Company visit 2 - TAL

Q1. What would you do to balance the huge cost in technology and other areas?

TAL makes use of its own well-known brand as a strategy to overcome the huge production cost. Since TAL noticed that the production cost was keeping increasing due to unstable economic environment, it was essential for TAL to change the strategy to provide more value-added service to retain and attract more customers. Thus, TAL has invested lots of money in R&D in order to re-position itself as “innovative manufacturer” and provide more value-added services to the market. Now, TAL’s Brand not only sells the manufacturing experience, but also the new manufacturing technology to the market. This strategy is successful since it builds a strong partnership with those retailers aiming at selling high quality to market and requesting fast responses logistic service. Although the costs incurred in R&D are high, the benefit of the technology and the value-added service provided by TAL greatly outweighs the high production cost. Thus, the service of TAL gains the customers’ recognition and TAL was awarded by Burberry Ltd as a best vendor in 2012. Therefore, it is still worth to form the partnership with TAL.

Q2. What is your lasted technology for the apparel industry?

TAL has invested lots of money in Product Development Team. It provides addition features and new fashion to the clothes such as Soft TAL technology and the TAL pucker free steam technology. These technologies help to wash the clothes easily and no need to iron the clothes frequently. Besides, 2 collections are developed by Product Development Team per year with new fabrication, new performance features and new designs. PD Team will share these collections with customers through roadshow or customer visits. Apart from that, TAL also shares the corporate social responsibilities (CSR Programme) to green the gases and reduce the air pollution. To achieve the target, TAL runs the Low Carbon Manufacturing Programme to reduce TAL Green House Gas (GHG) footprint intensity by 21 by end of 2014.

 Q3. Most of the TAL’s factories are built in Asia, are there any alternatives to deal with the increasing labor cost in Asia in the coming years?

To balance the increasing labor coat, TAL may recycle the left cloth to reproduce to the new recycled cloth. This issue not only reduces the pollution cased to environment, but also reduces the wastage and cost. However, the recycled cloth’s quality is different from the original cloth. Thus, the price for the recycled will be charged less.

Q4. How can you make your IT system to become a sustainable competitive advantage to help you stand out in the industry?

Replenishment Models:

Replenishment Models	Competitive advantage of system
1. Quick Response (QR)	Speed up response time Later order placement, lower the chance of stock-outs Improve the quality of inventory flow
2. Continuous Replenishment (CR)	Shorten lead time Align the demand and supply equilibrium Response to market more quickly Save cost from too much inventory up/loss sales Size management
3. Vendor Managed Inventory (VMI)	Align store allocation and warehouse demand planning Increase in-stock rate from 70% to 97%
4. Made-to-measure	More choices and personalized service for end customer No inventory in stores Order flexibility

Other Supply Chain Service

Supply Chain Service	Competitive advantage of system
1. Cross Docking	Reduce the storage cost Reduce the operation cost
2. Pick to Light	Sophisticated racking system Pick by 1 pc or multiple pc inner box SKU picked to light LCD display Each picked item is QC scanned for 100% accuracy

Finally, TAL provides the scorecard to its customer to evaluate the vendor service performance and control system. The scorecards can quickly view on the weakness and strength of TAL service, jumping outside and re-evaluated the real situation. It also let TAL know the weakness and take the corrective measure to fix the problem. It also provides ease of communication during discussion between TAL and its clients.

Q5. Using Vendor-managed inventory, company can enjoy many advantages, such as gaining the exclusion supply contracts from its retailer customers in product line, and blocking out the company’s competitors. However, are there any drawbacks of implementing using VMI?

To provide VMI service, TAL has to get the stock level information from the clients. In this stage, Faith and Trust are very important element to provide such service. Therefore, it is not easy to provide this service to new clients. TAL prefers to provide this service to clients that form long time partnership.

Q6. The US economy has been deteriorating and the fiscal cliff is coming ahead. Given that US market accounts for 78% of your Company’s sale revenue, how serious does the bad US economy affect your company and what is your company going to encounter and to deal with during this hard time?

There are four main directions for TAL to keep leading the way in the industry. They are innovative products, supply chain capabilities, value-added service and sustainability.  Although US economy has been deteriorating and the fiscal cliff is coming ahead, TAL keep changes itself to face with the unprecedented challenges by providing different new feature products and supply chain logistic service to attract and retain its clients.