Wendler inside

Interlinings are what makes a collar or cuff good and in turn, collars and cuffs are key to shirt quality. Wendler Einlagen GmbH specializes in shirt interlinings and professor Luk Van Wassenhove (INSEAD France) has studied how they have become a world leader in their market.

Wendler Einlagen GmbH has become the world’s largest shirt interlining provider (Einlagen is German for interlinings - interlinings are the means of strengthening the collars, cuffs and plackets of a shirt). In 2007, Wendler supplied interlinings for 400 million shirts for total sales of  €75 million, with a 20% share of the world market and a 40% share of the Euro-American market. Professor Luk Van Wassenhove, the Henry Ford Chaired Professor of Manufacturing at INSEAD, has studied Wendler’s success and explains: “Wendler is an example of excellence based on single focus and product quality allied with a high level of customer support.”

Single focus
A major turn occurred for Wendler in 1974. This family-run textile firm, founded in 1843 in Reutlingen, was confronted with new Asian and Italian competition and the family members could not agree on a strategy. At that point, one family member and a manager, Mr. Lohrer, took the bull by the horns and bought the company in a 1974 LBO.

Their key strategic move was to get out of the fabric market and to focus on interlinings for shirts. Thus was single focus born. Since interlinings can serve as a quality differentiator in that collars and cuffs need to hold up to multiple washings and ironings without bubbling or creasing, the new Wendler was betting that it could thrive by acting as guarantors of collar and cuff quality (see box for an explanation of the production process).

Wendler quickly became the trusted intermediary for large German retailers in their dealings with Asian shirt manufacturers. It all started with Quelle, then the largest German mail order company, asking Wendler to supply the interlinings for the shirts manufactured by its Korean supplier.

These types of agreements were known as nomination contracts in that the contractor (here Quelle) nominated for the sewing factories specific suppliers (here Wendler) for specific elements (here interlinings). To ensure on-site quality and to cut down on the Asian travel of its managers, Wendler set up a technical service in Hong Kong in 1976.

On the heels of the Quelle nomination contract, Wendler netted the next biggest mail order firms,  Neckermann and Otto, as well as the huge brick-and mortar retailer, C & A. In this manner, the Hong Kong technical center was able to turn a profit in its very first year of existence. Professor Van Hassehove insists on the importance of the service delivered by Wendler: “The retailers and sewing factories do not want to deal with interlining quality problems. They want someone to take the hassle away and that is what Wendler has done and how it has thrived.”

Product quality, technical excellence
To draw attention to the importance of interlinings in shirt qulaity, Wendler began an information campaign (simply but gothically entitled “Das Hemd” (the shirt, in German)) via the powerful German consumer association VBZ. Professor Van Wassenhove likens Wendler’s idea to Intel’s later “Intel Inside” campaign. The goal for Wendler as later for Intel was to focus consumer attention on a discreet aspect of the product and its key role in the product’s quality. The VBZ campaign foregrounded the role of high-quality interlinings in the life expectancy of a shirt.

And again as a leading indicator of Intel, Wendler offered its clients the opportunity to append to the shirts a quality stamp, a circular stamp reading in its English translation: “Good guarantee for collars and cuffs – Wendler.” For example, Aldi, a more recent client, uses this stamp to reassure its German customers.

In the 1980s Wendler’s management was faced with a new set of challenges. The strengthening of the German Mark put it a new cost disadvantage. The reaction was to maintain its quality differential and leverage its Asian experience. First, it did not abandon German production totally but intensified efforts to increase productivity. In other words, it preserved some insourcing.

Second, it approached US companies which were beginning the move to Asian sourcing. Leveraging the Asian know-how acquired through its German nomination contracts, Wendler was able to achieve 30% American market share by 1988.

Finally, it sought to begin some outsourcing. The problem here was finding a reliable, long-term partner. After first looking at Korea, Wendler turned to China for reasons of cost and proximity to the sewing factories. They hooked up with a new company, Hai Hui. After 10 years of partnership, Wendler took a majority stake in the company in 2005, invested in new machinery and multiplied production by 6 to 25 million meters in 2007, accounting for 40% of Wendler’s global production.

Focus and technical excellence enabled Wendler to meet a new challenge of the 1990s. It was in this decade that fast-fashion houses such as Zara and H & M emerged. These houses featured high turnover in design. Wendler held a competitive advantage in that it focused on shirt interlinings alone while its competitors offered diverse interlinings and so Wendler could respond more quickly to the retailer’s shirt demands. Also the fashion turnover meant increase in the number of fabrics used. Wendler had the know-how in its technical service centers to quickly “debug” the fabric-interlining combinations and minimize losses.

So the story of Wendler is a multi-faceted one and professor Van Wassenhove likes to use the case in multiple ways: “One discussion question is the design of supply chains so as to maintain quality and speed while availing oneself of low-cost producers. A second issue is insourcing versus outsourcing. Wendler does both. Students can discuss the benefits of outsourcing but also its dangers which are currently leading a return to some insourcing.”

Published September 2009

Reference:
ECCH 609-005-1
"Wendler: Global Success with Textile Commodities"
Luk Van Wassenhove, Anne-Marie Cagna, Baptiste Lebreton
INSEAD France