Patagonia Escalates Business with ERP
Founded in 1972 to succeed a small company that provided climbing tools, Patagonia has become a globally recognized brand. Yet many years of successful growth brought Patagonia to a juncture where it became necessary to review and improve the effectiveness of business processes and infrastructures in a way that would allow it to remain true to its mission of supporting the environment.
“We wanted to ensure that the business could scale to meet global demand and continue to grow without adding significant resources,” says Rose Marcario, chief financial officer and chief operations officer at Patagonia. “And, we needed a way to view supply and demand globally, moving away from what had been a silo environment.”
Patagonia decided to update its business technology with a new enterprise resource planning (ERP) system. Working with Microsoft Gold Certified Partner Sunrise Technologies, the company implemented Microsoft Dynamics AX 2009 together with the Sunrise Apparel and Footwear Template.
By replacing a number of disparate systems with a single ERP instance, Patagonia was able to generate a single, unified view of all business information, including finances, products, inventory, planning, demand management, forecasting and channel management. Supported by Microsoft BizTalk Server to help bridge technologies, Microsoft Dynamics AX also serves as the hub with which Patagonia connects most remaining legacy systems.
Consequently, new visibility into business events makes it possible for Patagonia to respond quickly to demand changes and market trends.
“I have unprecedented visibility into order fulfillment rates, inventory movement and other areas that were not transparent to me before,” says Marcario. “Our forecasting is far more meaningful and accurate and lets us match actual demand with the right products, even given long product lead times and limited supply.”
Improvements in inventory management also illustrate the solution’s value. In allocating inventory to demand, business planners can effectively consider such factors as customer retention or margins to achieve the best profit and highest customer satisfaction from the company’s inventory.
“Inventory is no longer channelized, which makes it much easier to reassign and capitalize on it,” says Marcario. “We’ve improved inventory turns by 20 percent to 30 percent already.”
With increased visibility and agility, Patagonia is also poised to serve its reselling trading partners more effectively. Within just a few months, it boosted fill rates between 5 percent and 10 percent.
“We’ve achieved several groundbreaking changes,” says Marcario. “And, when our European and Japanese operations come online with the solution, the entire company will work with a single, consistent enterprise infrastructure that embraces a streamlined way of doing business.”
But perhaps what’s most important is that these business wins enable Patagonia to practice its environmental values with greater impact.
“Without question, when I consider the costs of implementing Microsoft Dynamics AX and what we will get out of it in terms of future scalability and profitability, I realize the more good we can do for the environment,” says Marcario. “That is a big part of why we are here.”
FAST FACTS
Company at a Glance
Patagonia designs, produces and distributes clothing and gear for trail running, skiing, mountain climbing, surfing and snowboarding. It serves its markets through multiple channels, including international distributors, wholesalers, retail stores, catalog sales and e-commerce.
Up for a Challenge
Given sizeable upfront investments and lengthy lead times, critical functions such as forecasting, demand planning and inventory management did not sufficiently enable Patagonia to react to market changes in a timely manner.
Words of Wisdom
"I hope that our experience of running a successful business on the basis of great products and putting it to work for the greater good serves as an example for other companies."
– Rose Marcario, CFO & COO, Patagonia
Two for One Benefits
By improving inventory turns by up to 30 percent and fill rates by up to 10 percent, Patagonia achieved unprecedented double-digit growth and is pursuing its environmental mission with increased vigor.
“We wanted to ensure that the business could scale to meet global demand and continue to grow without adding significant resources,” says Rose Marcario, chief financial officer and chief operations officer at Patagonia. “And, we needed a way to view supply and demand globally, moving away from what had been a silo environment.”
Patagonia decided to update its business technology with a new enterprise resource planning (ERP) system. Working with Microsoft Gold Certified Partner Sunrise Technologies, the company implemented Microsoft Dynamics AX 2009 together with the Sunrise Apparel and Footwear Template.
By replacing a number of disparate systems with a single ERP instance, Patagonia was able to generate a single, unified view of all business information, including finances, products, inventory, planning, demand management, forecasting and channel management. Supported by Microsoft BizTalk Server to help bridge technologies, Microsoft Dynamics AX also serves as the hub with which Patagonia connects most remaining legacy systems.
Consequently, new visibility into business events makes it possible for Patagonia to respond quickly to demand changes and market trends.
“I have unprecedented visibility into order fulfillment rates, inventory movement and other areas that were not transparent to me before,” says Marcario. “Our forecasting is far more meaningful and accurate and lets us match actual demand with the right products, even given long product lead times and limited supply.”
Improvements in inventory management also illustrate the solution’s value. In allocating inventory to demand, business planners can effectively consider such factors as customer retention or margins to achieve the best profit and highest customer satisfaction from the company’s inventory.
“Inventory is no longer channelized, which makes it much easier to reassign and capitalize on it,” says Marcario. “We’ve improved inventory turns by 20 percent to 30 percent already.”
With increased visibility and agility, Patagonia is also poised to serve its reselling trading partners more effectively. Within just a few months, it boosted fill rates between 5 percent and 10 percent.
“We’ve achieved several groundbreaking changes,” says Marcario. “And, when our European and Japanese operations come online with the solution, the entire company will work with a single, consistent enterprise infrastructure that embraces a streamlined way of doing business.”
But perhaps what’s most important is that these business wins enable Patagonia to practice its environmental values with greater impact.
“Without question, when I consider the costs of implementing Microsoft Dynamics AX and what we will get out of it in terms of future scalability and profitability, I realize the more good we can do for the environment,” says Marcario. “That is a big part of why we are here.”
FAST FACTS
Company at a Glance
Patagonia designs, produces and distributes clothing and gear for trail running, skiing, mountain climbing, surfing and snowboarding. It serves its markets through multiple channels, including international distributors, wholesalers, retail stores, catalog sales and e-commerce.
Up for a Challenge
Given sizeable upfront investments and lengthy lead times, critical functions such as forecasting, demand planning and inventory management did not sufficiently enable Patagonia to react to market changes in a timely manner.
Words of Wisdom
"I hope that our experience of running a successful business on the basis of great products and putting it to work for the greater good serves as an example for other companies."
– Rose Marcario, CFO & COO, Patagonia
Two for One Benefits
By improving inventory turns by up to 30 percent and fill rates by up to 10 percent, Patagonia achieved unprecedented double-digit growth and is pursuing its environmental mission with increased vigor.