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Manufacturing Industry

TSI built to win - includes articles on TSI chairman William Compton and TSI management style - Tropical Sportswear International Corp

Bobbin, Jan, 1999 by Kathleen Desmarteau

Tropical Sportswear Int'l. Corp.'s sales have grown from $25 million to $400 million in just nine years, and as it skillfully maneuvers its private label and branded businesses, the firm continues to raise the bar for best practices in customer service.

A bank that sells bananas: Tropical Sportswear Int'l. Corp. (TSI) often views its business with this concept in mind - a bank because it carries its customers' inventories, and bananas because they are something that must be turned every week, lest they go bad.

This type of unusual "out of the box" thinking has been critical as the Tampa, FL-based casual pants firm has driven its sales from $25 million to more than $400 million in just nine years ... and brought its turn times down to an average of 36 days, from piece goods to finished product ... and the list goes on.

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TSI now has set its sights on achieving much higher sales and expanding its brands to include everything from shins to cologne - all while improving customer service with an eight-hour turn, from the time it receives a customer's order until the goods are shipped out, labeled to specifications and ready for the retail floor.

How have they done it, and how are they approaching the road ahead? It's all about having a can-do attitude, its top executives emphasize, and following a solid blueprint for success.

What Is TSI?

Originally a pants and jeans contractor for a variety of designer brands, TSI was purchased by William Compton and Michael Kagan in 1989. The business partners quickly changed the firm's focus to private label manufacturing, and today it is generally considered to be the United States' largest private label casual slacks producer. Casual slacks account for most of TSI's sales, with shorts following at a close second. Denim jeans, dress pants, skirts and casual shirts make up the balance.

This past June, a little more than six months after going public, TSI took a giant jump into the branded apparel business when it acquired Farah Inc., an older, much larger company that brought both the Savane and Farah brands under the TSI umbrella, as well as the licenses for John Henry and Van Heusen pants. The Savane brand greatly expanded TSI's presence in the department store arena, while the Farah name brought with it an enormous business with Wal-Mart, the only retailer that carries the brand.

While El Paso, TX-based Farah has faced operational problems that put its bottom line in questionable health for the past decade or so, the business was turned profitable within its first four months under TSI. Farah is now operated as the Savane subsidiary of TSI, and is responsible for the branded side of the TSI picture, while private label programs continue to be handled from TSI's Tampa corporate headquarters.

The combined companies are shipping approximately 25 million units annually, and employ more than 3,000 associates. For the 1998 fiscal year that ended this past Oct. 3, TSI reported that net sales were up 74 percent to $264 million, compared with $151.7 million in fiscal 1997, and net income had increased 30 percent to $10.8 million, up from $8.3 million in fiscal '97. According to one analyst's estimate, sales for 1999, the first full year TSI will operate with the Farah business under its belt, are expected to reach $477 million, a far cry from $25 million in 1989, the year it was acquired by Compton and Kagan.

Inventory Orchestration

At the heart of TSI's success is inventory management, and the ability to quickly and accurately "fill in" - in other words, to adjust production and shipping mid-stream according to demand at retail.

As Kagan, who serves as the firm's executive vice president and CFO, says: "Inventories have been the cause of more failures in the apparel industry than anything else. ... We use our systems, our reporting capabilities and our procedures to keep inventories in line. We do things with inventory that no other company in the industry does."

As an example, the company keeps no more and no less than five days of piece goods inventory in its cutting facility in Tampa.

"We operate by the minute," says Kagan. "We know you can no longer do something in two weeks. We know that when a truck pulls in with a shipment of goods from the Dominican Republic, it takes one hour and 42 minutes to unload that truck. Every process is measured."

TSI's leanness also is closely tied to its "chassis" manufacturing strategy, whereby most styles the company produces are based on six basic pant styles. These models are built to strict specifications - most specification packages run 20 pages to 40 pages in length, including instructions in both English and Spanish - that adhere to TSI's "good-better-best" product philosophy. The good, better and best categories are distinguished from each other by the quality of fabric and level of workmanship and detail used in the different styles, which are geared to different retail channels and price-point ranges.

The basic chassis may be altered with a different cuff here or an extra pocket there, but in general, the six chassis fit the bill for more than 90 percent of TSI's slacks demand from retailers. And once a TSI sewing contractor masters one or two of the chassis, efficiencies increase and turn times quicken, creating higher profits all around.

Manufacturing Industry

TSI built to win - includes articles on TSI chairman William Compton and TSI management style - Tropical Sportswear International Corp

Bobbin, Jan, 1999 by Kathleen Desmarteau

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