American Apparel Faces Market Forces

March 21, 2011 at 3:07 pm Leave a comment

News is in that American Apparel has delayed filing its 2010 annual report. Speculation in the media has it that the popular T-shirt and basics retailer will report stiff losses over the past year. The company—whose popular line of primary-colored socks, tights and shirts are ubiquitous among certain demographics—has seen a spate of bad press and disappointing financial numbers recently.

According to some reports the increasing price of yarn and textiles over the past year, coupled with “labor inefficiencies,” has led to the declining profits at American Apparel. The company was forced to hire hundreds of new workers at its Los Angles manufacturing plant after a federal investigation into worker eligibility led to mass firings. The inexperienced labor supply has in turn led to a less efficient manufacturing process.

http://latimesblogs.latimes.com/money_co/2011/03/american-apparel-says-it-expects-to-report-a-loss-and-sales-decline-for-2010.html

It is interesting to look at American Apparel as a case study on the forces affecting today’s clothing manufacturers and retailers. Even though the brand is high-profile and popular, the various complexities of the market have compounded to threaten the underlying viability of the company.

No manufacturer is immune to market forces. Many of the factors pushing against American Apparel are well-known obstacles. Fluctuating raw material costs, regulatory compliance, labor efficiency; these are all factors that people in the clothing industry are well acquainted with. In fact, many manufacturers use Supply Chain Management or Product Lifecycle Management software in a concentrated attempt to bring these chaotic forces into check. For example, there is very little your company can do to affect the increasing price of cotton on the global market. However, with a well-implemented PLM system you may be able to foresee potential supply issues and enact design changes to avoid making costly mistakes. Likewise, if you use contractors or subcontractors in the manufacturing process, a PLM or SCM system can help you track and verify regulatory compliance.

So take a look at your operation and decide if you are doing everything in your power to stay on top of the kind of volatile market forces which are battering American Apparel right now. It may be necessary to implement a supply chain software system to help you oversee your efforts, and help avoid serious financial issues that result from compounded market forces.

JW Yates

New York City, New York

March 21, 2011

 

Business Management Systems

330 West 38th Street

Suite 705

New York, NY 10018

(800) 266-4046

info@bmsystems.com

www.bmsystems.com

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Entry filed under: Fashion, PLM, technology, textiles. Tags: , , , , , .

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About BMS

Business Management Systems (BMS) has been a leading provider of product lifecycle management software solutions to the apparel & textiles industry for 15 years, delivering VerTex Toolboxes--an easy-to-use modular system uniquely configured to meet every company's specific needs.

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