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Posted Date: 2/18/2010

REI Getting ROI from PLM Solution

By Michael D. Cole

Ask Tim Smith, the manager of business systems of REI Gear and Apparel, what he admires about his employer of 12 years - one that has been perennially ranked in the Top 100 Companies to Work for in the United States by Fortune Magazine during that time - and he points to the retailer's mission statement.
 
"The mission is to inspire, educate and outfit for a lifetime of outdoor adventure and stewardship," says Smith, who like numerous others at the company got grounded in that mission by working on the retail floor. "I think that's a telling mission statement from the standpoint that 'outfit' is not the first part that's mentioned - it's the last. We're a retailer and we're in business to sell our customers products but our main focus is on inspiring people to get outside and to live healthier lifestyles."
 
Founded in 1938, REI (Recreational Equipment Inc.) is now considered the largest consumer cooperative in the United States (with nearly 4 million active members); the company, with headquarters in Kent, WA, sells outdoor recreation gear, apparel and sporting goods, via the Internet, catalogs, and more than 100 stores in 27 states.
 
At its inception, REI originated to help outdoor enthusiasts acquire quality climbing gear at reasonable prices, but the emphasis over the past couple of decades has clearly shifted beyond that focus, into bicycling, kayaking and other human-powered outdoor sports. During that time, the company has also significantly expanded its apparel product line, developing its own private brands (REI and Novara) to complement an assortment that features other leading brands in the industry.
 
As Smith suggests, the mission to educate and meet customers' specific needs runs so deep that the vertical retailer's buyers aren't even mandated to buy its branded products. "In essence," he says, "we need to compete with our purchasing group. We're putting up our products against the best brands in the industry and letting our buyers make the decisions they think are best."
 
As it has also been devoted to sustainability, REI's vision in creating its products has been to minimize their impact on the planet. The retailer has pledged to be a climate neutral and "zero waste to landfill company" by 2020 by focusing on five areas of its business: green buildings, product stewardship, proper usage of paper, reducing waste and energy efficiency. Accordingly, REI has sought to blaze a trail as a leader in product lifecycle development to propel those sustainability initiatives.
 
Yet as it evaluated its IT architecture a few years ago, which included a product data management (PDM) system, the company determined its infrastructure was not conducive to supporting that commitment.
 
Says Smith: "We had the classic issues of multiple systems, multiple versions of the truth, no holistic view of our business and extensive rekeying of data - all the issues that get cited for moving to a PLM system." 
 
Considering its extraordinary growth over the past decade (Smith noted that in his 12 years at REI, sales have bubbled from roughly $500 million annually to nearly $1.5 billion in 2008), pressure built for its product development group to create more and more innovative products. It needed to improve information flow through the product lifecycle; from R&D to line planning, design development and sourcing - but its PDM solution didn't provide that flexibility.
 
"It was apparel specific," Smith says. "So we weren't able to support our 'gear' business with our PDM system; so all our tents, sleeping bags, and backpacks were trapped in Excel [spreadsheets]." The issue was especially pronounced, considering that REI sought to capitalize on some key crossover opportunities. Case in point: REI innovatively adapts some of its tent fly fabrics to create ultralight outerwear apparel pieces. "With disparate library sources," Smith says, "you really never have the ability to capitalize on those opportunities unless you have an incredibly curious or interested designer." 

Pursuing its vision for products
It became evident quickly that REI needed a more robust system, one that did more than warehouse information and generate a spec.  Following a three-month selection process, REI ultimately replaced its legacy systems in 2006 with the ENOVIA PLM solution, from Dassault Systèmes, specifically to manage the enterprise product development lifecycle for both its REI and Novara private brands. The web-based system enabled REI to manage its design activities and information. Smith says it allowed the company to further build its private brands by providing that cohesiveness and collaboration between its gear and apparel teams. 
 
"What we worked on with ENOVIA was to deliver end-user value in driving the promotion of objects through their lifecycle, so we could see the true benefits of PLM from a dashboard perspective," says Smith. Because REI's third-party vendor factories didn't have direct access to REI's systems, Smith says, "we were trapped in a wall of email in which we couldn't get data out of the application." Sample requests, for instance, that were created needed to be sent to the factory. "We'd have to look up the vendor, recreate and re-key all that information in," Smith explains. "[With PLM,] the system automates the generation of email and attachments of product specifications so it all happens naturally as part of the system."

Leveraging PLM further
Smith, during an interview at Dassault Systèmes' users conference in October, indicated that REI's dedication toward attaining heightened product lifecycle development levels is an ongoing undertaking.
 
The company upgraded to the most current version of ENOVIA in February 2008 and then in the second half of 2009 integrated a system from Technia, a solutions provider offering systems that are based on Dassault Systèmes' PLM Solutions.
 
As Smith explains, the implementation of any PLM system brings user adoption challenges: "As you optimize the enterprise, the individual doesn't always see personal benefits in the new solution. The user will say, 'It's easier for me to just work in Excel.' "
 
Smith says the tailored solution from Technia acts as a front-end user interface primarily intended to reduce clicks and enhance productivity further. "We sought to continue those great PLM goals in terms of the enterprise optimization that Dassault provided. At the same time we sought to deliver greater and greater end-user benefit.
We wanted to make it easier to manage and reduce repetitive tasks. Fortunately the ENOVIA system makes it easy to add in that functionality."
 
In particular, Smith says facilitating the bill of materials (BOM) generation process was a key benefit from the recent PLM refurbishing. "Though the results are early we've projected some compelling improvements between the old and new way we do things," says Smith. A recent analysis by REI indicated a reduction of 200,000 clicks annually. With regards to BOM, Smith says the company has calculated a 60 percent reduction in the number of clicks to commit those transactions and a 50 percent reduction in time.  
 
In addition, with its solutions offering better levels of visibility than ever before, Smith says one of REI's top missions - to create green, environmentally friendly products - has been dramatically enhanced. Collecting, organizing and leveraging information to make informed choices (for instance whether to use rapidly recycled polyester or another material), has improved, says Smith.
 
"When you look at sustainability, it's not just about a single system," he says. "It's distributed computing, it's the cloud, all the data spread across your resource and supply chain. But at the heart of that you need to find the best way to get all that information in front of a designer at just the right time they're designing products. It's at that point they're extracting all that information about their raw materials - and interpreting the impact of their choices."

Michael D. Cole is associate editor of Apparel. He can be reached at mcole@apparelmag.com.
 
 
fast facts
* Company Type: Consumers' cooperative (the largest in the U.S. with 2.7 million members)
* Founded: 1938
* Headquarters: Kent, Washington
* Employees: 9,500 (many are part time but all receive health care benefits); REI ranked as the No. 12 top company to work for in the United States by Fortune Magazine for 2009.
* Industry: Outdoor gear, apparel and other sporting goods.
* Website: REI.com

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