just-style management briefing: PLM growing despite recessionary jitters
Forecasts for the uptake of product life cycle management (PLM) technology in the clothing industry have slowed from the bullish expectations of three years ago. But software suppliers are still confident that investment in the tools will continue to be strong, despite the volatile global economy.
Three years ago, apparel software firms were raving about the growth potential of an emerging technology called product life cycle management (PLM), saying the market could grow 30-40% annually by 2014.
Fast forward to 2011, and those forecasts have been tailed off. While they are still bullish, some observers admit earlier forecasts were "wishful thinking," pumped up during an economic boom notorious for exaggerations on the growth potential of a slew of markets.
Simon Poulton, sales vice president at French PLM developer Lectra, is the first to acknowledge those past projections are unlikely to be met. Still, his forecasts are still very sanguine. "I think we will see 20% annual growth by 2014. 40% is unrealistic for any market," he says.
While PLM investment fell sharply during the 2009 financial meltdown, a global economic revival is prompting fresh interest in the technology which helps apparel manufacturers save crucial time and money in their sourcing, supply and inventory activities - a make-or-break competitive advantage in a world where fast-fashion and fickle consumer shopping trends have become the norm.
"People have cut staff and looked to increase efficienciesm which is what PLM is all about," Poulton adds. "Now that the slump is over, clothing manufacturers are looking for technologies that can help them grow."
The global cotton and other raw materials crisis is also throwing apparel firms into a scramble to cut costs, making PLM even more attractive, Poulton adds.
Susan Olivier at compatriot Dassault Systèmes agrees PLM will continue to grow strongly. While she won't venture an exact forecast, she says the market will continue to grow in several ways.
Firstly, brands and vertical retailers without PLM software will find limits to their ability to scale and maintain the pace of industry change without them. Therefore, companies that could be considered laggards, or those who are growing beyond their start-up size, will be moving to PLM for the first time, she says.
Secondly, many early adopters of product data management (PDM) or those with home-grown solutions will be ready to upgrade based on PLM's "tremendous" advances over the past three to five years.
And thirdly, leading brands and retailers are always innovating their technology and will be expanding their PLM deployments. For instance, they are likely to strike deeper collaborations with extended supply chains and integrate PLM not just with ERP and Order Management systems but also with merchandising and space planning systems to maximise the value of product data, images and dimensions.
At PLM software firm Lawson, marketing director Andrew Dalziel says inventory control pressures have never been more important in a fast-moving fashion market.
"2011 is going is all going to be about inventory control. The right inventory, at the right place, at the right time has never been more true," Dalziel points out. "Retailers and their supply chain partners will have to work in concert to make every effort to achieve the right inventory balance."
By helping cut a collection's time to market, PLM helps ensure manufacturers are developing the right products and getting them to the store faster, reducing inventory risks.
PLM can also help stave off losses from the industry's current biggest headache: soaring raw material costs.
According to Dalziel, building a "collaborative" PLM system, which integrates an apparel firm's suppliers, can help strengthen existing strategic relationships to ensure quality, cut costs and shorten time to market.
"You can start looking for the next low cost destination and regularly move, rebuilding your supplier relationships from scratch each time, or you can take a more strategic approach," Dalziel says.
"Wherever you are going to source, for example China, Turkey, North Africa or Central America, if you are taking a strategic approach rather than a short term opportunistic approach, it makes sense to look at PLM."
Kathleen Mitford, vice president of product and market strategy at PLM software developer PTC, counters the trend, saying the PLM sector could still grow around 30%-40% annually by 2014, adding that clothing retailers will continue to invest in technology, despite the volatile global economy.
"We expect to see continued success and growth in this industry," she says. "It is hard to predict the exact percentage growth but I would expect to see 50% for the next year with a decline each year, levelling off to around 30% growth by 2014."
The PLM industry's deepening expansion in Europe and Asia, the inclusion of PLM by additional users in a supply chain and its increased usage to support quality and compliance initiatives will fuel this growth, she concludes.
An interactive databank with intelligence on the major apparel sourcing countries
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