PLM software takes off in apparel supply chain
By just-style.com | 24 July 2008
The fast-fashion revolution is changing the face of the global apparel industry, which is struggling to meet the demands of an increasingly fickle clothing consumer. Enter product lifecycle management (PLM) software, a technology that most market observers say will become a make-or-break investment in the next five years. By Ivan Castano-Freeman.
Retailers are under growing pressure to deliver ten fashion collections a year (from the traditional four) to cater to shoppers with "short attention spans," while rising manufacturing costs and falling point-of-sale (POS) prices are squeezing margins.
In this environment, delivering fashion-right collections on time and on budget is often becoming a logistical nightmare, prompting companies to seek technological solutions to bolster enterprise efficiencies and cut costs.
Enter product lifecycle management (PLM) software, a technology that most market observers say will become a make-or-break investment in the next five years, alongside merchandise management systems (MMS) and markdown optimisation solutions (MOS) that help retailers manage over-bloated inventories and minimise losses from stock-outs.
PLM enables manufacturers to shorten product lifecycle times by at least half to boost efficiencies in the supply chain.
Current applications work through a web-based interface that allows all parties involved in a garment's design and development to work on the same platform and communicate on a real-time basis.
The software collects a product's "spec" or DNA in a file that can be accessed by all product development agents from designer to manufacturer.
Because everyone works on the same page and calendar, the technology saves time and money compared to sequential processes which involve heavy paperwork and more time to execute.
One version of the truth
Lawson Software, which is integrating the Lawson Fashion PLM suite (formerly known as Freeborders PLM) into its Lawson M3 Fashion offering to provide an end-to-end supply chain solution, estimates that as much as 50% of the lifecycle of any fashion product is spent in development.
"There's a lot of pressure on fashion companies to reduce time to market, and the bulk of this will have to come from the design and development process where 9-12 months is still the typical lead time," explains Andrew Dalziel, the company's fashion industry marketing director.
He adds that because there is still a proliferation of spreadsheets and documentation throughout the supply chain, a central database that allows internal and external partners to collaborate is essential, and offers "one version of the truth."
Through PLM, "everyone can see the latest version of a product, know when it's been modified or if it's been dropped from the line, avoiding manufacturing errors and improving product quality," confirms Kathleen Mitford, vice president of product and market strategy at PLM software vendor PTC.
By using the real-time platform, a designer can work on the details of a garment's spec while another department explores different manufacturing options for the product, hedging time, she adds.
PLM software also helps streamline sourcing. By using it, a manufacturer can quickly and easily see a product's spec to draft a cost estimate and send a product sample to the retailer.
The retailer can then review the sample and enter any modifications into the PLM system for the manufacturer to sew a final sample.
Most apparel companies do this process manually, generating huge amounts of paperwork which must be emailed or fedexed around. For those with big orders, product changes can be chaotic.
"If you are a manufacturer of a certain scale you are making hundreds of garments at any point in time, all of which are at different development stages," says Simon Poulton, sales director at Yunique Solutions, a PLM vendor in New York.
"With today's ten [apparel collection] seasons, the sheer volume of paperwork involved in these activities can cause many costly errors."
Sales to quadruple
With the industry's prospects looking bright, it's no surprise that a string of start-up suppliers are rushing to lead the PLM software market.
Industry executives forecast that PLM software sales will grow 30%-40% by 2013 as a growing number of fashion, apparel and footwear brands adopt the technology.
Yunique Solutions, which claims its software helps cut PLM times from 120 days to 60 days on average, is forecasting sales will hit $50m in five years from its estimates of $10m in 2008.
Company executives say 20% of the apparel industry has embraced PLM software
"We are just in the tip of the iceberg," enthuses Lenny Weiss, Yunique's vice president for marketing and sales.
Bullish about the future
PTC, which claims to be the largest PLM supplier with a 55% global market share, is also bullish about the future.
Mitford says the company's sales could leap 40%-60% annually by 2014 to mirror a similar growth rate since 2005.
PTC is set for a big push into Europe where PLM "adoption is a little behind" the US, says Mitford. The company is on the verge of signing three to four big European customers after having a "great year" in 2007, she adds.
PTC recently won French sports equipment firm Decathlon and Germany's largest department store operator Karstadquelle as customers.
According to Mitford, the North American PLM market (for apparel brands with over $2bn in sales) is maturing though she expects many under-$2bn firms to purchase PLM applications in coming months.
However, in common with rivals, she says Asia is quickly becoming a hot expansion market for PLM software vendors.
"We are seeing a significant increase in the number of Asian companies interested in PLM, specifically in China, which will be one of the largest consumers of PLM in five years," Mitford points out.
Nathalie Gondoin, director of product promotion at French PLM software vendor Lectra, agrees with Mitford.
"Asia is the next big market," she says, adding that the fast-fashion phenomenon is starting to gather pace across the continent, particularly in China where retailers are staring to emulate
However, she says the market won't truly come of age until three to five years from now when companies transform themselves into purveyors of fashion from mostly manufacturers now.
"When Asian apparel manufacturers start to gain scale and develop their brands, they will need PLM solutions," says another industry executive. "Right now many companies are getting by with more basic PDM applications."
...US and Europe too
But Lawson's Dalziel, however, believes there are still huge opportunities for the technology in Europe and the US.
"A lot of companies here are still using spreadsheets and email, and this is going to have to change," he says.
"We believe there's still a big market from retailers and brand owners in Europe whose real part in the process is in design - and this is where PLM really supports them."
Poulton, too, says that while Asia will be the largest PLM market that won't happen until 5-10 years.
"There's no doubt that the market is exploding with retailers and manufacturers growing very strongly but the big [adoption] push is coming from the big US and European apparel brands," Poulton says.
"Asia is not going to emerge into a huge market over night. Companies have to learn a lot about [retail, manufacturing] processes and become more sophisticated."
Poulton, who expects Yunique to open a regional office next year, says that most current Asian PLM usage is coming from the supplier end and that Western brands are moving to educate their Asian textile and garment suppliers to use the technology.
"There is still a lot of work to be done in this regard," he adds.
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