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Founded in 1969 by Torquay surfers Doug Warbrick and Brian Singer, the Rip Curl journey began with the garden shed manufacture of surf boards.

Although they were successful at this, with-in a year Warbrick and Singer recognised that there were already too many players making surf boards – but almost none operating in the apparel side of the surf business – specifically in the manufacture of 'surfer friendly' wetsuits.

For, while wetsuits were available at the time, they were designed for the limited mobility needs of divers, as opposed to the flexibility and range of motion required by surfers.

Sensing a niche, the partners secured a pre-World War II era sewing machine, took over an old house in Torquay and went into production, cutting out the rubber on the floor and handing the pieces to an over-worked machinist.

By today’s standards these prototype Rip Curl wetsuits

were primitive, but they differed from others on the market in that they evolved through interaction with surfers. The people who ran the company actually used the products in the field, and whether its surf gear or sunglasses, the 'we test it so you don't have to' ethos is a philosophy that remains with Rip Curl today.

Fast forward 39 years and Rip Curl remains in private ownership (unlike other Australia founded labels Billabong and Quiksilver) and is managed by former action sports publisher Stephen Kay.

Annual turnover is north of $400 million (as the com-pany is privately owned, Kay won't put an exact figure on it) and nine corporate licensees make and sell Rip Curl products (which include surf boards, shoes, eye-wear, clothing, bags and accessories) in Australia, Argentina, Brazil, Canada, Chile, France, Israel, Indonesia, Mauritius, Japan, New Zealand, Peru, South Africa and the US.

Explaining the company structure, CEO Kay says

As it approaches its 40th birthday, iconic Aussie surf brand Rip Curl is in themidst of a technology and systems overhaul designed to deliver consistency and

give its management team state-of-the-art decision making tools...

By David McNickel

SWITCHED ON CEO:

Surf's (Still) Up! Stephen Kay, Rip Curl

COVER STORY

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TURNING UP THE HEATAn interesting aspect of Rip Curl's surf wear business is that most of its customers don't actually

live in balmy locations like Hawaii or Fiji – in fact, many of the best surf beaches in Australia, New Zealand, South Africa and the east coast of the US are downright chilly at times, especially for those who want to surf year round.

For surfers this means a lot less time in the water because as their bodies cool, blood flow is redirected to their core internal organs and the arms, legs and fingers gradually become numb and ineffective – and if you can't swim, you can't surf. With this in mind, Rip Curl has recently launched the 'H-Bomb' - the world's first heated wetsuit.

Two Lithium-Ion batteries heat the wetsuit meaning the body's core remains warm and blood flow to the extremities is not reduced, meaning surfers can stay in the water for longer.

The fact that the suits are heated also means the neoprene does not have to be as thick as a standard wetsuit – thus allowing cold water surfers a better range of motion in the water. The suit's electronics have a water resistance rating of IP68 and have also been tested by the Natal Sharks Board to see if the electric current generated attracted sharks (it didn't, by the way).

COVER STORY

Number one, we see Rip Curl as a marketing company. We're very focused on our brand, the projection and presentation of our brand and we're just obsessed by our products.

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Rip Curl operates a central company called Rip Curl International, and all the major regions and licensees are fully owned subsidiaries of that company.

“So Australia is a fully owned subsidiary of Rip Curl international,” he says, “as is America, NZ, Indonesia and Europe. 90 percent of our global revenues comes from companies that are fully owned subsidiaries of Rip Curl.”

Interestingly, this ownership philosophy does not extend through to the manufacture of Rip Curl product, although this is not an unusual situation in the apparel business.

“Very few of our licensees or subsidiaries actually manufacture,” says Kay.

“Most of our goods are made by third parties - manu-facturers from Morocco through to China. We own a very large wet suit manufacturing facility in Chiang Mai in Thailand which is the largest single employer in the Rip Curl world (650 employees). And we maintain a very small wet suit factory in Australia that produces maybe half of one percent of our total requirements. Other than that, it's pretty much all made overseas with China as our No.1 sup-plier.”

Although Rip Curl does operate around 170 branded retail stores Kay says the company is first and foremost a wholesaler – albeit with a retail arm.

What's The Big Idea? So if Rip Curl isn't really in the manufacturing busi-

ness, what business are they in?“We think of ourselves differently these days,” says

Kay.“For example, our Australian head office we think of

as an exporter of intellectual property in that probably 60 percent of the goods that are sold in the Rip Curl world are designed here in Torquay.”

