, and reduce the risk of costly product recalls. This applies equally across all industries without regard to the product.

Technology and process solutions, such as ecVision XpressCommerce, can provide a number of direct benefits in meeting the array of compliance demands, including:

- The ability to anticipate and respond promptly to issues;
- A focus on uncertainties rather than certainties -- in other words pointing you to the problems that need attention; and
- A competitive edge by managing risks that can be controlled.

As a packaged solution that unifies PDM, PLM and Supply Chain Management tasks, the XpressCommerce modules provide a means for users (including internal sourcing, quality assurance and legal teams, overseas buying offices, suppliers, agents, external inspectors and others) to achieve greater visibility into the processes. ecVision's unique product can help companies in their efforts to re-evaluate business strategies, gain a better understanding of the critical interdependencies and supply chain risks along the way -- from the sourcing of raw materials to delivery to the customer -- and appropriately manage or transfer risks.

We encourage you to visit our web site and download additional information about our products. www.ecvision.com

About ecVision: 
ecVision provides sourcing and supply chain management software for private brands that enable collaboration and visibility into their supply network. ecVision XpressCommerce is a configurable, web-based solution for private label owners and manufacturers to facilitate better relationships with trading partners through standardized documents and process flow from product concept to receipt. The end result is minimized risk, lower supply chain costs, improved speed to market and the protection of brand quality.

The functional modules in XpressCommerce provide the capabilities for:
- collaborative product design and technical specifications
- supplier production capacity and raw material commitments
- factory audits and compliance inspection scheduling and reporting
- global sourcing, SKU level sample management and online costing negotiations
- collaborative order management and production tracking
- rule-based product QA and inspection management
- online shipping documentation (ASN, invoice, carton labels)
- online shipment tracking
- time & action calendar management

Headquartered in New Jersey, ecVision has offices in Hong Kong and China, in addition to a partner network in 15 countries providing overseas support to worldwide users.

The XpressCommerce user base includes internal teams, suppliers, mills, factories, logistics providers, inspection agencies and banks. Every day, industry-leading companies around the world including Abercrombie & Fitch, BonTon, JCPenney Co., Li & Fung Ltd., New Balance, Phillips-Van Heusen, Falabella, Timberland and others use ecVision's award-winning software to effectively run their businesses.


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