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Friday January 9, 2004
Kim’s
Gamble: Going Vertical
By Nola Sarkisian-Miller
As the owner of a dye house and printing mill,
Edmund Kim felt like he was in the sunset of his
career about 10 years ago.
His company, Edmund Kim International, was
churning out textile orders for the likes of Guess
and Calvin Klein, but he sensed a wave of
competition from the deepening sea of importers
who could provide full-service operations to major
manufacturers and retailers.
So, by 1997, Kim took a gamble by creating a
vertically integrated company for private label
manufacturing at a time when manufacturers were
morphing into shell companies of design houses and
handing over production to someone else. The
company added a knitting and converter plant and
apparel manufacturing center, creating three
wholly owned subsidiaries:
- Pacific
Continental Textiles Inc., which handles
dying, printing and knitting.
- Pacific
Continental Apparel, which oversees garment
production.
- Edmund
Kim Production Group Inc., the converting
business.
Yet, it was able to trim payroll by about 24
percent, for a current workforce of 400.
“As we see it, we’re doing more business than
five years ago [sales of $65 million], with fewer
employees,” Kim said.
Amassing clients such as Wal-Mart, Reebok, Fossil,
Victoria’s Secret, Anchor Blue and Mimi’s
Maternity, the firm’s production of fabric,
sportswear and sleepwear for women and men has
driven sales up to $100 million in 2003, with
projections to hit $120 million this year.
To accomplish the feat, he invested $20 million in
technological improvements, financed by banks,
that are just bearing fruit. He brought on board
executive vice president Reza Farmehr, a former
senior audit manager with accounting firm Moss
Adams LLP, in 1997, to oversee the ramp up, that
most notably included the eight-month-long
creation of a production and inventory tracking
system using software systems Omni 7 for the
fabric side and Apparel Magic for apparel
manufacturing that pinpoint where the product is
in every stage of the process.
If the company receives an order for a million
screen-printed T-shirts, the system can follow
production from the fabric order and the dying and
finishing stage to the cutting room and the end of
the multistep process. Efficiency also gets a
boost, since the system can monitor the fabric’s
shrinkage, torque and working loss.
“There’s a big difference between now and the
caveman era, when we were using Excel,” said Joe
Buggan, the firm’s manager of corporate
planning. “Nothing linked. The computer program
couldn’t connect to our dying formulations.”
The difference is the bottom line: Farmehr said
the company’s dilution rate — the number of
goods that fall out of production — has
plummeted to 1.5 percent from 5.5 percent in 1998,
with $4 million in upside for the firm.
The system even sounds an alarm when pick tickets
(orders for goods to be picked from inventory for
shipment) don’t mesh with invoices, helping the
company lower its error rate to less than 0.1
percent, down from 1.5 percent.
To get a leg up on production, the company
upgraded and expanded its machinery, which now
includes 90 Monarch knitting machines and 20 Thies
dye machines that have increased capacity by 30
percent. That in turn helps get products quicker
to the company’s affiliate in
Mexico, as well as
factories in Guatemala, for cut-and-sew
assembly that has transformed the company into a
quick-turn provider, averaging four weeks,
compared with the two-and-a-half months it took
about five years ago.
Among its growing strengths are coping with
increasing restrictive quality control measures.
Retailers’ growing intolerance of shading
discrepancies can send many a project back to the
drawing board if it weren’t for the two-year-old
computerized color separation machine that can
pinpoint color differences to a degree of 1
percent.
“There was lots of reworking, redying and simply
trashing of merchandise — now we’re one step
ahead,” Farmehr said.
Savings from Kim’s investment hasn’t turned
the company into a low-cost production leader. Kim
said on a pricing scale of 1 to 10, the company
ranks seventh highest in price. But, that’s not
turning away customers who value the firm’s
quality and consistency, such as Angela Foster,
Fossil’s production development manager.
“Their sewing quality in T-shirts is very good
and we always stay informed about where we are in
the design process,” Foster said.
Getting this far with technology wasn’t easy,
Kim said, given that the apparel community was
just waking up to its marvels when he introduced
his upgrades.
“Factors even gave us a hard time, saying we’d
be stuck with this equipment,” Kim recalled.
WWD.com
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