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The Under Armour Success Story: How SAP improved the UA supply chain

The Under Armour success story, like many others, all started with a vision: “To be the world’s No. 1 Performance Athletic Brand.” Although that particular goal may have seemed a bit ambitious back in 1996 when Under Armour’s only customer was the Georgia Tech football team, the UA execs never lost sight of that vision.
 
 
 
The Under Armour success story, like many others, all started with a vision: “To be the world’s No. 1 Performance Athletic Brand.” Although that particular goal may have seemed a bit ambitious back in 1996 when Under Armour’s only customer was the Georgia Tech football team, the UA execs never lost sight of that vision. Under Armour was able to grow from a $17,000 company run out of founder Kevin Plank’s basement in 1996 into what it is today, which is a multinational, leading sportswear provider. Nike might have something to say about Under Armour claiming to be the top athletic brand. If nothing else Under Armour is on Nike founder Phil Knight’s radar.

The Under Armour brand grew mostly by word of mouth, but it caught a major break when it was featured in Oliver Stone’s football movie “Any Given Sunday.” Plank introduced Under Armour to the world by strategically planning a full-spread advertisement in ESPN the Magazine to coincide perfectly with the release of “Any Given Sunday.” Those two adverts helped Under Armour net close to $750,000 in sales alone. I can’t help but smile knowing that the Under Armour brand exploded onto the US scene only after we saw Jamie Foxx footballing it up as hot-shot quarterback Willie Beamen. In the film you couldn’t find Beamen unless he was decked out in UA-branded jockstraps, compression shirts and skull caps. It may be the single greatest product placement in cinematic history.

Don’t remember Willie Beemen? We got your back. Click here to find out who “Steamin” Willie Beamen was and what he was all about. 

Thank you, Jamie Foxx. Anyways back to the point of this article, why you clicked in here in the first place. Under Armour has to have a tight grip on its supply chain. With its headquarters in Baltimore, Maryland and offices in Denver, Hong Kong, Guangdong, Toronto and with distribution out of Japan, Under Armour must successfully manage its sales forecasting and demand planning process. Inventory reduction is the key for any retailer, but when you have aspirations to the be the very best in what you do, then it is absolutely necessary.

RELATED: SAP, Oracle and Accenture weigh in on Inventory Reduction

Naturally, Under Armour turned to SAP to help it handle its planning. In May of 2009, Under Armour launched SAP Advanced Planning & Optimization (APO) to help develop sales projections, plan inventory seasons, synchronize strategic financial plans and launch market-shattering new products. The interactive solution from SAP is a planning tool that links all three of Under Armour’s planning departments: Demand Planning, Merch Planning, and Sales Planning.

Speaking at a SAP conference in 2009, Kimberly Slinger, the demand planning analyst in the IT group with Under Armour said: “Why did we choose APO over some of the other forecasting tools out there? I think because we were building a large, scalable business, we needed a tool that would help support that growth. And as the Company grew and we offered more products in more countries via more distribution channels, it was – we just outgrew the legacy system. They were good to us when we were small when we were making five digits instead of five figures.”

RELATED: Oracle’s Top Tips for Supplier Relationship Management

Singer leads the APO project and said the benefits from the implementation were seen almost immediately. She noted increased levels in confidence of data, knowledge of functionality, agreement on process and stability of system performance.

“Buying the right product at the right time for the consumer, that's the name of the game, having the right inventory at the right time and -- it's a success for us that in just 30 days, we were able to save about $1.2 million in purchases,” said Slinger.

At the conference Slinger told the story about when Under Armour first needed to come up with a forecasting solution for its apparel.

“In 2006, we really missed sales. The product was hot. People wanted it. And we didn't have it on hand to deliver. So in 2007 we purposefully raised the inventory levels and said, "How high is high? What can we do?" And then I think we had to draw it back. In 2008, we had to get it back on track because you can see the inventory was just growing. It wasn't turning as fast as we would have liked.”

In turn, Under Armour turned to SAP first in 2006 for ERP systems, and then again in 2009 for the APO process.

With implementation of APO, Slinger said, “We're no longer extracting and transforming and maintaining data. Now we're analyzing it. We're adjusting the models and we're addressing the alerts that show us where the big problems are. And we've replaced the manual imports with interfaces, and I think that's one of the huge -- the biggest things that we could have done was really take that maintenance out of the hands of the demand planners and just say, "Okay, come in in the morning, and your data's there. The new styles are showing up. The fact that we changed it from a compression to a training top -- the new data's there, and they can get going on the forecast.’”

Hey, they never said that becoming, “The World’s No. 1 Performance Athletic Brand” was going to be easy and that you wouldn’t run into a few glitches along the way.

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Don’t forget to also check out the complete March issue of Supply Chain Digital. It’s free and you won’t believe user-friendly it is. Seriously! Check it out: Supply Chain Digital – March 2011

 
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