How do you handle the sweatshop issue?
Tom Mann: Fortunately we’re in a segment of the business which is quite a bit more demanding in terms of product details and in terms of the specific requirements of the product. They’re not commodity products, per se. So our manufacturers have to be more sophisticated than the typical sweatshop. They have to have well-trained, loyal employees.
Mark Erickson: For many of our clients we have social compliance audits performed every year by an independent third party of their choice.
Tom Mann: We’re also in our factories on a regular basis, doing inspections, so we can see what’s going on…
Mark Erickson: Well, The whole subject of sweatshops sort of insults our sense of moral dignity, but there’s actually a very pragmatic reason why we won’t use sweatshops: we put a premium on the timely delivery of a quality product. And you really have to balance those two factors with the low price a sweatshop may offer. After all, if a contractor is cheating their employees, breaking laws and doing things under the table, they’re probably not taking very good care of the other parts of their business — like delivery and quality. So it’s just too risky to go that route.
What has remained constant for your business?
Mark Erickson: Really, our mission statement today hasn’t changed a bit from what it was back in 1989 when we started the company — supplying private label services to anybody who needs them. That includes large retailers and wholesale companies both large and small. And so I’m pleased to say that our original impulse seems to have held true. It seems to have been a valid one.
Tom Mann: When we first got started, we were almost exclusively involved in providing products for outdoor use: climbing, skiing, backpacking, hiking, and so on, to customers who were traditionally in that market. Today, our lineup is substantially different. Most of our customers are in the sporting goods industry in some form or another. Not all. We’re also involved with oddly enough some medical products. But we’ve evolved into a broader base of sports-specific apparel. Now we’re involved in cycling of different varieties; touring, cross-country, off road bicycling, bicycle racing; women’s active wear, golf, skiwear, women’s and men’s. So you can see the range is substantially broader than it once was, but the role that we play and services we provide and the way we position ourselves in the supply chain is unchanged.
Mark Erickson: A good enterprise is one in which you’re learning everyday. In the early days, we stubbed our toe more often than we’d care to remember. And yet we survived those things, we got stronger as a result of some of those mistakes so that today we can look back and say in all sincerity we’re a heck of a lot better organization than we were then because we’ve learned a lot.
Tom Mann: I would also add something that we’ve said many times over the years that we truly believe, and that is that experience: you prove yourself when you have to deal with your mistakes. Ultimately, every business has mistakes that you have to cope with, especially as it relates to people who are supplying you. You’re not expecting perfection, but you are expecting the supplier to repair and recover and provide backup seamlessly and as fast as possible. And so we’ve committed ourselves to that, perhaps at times arguably above and beyond the call of duty. We’ve done things that in retrospect maybe didn’t have to be done and maybe weren’t that wise in terms of dollars and cents in a business sense, but gave us a feeling of confidence in our own commitment to provide not only the best possible services, but the quickest and best possible reaction to things that don’t go as planned.
Mark Erickson: This is an important idea. It’s a philosophy widely practiced in the Outdoor industry, and it’s also something about our personality. I guess you’d call it candor. When we approach our customers and our vendors, we’re really not going to put on a fancy dog and pony show and try to make you think that we’re something we’re not. We’re really not trying to bullshit you about anything. We’re just trying to do the best thing we can, honestly and without guile.
Tom Mann: The one thing I can assure you is that if you deal with Erickson Outdoors, you’re going to get an honest deal.
Can you actually help your clients run more efficiently and profitably?
Mark Erickson: Well, we’ve already talked about helping our clients avoid costly overhead…
Tom Mann: Yes, but we can also help our clients with something like inventory turns. We can anticipate their inventory needs with ready supplies of all the key components — fabric, zippers, whatever — that affect the manufacturing lead time. By having supplies in place— either through alliances with sub-suppliers or by actually buying physical inventory — we can provide a quicker response to their requirements for color or size changes.
Mark Erickson: We can shave about half of the usual lead time — two months — this way…
Tom Mann: If a fabric is used in three products we can produce them in small increments and alter production to meet demand. We’re always able to scale production to a client’s needs. A lot of manufacturers won’t talk to you about small increments. We’ve built our business on small increments. The more important inventory turns are to you, the more significant our role can be.
Mark Erickson: By offering smaller shipping increments, we give our customer the flexibility to react to the ups and downs of sales trends more quickly than if they are relying on one big lump shipment.
Tom Mann: I’ll give you a real-life example: A key customer did a seasonal transition where they obsoleted about forty-five percent of their total line, and their total amount of markdowns at the end of that season was one percent. That’s radically different than what usually happens in the apparel industry. Most large-scale apparel retailers go through a series of markdowns and expect half their inventory to be marked down more than 50%. They have exaggerated margin requirements on the front end because they know they’re going to consistently go through all these levels of markdown through the course of a three-month season. Our customer had forty-five percent obsolescence with one percent markdown. And then they made a smooth transition into the next year with no drop in service level for the implementation of their new products. They did this by carefully tapering off of the old line. We responded to their needs producing small increments while at the same time gearing up production of the new line. So the new line was in place running the moment their old line was sold out.