And it's here that Kay's media background has played an important part in the growth of Rip Curl since he joined the company nine years ago. Whereas most com-pany heads come from an accounting or economics back-ground, his experience in publishing (essentially a busi-ness of ideas, imagery and presentation) is closely aligned to Rip Curl's vision of itself.

“That's why this company isn't run by accountants,” he says.

“We have some great financial people here but if you looked at our company values, creativity and innovation is right at the top of the list. Number one, we see Rip Curl as

a marketing company. We're very focused on our brand, the projection and presentation of our brand and we're just obsessed by our products.”

So focused, in fact, that when Kay arrived he set about creating an internal design and media arm that would rival many advertising agencies for size, scope and project capability.

“Whilst we were spending some pretty significant amounts of money on marketing,” he says, “the structure within the company was rudimentary and I was given a very broad license to develop the fabric of advertising and promotions.”

Media staff went from three to about 25 in two years.“We believe in doing things in-house,” says Kay.“We have our own edit suites, internet specialists, film

editors & photographers. We have the full box of tricks in Torquay and we see those skills as essential competencies that the company must have and keep in house.”

Although the value of IP has always been understood at Rip Curl, when Kay first joined the company (as the global head of advertising and promotions) branding con-sistency was an area that needed his attention.

“Trying to be a global brand with regional sensitivities can be a real challenge,” he says.

“We set about standardising formats and the use of brand and logo around the world and having more of a global team of athletes, a global events platform and things like that. When I arrived there was very little globalisa-tion in that area and nine years later we have quite a high level of globalisation and a lot more guidelines in place as the company has got bigger as to how people can use our brand.”

Evolving ERP With its branding standardised & globalised in the

early years of Kay's tenure, more recently Rip Curl have looked to doing the same with its core business systems. High on the list was a new ERP solution to replace Rip Curl's ageing GABS solution.

“We are in the final stages now of specifying a new ERP platform,” he says, “that will give us standardised reporting processes, policies and hardware from every fully owned Rip Curl subsidiary in the world.”

Rip Curl IT manager Steve Westmoreland says the company went through a comprehensive evaluation pro-cess to find the right ERP fit.

“We prepared a request for tender document,” he says, >

SWITCHED ON CEO // STEPHEN KAY

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“based on our required functionality and went out to the market. The obvious people who responded were SAP, Microsoft, Intentia (now swallowed up by Lawson) and a few others. We then went through an elimination process around things like the complexity of the software, time to install and so on.”

Ultimately Rip Curl opted for M3 from Lawson – a speciality ERP package for the apparel and fashion indus-try.

“M3 is based on the Movex system. Movex was owned by Intentia and was a very solid apparel ERP system that many of the global apparel companies were using.”

Westmoreland says although SAP was considered, he found it more suited to a larger organisation than Rip Curl.

“It's great for the globalisation of big companies,” he says, “whereas the M3 system wasn't quite as difficult in terms of implementation, maintenance and training. Basically the software and the size of the company was a better fit for Rip Curl.”

The M3 implementation began in August and Kay says the first roll out of the system is expected in early 2009 in Australia and New Zealand with a subse-quent global roll out over the ensuing 12 to 18 months. Westmoreland says the introduction of M3 will also impact the profile of Rip Curl's in-house IT team.

“At this time our IT team is made up of about seven people in Australia predominantly supporting our Lotus Notes and our OsiPOS system. But what we're doing with our ERP implementation is starting to build a global IT team that will be involved in every roll out around the

world so that we get consistency in the application of the system and the processes to support it.”

Speed To Market Around the same time as it went looking for a new ERP

system, Rip Curl also sought to further strengthen its IP systems by implementing a Product Lifecycle Management (PLM) solution.

The Infor/Geac Run Time application incorporates proactive process workflow capabilities in its Quest Workflow Engine, a tool Kay says has dramatically impact-ed Rip Curl's range development time frames.

“We use Quest as our product development system,” he says.

“It's the format within which we design and man-age our intellectual property – our designs – and it's of immense importance to us as we go forward.”

Previous to the deployment of Quest, Kay says when Rip Curl had finished a new range it had to burn disks of the range and Fed Ex them to its licensees around the world.

