Case Study

Quality Is In The Sole For This Footwear Company

FDA quality metrics

There’s no business like shoe business for this company that operates both a retail segment and private label brand operation. The retail side runs over 1,045 value- priced family footwear stores in the US and Guam, 159 other stores in the US and Canada selling natural comfort style shoes, and a growing number of shoe stores in China. The company also sells shoes online and licenses two major name brand footwear product lines. Its footwear manufacturing operation sells to consumers worldwide through more than 1,700 retailers, including independent, chain, department stores, catalogs, and online retailers. The company has a growing footprint in China. Started in 1878, this company’s brands are recognized globally for crafting the perfect shoe.

THE CHALLENGE

The company has sourcing and product development offices in China, Hong Kong, Macau, Vietnam, Italy, Ethiopia, and the US (St. Louis and New York). During a period when the company was in the process of diversifying its mainly Chinese sourcing base to other Asian countries, its leadership set objectives to improve product quality. A new QA program was launched in 2016 and called the “Five Star QA” program.

Admitting the “cost of quality” was never measured before, the key drivers were to understand the impact of quality on the company’s business, the total amount of claims sent back to factories and suppliers, and how much of those claims were actually recouped. Defect rates, on both raw materials and finished goods, averaged about 8% annually.

The organization’s disparate parties lacked pure visibility across multiple systems, time zones and languages. Without the ability to digitize data at all levels of the supply chain, it could not see the quality of raw materials and commercialized products, or conduct analytics over time.

THE SOLUTION

Amber Road’s Supply Chain Collaboration platform for Inspection and Quality Management enabled the company to centralize and automate their processes. The solution facilitates an efficient means to collaborate with Tier One and Tier Two suppliers and provides visibility into quality inspections at the factory level, but also tracks returns for defects back to the tanneries.

Concurrent to the technology roll-out, the company defined factory inspection SOPs and more in-depth formal training for the factory inspectors. This raised the skill sets of its internal inspectors who use the Amber Road modules to input their results, product images, and notations.

THE BENEFITS

The initial goals of improved quality and visibility have been achieved:

  • The number of claims back to the factory was reduced by 15-20% over the two years this company has used the Amber Road solution.
  • The trend line over the last two years shows a decline in claims by 20%, the average dollar amount for claims has gone down also, now totaling about $300-400,000 annually.

Defect rates have been cut in half – starting at 8% and now down to 4%.

But in the last six to ten months, claims plateaued. This is attributed to the growth of online sales which has led to consumers’ increased awareness to quality, and ability to return the product more conveniently.

The product quality at the factory/tannery level is still much better than before the ‘Five Star Program’ and Amber Road technology was put in place.

Aside from the quantifiable value, the organization also realized these benefits:

  • Increased Supply Chain agility, visibility, flexibility: Being on a common platform enables the organization to do major supplier diversification shifts; these also enabled them to get out of an external agent relationship and allowed sourcing to work with its supplier partners closer, which improved overall agility.
  • Reduced Risk: From the quality perspective, the solution has helped reduce the risk of product recalls and returns.