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Chapter 13 Building Information Systems 493

INTERACTIVE SESSION ORGANIZATIONS

Tommy Hilfiger Transforms Its Wholesale Sales Process with Digital Showrooms Tommy Hilfiger’s world-leading designer apparel and retail brand is known for its “preppy with a twist” designs. The company maintains the Tommy Hilfiger and Hilfiger Denim brands, which include Hilfiger Collection, Tommy Hilfiger Tailored, men’s, women’s, and children’s sportswear, denim, accesso- ries, and footwear. Tommy Hilfiger was acquired by PVH Corp. in 2010 and has an extensive distribution network in more than 100 countries and 2,000 re- tail stores throughout North America, Europe, Latin America, and the Asia Pacific region. Global retail sales of the Tommy Hilfiger brand were $9.2 billion in 2019.

Hilfiger’s management wanted the firm to take better advantage of digital technology to improve the way it operated. For example, the wholesale sales process cried out for streamlining and simplification. In the past, several times per year, buyers of Hilfiger merchandise for retail stores and department store chains would have to personally visit a Hilfiger wholesale showroom, which displayed physical samples of each item in the Hilfiger product line for the upcoming sales season. The buyers would inspect physical samples from a new collection and write down orders on paper order forms. The entire process of viewing and ordering items to stock retail stores might take three days.

Tommy Hilfiger encompasses eight sub-brands, each selling 1,500 pieces of clothing every quarter. That translates into a great deal of product to create just to show and sell samples to a wholesale buyer and then produce them to sell to the end customer.

Hilfiger assembled a small team of information technology specialists and a designated “digital trans- formation team” to reimagine the wholesale sales process. The team spent several weeks in Hilfiger showrooms observing how sales people worked with retail and department store buyers. The team recom- mended streamlining the wholesale ordering process by using digital showrooms to shorten the window between retailer previews of new collections and final delivery of new products to stores. The digital showrooms feature interactive touchscreen worksta- tions with ultra-high-definition display screens where

buyers can view every single item in the Tommy Hilfiger collection. They can zoom in to see design details and textures, and click every garment to dis- play prices, color options, and size ranges, and place orders. At the end of the process, buyers receive an email with an attached PDF document contain- ing their final order. The system arranges for order delivery.

Tommy Hilfiger used the Couchbase Data Platform as the technology foundation for its digital showroom. Couchbase uses NoSQL nonrelational data management technology (see Chapter 6), which provides more flexibility and scalability than tradi- tional data management tools. Compared to tradi- tional tools, Couchbase can more easily handle large numbers of interactions with end users and different kinds of data. It is optimized for interactive applica- tions and rich, personalized customer experiences and engagement, such as wholesale buyers scanning new product lines, selecting products, examining tex- ture and design features, and inquiring about pricing and shipment dates. Workstation users can add, ac- cess, and combine data in real time.

The digital showroom system has minimized production and transport of showroom samples be- cause there is much less need to create, examine, and deliver samples to showroom locations around the world for every new collection. Using the digital showroom, Tommy Hilfiger was able to cut sample production by 80 percent in European headquarters, and it’s doing the same with its digital showrooms all over the world. Costs to transport physical samples have also been reduced.

When Hilfiger’s Asia-Pacific team went on a buy- ing trip to Europe, the visit only took a single day, as opposed to three days in the past. Pre-Fall sales increases were noted for the Netherlands, Africa, and Middle East. Shifting from showrooms full of physi- cal samples to digital showrooms has reduced the amount of time required to provide new products to a retail outlet for sale to the public by six weeks. The digital showrooms have also been able to accommo- date more wholesale buyer appointments per day, and sales are much more accurate.

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Paradigm shifts and business process redesign often fail because extensive or- ganizational change is so difficult to orchestrate (see Chapter 14). Why, then, do so many corporations contemplate such radical change? Because the rewards are equally high (see Figure 13.1). In many instances, firms seeking paradigm shifts and pursuing reengineering strategies achieve stunning, order-of-magni- tude increases in their returns on investment (or productivity). Some of these success stories, and some failure stories, are included throughout this book.

Business Process Redesign Like Tommy Hilfiger, described in the Interactive Session on Organizations, many businesses today are trying to use information technology to improve their business processes. Some of these systems entail incremental process change, but others require more far-reaching redesign of business processes. To deal with these changes, organizations are turning to business process man- agement. Business process management (BPM) provides a variety of tools and methodologies to analyze existing processes, design new processes, and optimize those processes. BPM is never concluded because process improve- ment requires continual change. Companies practicing business process man- agement go through the following steps:

1. Identify processes for change: One of the most important strategic deci- sions that a firm can make is not deciding how to use computers to improve business processes but understanding what business processes need im- provement. When systems are used to strengthen the wrong business model or business processes, the business can become more efficient at doing what it should not do. As a result, the firm becomes vulnerable to competitors who may have discovered the right business model. Considerable time and cost

Tommy Hilfiger’s design processes—from sketching through sampling and showrooming—will be digital.

Sources: global.tommy.com, accessed April 8, 2020; “This Season’s Must-Have,” www.couchbase.com, accessed February 26, 2020; Maghan McDowell, “Tommy Hilfiger Goes All In on Digital Design,” Vogue Business, November 7, 2019; Alex Hisaka, “Tommy Hilfiger Revolutionizes the Fashion Industry with a Digital Selling Ecosystem Powered by DC/OS,” D2IQ, December 10, 2019; and Chris Preimesberger, “IT Science Case Study: How Tommy Hilfiger Created Its Digital Showroom,” eWeek, July 11, 2018.

Hilfiger launched its first digital showroom in Amsterdam in 2015. By mid-2019, PVH had launched 53 digital showrooms in countries around the globe, featuring over 300,000 products.

Tommy Hilfiger’s success with digital showrooms has encouraged it to look for other opportunities for business process transformation in its value chain. The company is now transitioning to 3-D design for designing and manufacturing garments. All of

CASE STUDY QUESTIONS

1. How did Tommy Hilfiger’s previous wholesale sales process affect its business performance?

2. What management, organization, and technology factors contributed to Tommy Hilfiger’s problems with its wholesale sales business process?

3. Diagram Tommy’s Hilfiger’s old and redesigned business process for ordering merchandise for a retail department store.

4. Describe the role of technology and digital show- rooms in Tommy Hilfiger’s business process changes.

5. How did Tommy Hilfiger’s redesigned busi- ness process change the way the company worked? What was the business impact? Explain.

494 Part Four Building and Managing Systems

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