ANALYSIS: Recession takes the shine off PLM
PLM investment appears to be picking up again
As apparel manufacturers cut their spending during the recession, the uptake of product lifecycle management (PLM) software was one of the many casualties. But signs suggest investment momentum is picking up again, with double-digit growth expected in the coming years. Ivan Castano-Freeman reports.
Two years ago, the global market for product lifecycle management (PLM) software was popping corks as a growing number of apparel and footwear manufacturers were investing in the technology to gain a competitive edge in the increasingly cut-throat fashion market.
Indeed, some manufacturers boasted sales could grow 30%-40% a year by 2014 amid skyrocketing orders.
But like everything else, the credit crunch and heightened economic crisis in late 2008 changed all that.
Hurt by plunging sales, clothing makers cut spending sharply, pressuring many PLM vendors to lower prices, down-scale offerings and curtail their expansion.
"The [industry] growth forecasts have been heavily impacted by the recession," concedes Philippe Solignac, PLM product manager at French vendor Lectra, which had to scrap an ambitious Asian incursion, though it hopes to return in "full force" after the summer.
"Everyone has been hurt and sales fell 20% across the board last year."
However, Solignac says things are looking up this year as the world economy strengthens, adding that second half turnover should improve significantly, helping the industry grow 5%-10% in 2010.
Return to growth
Kathleen Mitford, vice president of product and market strategy at other vendor PTC, agrees that the meltdown hit the industry. However, she says growth is quickly returning, adding that the worst is now over.
"2009 was the worst year so far but we are seeing significant improvements in recent months," she notes.
And the market could reprise 2008's 20% growth hike this year, if the economy continues its upward trend, she adds.
PLM spending will also increase because apparel houses are more aware of its benefits than two years ago.
"2008 was an education year in which people were still valuing PLM, but 2010 is different. When you mention PLM to fashion executives they all know what you mean by it, especially in North America and Europe."
According to Mitford, the industry can still meet its robust 2014 forecasts.
"Clients are spending more money than we thought they would in 2008, so our forecasts for 2010, 11 and 12 are likely to be exceeded," she enthuses.
"Apparel executives are realising that those who are doing well have invested in the technology and there are more stable revenue streams from maintenance and system upgrades."
PLM has become so entrenched in the industry that apparel manufacturers could face heavy losses if they remove it.
"It would be too much risk to cut it off and the system can have serious consequences if it goes down," Mitford says.
Observers agree Asia, particularly China and India, will be the fastest-growing market in the future.
However, they acknowledge the giant remains sleepy and that the market may not pick up significantly for another two years.
This is because the first investment wave from the US$1bn apparel companies has just begun and it will take time to trickle down to the smaller and midsize players which are slow adopters.
Mitford says PTC recently won a couple of new unnamed customers in China and that it will continue to primarily expand there as well as in Hong Kong and India.
One reason why the Asian market has not taken off is lack of funds and the prevalence of hand-sewing, says Lectra's Solignac.
"There are many big manufacturers in Asia that still cut by hand and not machine," he notes. "The market has huge potential but investment in machinery and software is moving slowly."
He continues: "It will take a bit to launch the technology, but once it gets going it will get much faster and bigger than in Europe or elsewhere as the Asian market is huge."
Mitford says there are also growth opportunities in Europe, particularly in Germany, France, Italy and the UK where scores of SME manufacturers are interested in PLM.
North America is perhaps the least compelling market as most large manufacturers have bought PLM while the SME market is somewhat saturated.
As apparel manufacturers cut spending in the recession, many PLM users pressured their software purveyors to introduce more flexible pricing models, configuration options and integration features.
To meet that trend, many vendors rolled out simpler versions of their mainstay offerings.
PTC, for example, promoted its PLM express software, a pre-configured system with a standard implementation roadmap that cuts implementation times and costs.
Software vendors were also encouraged to team with other IT groups to find ways to streamline their products and provide more competitive services.
And that, according to Forrester Research analyst Rroy Wilderman, will make or break future technologies.
He says some PLM integrations face "horrific" delays and that manufacturers must strive to improve this.
"Merchandise planning, project management, supply chain and quality and inspection systems need to be more integrated in the fashion market than in any other industry," so the smooth management of all these steps will be a crucial selling point to next generation systems.
Wilderman says the fashion and retail industries will be the biggest future PLM investors as the software is already prevalent in other sectors.
However, he says some executives' 40% growth forecast is overhyped.
"Fashion retailers are definitely interested in PLM but if they can do without it they will," he notes. "I can see a low double-digit growth rate in coming years."
VFB Lingerie, a European unit of Fruit of the Loom that specialises in the design, creation and distribution of underwear, is taking steps to strengthen its PLM strategy....
Women's lifestyle brand Lilla P has begun implementation of Gerber Technology's YuniquePLM software solution, which it will use to centralise product information, streamline business processes, and be...
Fox Head Inc, the international brand of motocross gear and action sports apparel, has selected Centric Software to provide its product lifecycle management (PLM) system....
Visual 2000 and footwear design and development consultant Skerpa Design are collaborating on the development of a next-generation product lifecycle management (PLM) solution for the footwear industry...
Gerber Technology is offering its software users a chance to get a first look at new products and feature enhancements at its annual software conference in October....
Lawson Software has upgraded its Lawson Fashion Product Lifecycle Management (PLM) solution to include new features and an enhanced interface with its core ERP system....
CAD/CAM specialist Assyst is intending to drive the development of new products though an "innovation partnership deal" with leading men's fashion manufacturer Ahlers AG....
- Why Inditex is "clear winner" in fast fashion
- Brexit blow to global apparel industry confidence
- Sir Philip Green blamed for the collapse of BHS
- Why fast fashion isn't a case of one size fits all
- North Face has holistic view on harmful chemicals
- US Q2 in brief - Columbia Sportswear, Rocky Brands
- Vietnam mulls wage freeze to boost competitiveness
- Teijin launches polyester hook-and-loop fastener
- Ananta Group hits back at Bangladesh union claims
- LVMH to sell Donna Karan to G-III for US$650m
- Central America strategic sourcing review - a focus on Guatemala, El Salvador and Honduras
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Primark Stores Limited: Retailing - Company Profile & SWOT Analysis
- World Textile and Apparel Trade and Production Trends: the EU - June 2016
- Global market review of lingerie - forecasts to 2020