Peering across the abyss: Clothing and shoe companies cross the ERP chasm

Nineteen ninety-eight opened with great promise for the apparel and shoe industry. The economy was strong, skirt lengths were rising to new heights (thanks to Ally McBeal), and the stock market was humming. Furthermore, much of the apparel and footwear industry buzzed with anticipation. Software giant SAP AG of Walldorf, Germany, was about to launch what seemed to be the solution to the industry's manufacturing and distribution problems. A tailored version of R/3, SAP's enterprise resource planning (ERP) juggernaut, promised to untangle the knot of variables--style, size, color, etc.--that had stymied earlier attempts at production and distribution integration.

Executive Diary

In January 1998, industry participants rang in the year celebrating the Apparel/footwear Solution (AFS), which several companies had been co-developing with SAP for two years. On New Year's Eve day in 1997, in a conference room in Rockford, Mich., Wolverine World Wide inked a deal with SAP that the $670 million maker of Hush Puppies and other brands hoped would lead its systems out of the Dark Ages. Two weeks later, in Carlstadt, N.J., employees at Bruno Magli USA gathered in their offices to enthusiastically kick off the luxury-footwear maker's AFS implementation.

A number of apparel and footwear manufacturers have embarked on a momentous journey: buying, installing, and managing enterprise resource planning (ERP) systems. Datamation has been chronicling the shift, particularly at one company, AeroGroup International, since the summer of 1998. At that time, the $150 million maker of Aerosoles casual comfort shoes in Edison, N.J., started on the long and tortuous path of buying, installing, and managing an enterprise resource planning (ERP) system. Aerosoles CIO Jeffrey Zonenshine invited Datamation to chronicle the company's moves. In this third chapter of the saga, information executives discover more painful truths about ERP implementations, and AeroGroup switches to a new software vendor. For the full story, read Part 1, Risky business: bold R/3 effort by Aerosoles and Part 2, Riskier business! The high cost of ERP implementations

But 4,000 miles away, the mood was decidedly grim in a small office complex in the tiny German village of Hallbergmoos. There, in one of the buildings that housed SAP's AFS development effort, five IT staffers from Sara Lee Hosiery were making a startling discovery. After eight months of poring over code in intense collaboration with AFS programmers, the Sara Lee team was shocked to find that SAP had decided--six months earlier--to ax a key function on which their implementation depended.

The gloom in Hallbergmoos that day has spread. As 1999 unfolds, the buoyant anticipation that greeted AFS's debut has evaporated, at least at some companies. In its place is stoicism, mingled with muted panic and dead silence. By the end of 1998, several AFS projects had been delayed, and at one--AeroGroup International, the Edison, N.J.-based maker of the Aerosoles line of casual shoes--it was coming unraveled.

This spring, more than a dozen AFS projects will go live, according to company officials and SAP. Only two projects were operational as the year opened, though, despite the fanfare surrounding the software's official introduction in April 1998. They were:

Reebok International launched AFS at its Greg Norman division in August 1998--a success. But the division generates less than $100 million in sales, a blip among the $3.6-billion company's revenues.

But Justin Industries, a conglomerate with revenues of $440 million, predicts that implementation of enterprise resource planning software from SAP at its Fort Worth, Texas-based footwear unit will have a significant negative impact on fourth-quarter revenues, according to recent Securities and Exchange Commission filings. Justin officials didn't return phone calls requesting comment on their AFS implementation.

AeroGroup CIO Jeffrey Zonenshine declined to discuss the company's R/3 project now, after volunteering the firm's implementation story to Datamation when the project began. Photo: James Leynse/SABA

It wasn't supposed to be like this. AeroGroup's original plans called for launching its AFS implementation in February 1999. But early in January, AeroGroup signed a contract to replace AFS with JBA styles, according to software maker JBA International in Rolling Meadows, Ill. AeroGroup officials have declined to be interviewed since September. The Eisner Consulting unit of Richard A. Eisner & Co., AeroGroup's implementation consultant for the R/3 project, also declined to comment.

What's going on? Despite its impressive R/3 lineage, AFS is full of new programming code that hasn't been proved in real-life production environments. IT executives trying to stitch the two together found their implementations--and their nerves--frayed. Some of the difficulties are endemic to ERP in general. Some are due to SAP's stumbles as it entered the complex business of apparel and footwear. The lessons from 1998 are a cautionary tale for IT executives in any industry looking for a single solution to their enterprisewide problems.

Stepping in it

The cutting and stitching that's at the heart of the apparel and footwear industry may echo old-world craftsmanship, but it's anything but quaint. "Some of the most complex design problems in any manufacturing sector are in footwear," says Nick Brown, a partner with Comprehensive Computer Services Inc. (CCSI), maker of Footworks, a UNIX-based software package.