Coach 2014 Annual Report Download - page 10

TABLE OF CONTENTS
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Coach carefully balances its commitments to a limited number of “better brand” partners with demonstrated integrity, quality and reliable delivery. Our
manufacturers are located in many countries, including Vietnam, China, the Philippines, India, Thailand, Italy, Hong Kong and the United States. Coach
continues to evaluate new manufacturing sources and geographies to deliver the finest quality products at the lowest cost and help limit the impact of
manufacturing in inflationary markets. During fiscal 2014, the Company had five vendors who each provided slightly over 10% of Coach’s total units. These
five vendors are geographically dispersed and have multiple locations in different countries. No other individual vendor currently provides more than
approximately 10% of Coach’s total units. Before partnering with a vendor, Coach evaluates each facility by conducting a quality and business practice
standards audit. Periodic evaluations of existing, previously approved facilities are conducted on a random basis. We believe that all of our manufacturing
partners are in material compliance with Coach’s integrity standards.
These independent manufacturers each or in aggregate support a broad mix of product types, materials and a seasonal influx of new, fashion oriented
styles, which allows us to meet shifts in marketplace demand and changes in consumer preferences.
Our raw material suppliers, independent manufacturers and licensing partners, must achieve and maintain Coach's high quality standards, which are an
integral part of the Coach identity. One of Coach's keys to success lies in the rigorous selection of raw materials. Coach has longstanding relationships with
purveyors of fine leathers and hardware. Although Coach products are manufactured by independent manufacturers, we maintain control of the raw materials
that are used in all of our products. Compliance with quality control standards is monitored through on-site quality inspections at all independent
manufacturing facilities.
We maintain control of the supply chain process from design through manufacture. We are able to do this by qualifying raw material suppliers and by
maintaining sourcing management offices in Vietnam, China, Hong Kong and the Philippines that work closely with our independent manufacturers. This
broad-based, global manufacturing strategy is designed to optimize the mix of cost, lead times and construction capabilities. Over the last several years, we
have increased the presence of our senior management in the countries of our manufacturers to enhance control over decision making and ensure the speed
with which we bring new product to market is maximized.
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In North America, Coach operates an 850,000 square foot distribution and consumer service facility in Jacksonville, Florida. This automated facility uses
a bar code scanning warehouse management system. Coach's distribution center employees use handheld scanners to read product bar codes, which allow
them to more accurately process and pack orders, track shipments, manage inventory and generally provide excellent service to our customers. Coach's
products are primarily shipped to Coach retail stores and wholesale customers via express delivery providers and common carriers, and direct to consumers
via express delivery providers.
Outside of North America, the Company has established regional distribution centers, through third-parties, in Shanghai, China and Oldenzaal, The
Netherlands. The Company also operates local distribution centers, through third-parties, in Japan, China, Hong Kong, Singapore, Taiwan, Malaysia and
South Korea.
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The foundation of Coach's information systems is its Enterprise Resource Planning (“ERP”) system. This fully integrated system supports finance and
accounting, procurement, inventory control, sales and store replenishment. The system functions as a central repository for all of Coach's transactional
information, resulting in increased efficiencies, improved inventory control and a better understanding of consumer demand.
Complementing its ERP system are several other system solutions, each of which Coach believes is suitable for its needs. The data warehouse system
summarizes the transaction information and provides a global platform for management reporting. The supply chain management systems support sales,
procurement, inventory planning and reporting functions. In North America, product fulfillment is facilitated by Coach's highly automated warehouse
management system and electronic data interchange system, while the unique requirements of Coach's Internet business are supported by Coach’s order
management system. Internationally, Coach selectively relies on the warehouse and distribution systems owned by the third-parties that operate certain of our
international distributions centers. Additionally, the point-of-sale system supports all in-store transactions, distributes management reporting to each store,
and collects sales and payroll information on a daily basis. This daily collection of store sales and inventory information results in early identification of
business trends and provides a detailed baseline for store inventory replenishment. Updates and upgrades of these systems are made on a periodic basis in
order to ensure that we constantly improve our functionality.
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Coach owns all of the material worldwide trademark rights used in connection with the production, marketing and distribution of all of its products. In
addition, it licenses trademarks and copyrights used in connection with limited edition collaborative special
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