COMMENT: PLM vs MLM – what’s in a name?

9 December 2010 | Features & Interviews | Source: just-style.com

Apparel retailers often put Product Lifecycle Management (PLM) at the centre of their strategies to drive new product and merchandise innovation. But while the term PLM is often used, its remit is rarely understood and is all too often borrowed from other industries. Here, Sue Welch, CEO of TradeStone Software, argues that Merchandise Lifecycle Management (MLM) is better aligned to the needs of retailers of private label and branded goods.

It seems there is an ongoing discussion on the definition of the term PLM. Everyone “knows” it stands for Product Lifecycle Management, but what does that mean exactly?

In the engineering/manufacturing world, it means designing and specifying highly-engineered, complex products like airplanes, trains and automobiles. But in the retail world, PLM is often used colloquially to mean the entire design through delivery process of private label and branded goods.

However, as we’ll see, that’s a case of mistaken identity. Even the most crisply articulated description of a PLM solution falls short of addressing the unique needs of a retailer building, growing, or managing the private label side of their business, let alone integrating it with their branded merchandise processes.

What retailers really mean when they say “PLM” is “MLM” — merchandise lifecycle management. The important emphasis is on the “merchandise.”

Déjà vu…all over again
A recent IDC survey of PLM/MLM vendors covered about 20 companies. Mergers, acquisitions and providers not reported in the study add even more names to the count.

As a retailer, Googling PLM drops you down into a rabbit hole of similar messaging, pretty pictures, marketing double-talk and endless screen shots. Worse, you have to wade through descriptions of software written for engineers to build airplanes and rockets or miniature heart valves, not striped missy tank tops or flip flops.

Refine the search to “retail PLM” and it gets better, but wait…what’s this?

Many of the same companies pop up in your search. The bottom line is: PLM is about building things – individual things. Complicated things.

Retail PLM is about, to be fair, designing and building retail goods, but in either case, short of some collaboration capabilities and a bit of sourcing, PLM still falls far short of providing an efficient way to plan, design, construct, source and deliver entire assortments of branded and private label goods to your customers.

PLM becomes a part of a range of still-necessary applications that span the business inefficiently.

Product or merchandise?

Surely there must be a better term to describe – and more important, execute and manage – the design, sourcing, ordering and delivery of merchandise to stores. This is where MLM comes in.

Is this a marketer’s way of rebranding PLM or is it a real term? The answer is an unqualified “yes, it’s real,” and it differs from PLM in several very important ways.

But before we qualify the differences, let’s pause for a moment and take look at the terms themselves: M stands for Merchandise, where the P stands for Product.

This is important because as mentioned previously, PLM has its roots in technology and engineering. It’s been used to build cars and planes with a myriad of pieces and components and we can pretty well be sure that Boeing isn’t having a 50% off sale if inventory isn’t moving or changing the colours of their planes based on what is “trending”.

MLM is about retail and retail only. Retailers have merchandise officers and chief merchants; they don’t have engineering departments. They live and breathe the merchandise mix, with new merchandise flowing into stores every week. They buy millions of SKUs in a year.

If the “chunk” fits...

MLM represents a holistic approach to the entire merchandising world for both the national/global brands side of the business to the private label side. It’s about aligning the business from the initial inspiration to design, sourcing, ordering, tracking, validating, coordinating, distributing, and finally, getting those goods in a timely way into the hands of the consumer.

MLM is more capable and broader than a point solution, and less paralysing than an ERP/CRM application. It’s a “right-sized application chunk” - a solution that spans the processes and sub-processes that are necessary to efficiently design and deliver merchandise.

The MLM backbone includes critical, but often difficult to incorporate, processes that support regulatory compliance, security and safety assurance and quality control. Added to creative design, sourcing, ordering and delivery processes, the retailer now has a unified way to drive the entire process, not just bits.

It offers the chance to minimise total IT total cost of ownership by reducing the number of applications and infrastructure components that need to be supported.

MLM reduces risk by providing a single version of the truth from which more intelligent and market-responsive decisions can be made. It can layer over existing applications to leverage that data while making it consistent and actionable for everyone involved in the merchandising process.

There is no way to underestimate the importance of maintaining business performance while a new solution is implemented. Designs will not wait, seasons cannot be put on hold, customs inspections will not be waived, and most important, customers will not be patient while you work on your systems.

It’s critical, therefore, that your MLM solution addresses your entire private and branded goods operation, provides a quick path to full utility, and when done, enables real, positive change in terms of efficiency and business performance.

This can’t be done with traditional PLM systems, tuned for retail or not, and the forward thinking retailer will want to explore this holistic approach to the benefit of the business.

The (multi-) million dollar question
So now that we have a better understanding of the key differences between PLM and MLM, the real question is: why would a retailer buy a Product Lifecycle Management solution that, at bottom, is built for manufacturers?

The answer is: they shouldn’t. And yet they have, and in many cases continue to explore PLM solutions as the answer to their efforts to improve their merchandise processes.

Unfortunately, what the retailer finds is that PLM is no silver bullet, and the press and analysts constantly report on process disappointments, technology replacements and continued challenges.

The fact is, many people ask for PLM because they don’t know what else to call the problems they are trying to resolve. Luckily the industry is increasingly embracing the term MLM to describe the holistic process integration that the savvy retailer is seeking.

And finally, what’s to become of PLM? It remains a key component of an overall merchandise lifecycle management solution. Design? Great. Build out specifications? Terrific. But make sure it’s part of an integrated capability that spans design to delivery.

If you are seeking to unify your merchandise processes, collaborate across your extended supply chain, and transform your operation to a more responsive, risk-reduced, efficient business, then you need the right tools for the job – and that tool should address your Merchandise Lifecycle Management needs.

Sue Welch, founder and CEO of TradeStone Software, is an established leader in designing technology for retailers and suppliers involved in global sourcing and private label initiatives. Ms Welch's passion for all things retail is reflected in TradeStone's innovative approach to developing a Merchandise Lifecycle Management infrastructure to support collaboration among retailers and their partners as they design, source, produce and deliver exciting and differentiated merchandise collections to the store floor.

In addition to leading TradeStone, Welch is a frequent speaker on global sourcing addressing such organizations as the World Trade Organization, the Bankers Association for Finance and Trade, the ICC and the National Retail Federation. She has been celebrated for her innovation in the industry by such publications as Fortune and World Trade Magazine, in which she was named as one of the 50 most influential executives.