“It was cumbersome and time consuming,” he says.“Then we moved to intranets which were poorly disci-

plined and inconsistent for transferring information. But Quest is a highly refined system that allows our licensees to tap into it at any time during the development phase. They don't have to wait until the end of the process to get the information that they usually require urgently. It delivers massive improvements in apparel product time to market while significantly reducing operational costs and licensees can watch the range being developed on their computers wherever they may be.”

Measuring Success As with any company shifting large quantities of stock

around the world, warehousing and efficient SKU manage-ment is critical to Rip Curl, something the company has directed considerable attention to recently with the deploy-ment of RFID technology, integrated into Rip Curl's pro-prietary warehouse management solution.

Standing for 'Radio-Frequency Identification' the sig-nificant advantage of RFID as a tracking tool over other methods (like barcode scanning for example) is that RFID tags do not need to be positioned precisely relative to the scanner. Explained another way, if items in your supermar-ket trolley had RFID tags embedded, you would be able to simply wheel the whole trolley through the checkout for a total price instead of scanning each item individually.

“All our processes from receiving, through to inven-tory control, through to pick & pack are all performed now using RFID,” says Westmoreland.

“That gives us great control over our inventory and the

COVER STORY

CEO GADGET WATCH:BlackBerry Curve 83 Series “My essentially tool is my BlackBerry,” says Kay. “I've learnt to use it over the years and I'm onto my third one so it's become very valuable for me. Usually I am going from one Rip Curl subsidiary to another and outside of that environment I get my email through the BlackBerry,” he says.“My staff are trained not to send me large files or attachments, I get them to give me one paragraph summaries. It's very light and a lot of what I do is attend meetings and I take some pretty substantial paper files as well – so it helps me to keep my weight down as I don't have to carry a laptop everywhere.”

FEATURES: Phone, email, text messaging (SMS and MMS), browser, instant messaging and organiser applications in a single smartphone; 2 megapixel camera with built-in flash; Media player with audio and video playback; High capacity battery; Built-in GPS option; Trackball navi-gation; Full QWERTY keyboard; 64 MB of memory and expandable memory via microSD card.

www. Start.co.nzQuarter One 2009 13

accuracy of our picking process. We have implemented that in Australia, NZ and the US over the last 18 months and that will be upgraded in January to the new M3.”

Kay says RFID has certainly lived up to its promise.“It's been extremely successful,” he says. “It's when you

do your stock take that you see the true accuracy of your inventory and at our last stock take in June it was a very impressive result in terms of accuracy at the line level. And that accuracy is a great driver of sales because if a customer orders based on what they think is in inventory and it hap-pens to be there, then we can deliver what they require. It's really been an outstanding success from where we came from two or three years ago, to where we are today.”

At the other end of the supply chain, Rip Curl's interac-tion with its suppliers is managed via the Belhara supplier tracking system.

“We connect via a web portal,” says Westmoreland.“They log into the system and confirm their produc-

tion orders and ex-factory dates. When the goods are about to be handed over to a freight forwarder they create a packing list in this system, and the freight forwarder does the tracking of our product from handover until it arrives at its destination.”

Putting The Logic Into Logistics Both Kay and Westmoreland say that the last five years

for Rip Curl has certainly been focused on improving effi-ciencies and standardising systems and reporting. And in the unforgiving global fashion business, quality of product aside, success often boils down to who's got the most effi-cient logistics.

“For us what's important is what it costs to get our products from our factories to our customers around the world,” says Westmoreland.

“So international logistics is a big part of the measure of success. Being more efficient in the way that we consoli-date product into bigger containers so we don't trans-ship, we don't hand over to multiple freight forwarders, we don't go through too many regions. We need to make it very easy for every country in the world to be able to purchase prod-uct that's developed at Rip Curl so we increase our produc-tion volumes and reduce our FOB price.”

Kay acknowledges that there's still a long road ahead.“Rolling out a globally consistent process and adopting

best practices as we move through that process has very much been our focus,” he says.

“Our new ERP system will give us the tools and the visibility. We have a set of KPIs that we've established glob-ally that we're measuring against now. We are moving pro-gressively through the implementation and our objective is to achieve our targets in two years.”

Rolling out a globally consistent process and adopting best practices as we move through that process has very much been our focus.

SWITCHED ON CEO // STEPHEN KAY