just-style management briefing: The key focus for software investments

4 May 2011 | Features & Interviews | Source: Leonie Barrie

Where should apparel firms be focusing their software investments now if they want to remain competitive into the future? According to industry experts consulted by just-style, technology agendas should include strong core business systems, better use of business analytics, and integrated PLM, sourcing and supply chain capabilities.

Bob McKee, industry strategy director for fashion, Lawson Software
McKeeThe focus should be on the basics first. If you don't have a strong base technology, you're wasting effort on something more sophisticated. You can't collaborate externally if you still can't collaborate internally. You can't build a strong structure on shifting sand, so if you don't have strong core business systems you'll never get to a point where you can either trust the information you're getting, nor will you be able to effectively share your information with your supply chain partners.

Your - and your supply chain partners' - technology has to be focused on your shared customers/consumers. No one makes any money until the consumer makes a decision and pays!

Other focus areas include:

  • The systems and information to support inventory visibility, the balancing of inventory risk at retail, and to handle volatile demand.
  • Strategic sourcing initiatives are increasingly important as costs escalate in traditional low cost destinations such as China. This requires the support of strong base technology.
  • Multichannel sales - most companies start with e-commerce, some develop their own retail division, others offer franchising, open concession stores or provide vendor managed inventory services to their customers. All require the appropriate infrastructure and IT support.

Susan Olivier, director of retail, footwear and apparel market development, Dassault Systèmes Enovia
Susan OlivierWhen prioritising investments, many CIOs still consider ERP systems a primary way to encourage efficiency and improve the bottom line. What they often don't realise is that PLM has a strategic opportunity to impact the top line as well as the bottom line and drive increased sales.

Fashion CIOs should look at shorter time-to-market as one of the best opportunities for their company. If you can reduce time-to-market, you really improve your ability to recognise and respond to fashion and sales trends. PLM helps give companies time back to test and chase their "winners," making more of what consumers will pay for, which drives sales and reduces markdowns. At the same time, fewer samples can represent hundreds of thousands of dollars of savings. These are the under-appreciated elements of PLM's value proposition that CIOs should more closely consider when setting their technology agendas.

Philippe Ribera, group software marketing director, Lectra
Philippe RiberaIn order to remain competitive into the future, medium to large sized apparel companies need to achieve a seamless integration between enterprise processes (product development, manufacturing, global supply, consumer experience) to create an end-to-end value chain from ideation to consumer. The choice of technology vendor is key, and apparel firms must look at the presence and strength of a potential technology vendor.

Apparel companies must also look for practical and innovative applications to manage existing processes effectively. The use of 2D/3D CAD will shorten the fitting process and reduce the overall costs due to the need for fewer physical samples. This virtual prototyping will become more common in the near future due to its high potential for both cost and time saving.

Chris Groves, president and CEO, Centric Software
GrovesBranding: The brand is still "king." Apparel companies must understand that consumers will still pay for the brands they consider "must haves" (take Apple's phenomenal success with the iPhone as an example). To maintain the brand reputation, quality and panache, it will be critical to invest in ways that help the company stay connected to the end consumer: the styles the company delivers to shelves will have to be spot-on for trends and pricing.

Private-label brands are all about value and convey a key message to the consumer: "Same quality, equal or better value." The key to success here will be for apparel companies to provide the infrastructure to support private-label product development in the most efficient, productive way possible. Designing and communicating via spreadsheets and e-mail will no longer be enough in this market; they will need to start at the beginning with smart product development technology.

Technologies that produce short-term payoff will be in most demand. At Centric, we see that PLM technology fits the criteria, and indeed, are seeing significant demand increases as the economy turns.

To put it into context, market research firm The McKinsey Quarterly says that the impact on earnings of any particular IT cost-cutting program is 0.5 times the amount cut (expense reduction amount) over a period of 6- 18 months. Yet investing that same amount in technology to streamline and optimise supply chain processes impacts earnings 3-5 times the invested amount over the same time.

So a company with $200m in revenue that cuts $500,000 from its IT budget may see an impact on earnings of $250,000 ($500,000 x 0.5). If that company instead invests the $500,000 in a PLM solution to improve supply chain or product development processes - so that trend-right styles reach shelves on time and there is minimal discounting - the earnings contribution through improved efficiencies, enhanced business processes and margin improvements will be $1.5m-2.5m (3-5 times the invested amount).

Bump up the return on investment period to three to four months - which is what we are seeing at Centric - and it is clear that smart, selective IT spending will be key in driving innovation and the entire product development process going forward.

Mark Burstein, president of sales, marketing and R&D, NGC Software
Mark BursteinExtended PLM - which includes the entire product lifecycle from line plan/concept to delivery of the finished goods - is essential for helping companies become more competitive. Companies shouldn't think of PLM only for the design phase; they realise the greatest benefits when they can integrate PLM with sourcing and production. According to a recent Gartner study, only 5% of businesses have optimised this integration. Clearly there is room for improvement, and the benefits can be huge.

Increased profitability is one of the top benefits. When PLM can be extended to provide visibility into the factory and real-time collaboration with suppliers, companies can instantly shift materials and production resources to their best selling products, which improves profits. This greatly increases sales velocity and full-price sales for apparel companies - which is more critical than ever for protecting profit margins when the cost of materials, labour and transportation are at all-time highs.

Charles Benoualid, vice president, research and development, Visual 2000 International
BenoualidWe believe that PLM will continue to be among the most important technologies in the apparel and fashion industries. While not all PLM systems deliver the same capabilities, we see the footprint of PLM continuing to expand with greater merchandise and line planning, sourcing and supply chain management, business intelligence and other critical business capabilities.

In conjunction with the implementation of PLM, ERP, and other software, we believe that fashion companies can achieve faster and better results by conducting a thorough review of internal processes.

This work will highlight numerous opportunities to streamline bureaucratic layers and break down the silos between departments and with suppliers. Other key benefits of this approach are better team and partner collaboration, reduction of redundant and erroneous product and process information, and more timely and accurate flow of information throughout the supply chain.

Combining the right technology and implementation strategy can help companies increase supply chain visibility and create an environment where changes and exceptions are identified quicker, so that action can be taken before these issues have major impacts on final outcomes.

Andy Lynn, vice president business development, RLM Apparel Software
Andy LynnFashion companies are advised to take a comprehensive approach to technology investment. They should focus on equipping their team and supply chain with the integrated solutions they need to succeed in a very competitive market. Two of the most important requirements in today's global industry are the increasing need for collaboration and visibility; in the development phase, across the supply chain, and between buyers and sellers.

Today's companies need fully integrated solutions that combine PLM, ERP, SCM, and the tools necessary to achieve visibility and control from the concept all the way to the consumer. While implementing independent systems over a multi-year timeline was once considered the ideal approach, companies can now gain the benefits from cloud-based systems in a fraction of the time and cost of traditional, customised systems.

Of course, they can still implement in stages, but most companies do not have the luxury of time in positioning themselves for the competition and requirements that are already here and continuously growing.

Paul Magel, president, applications solutions group, CGS
More than ever before, companies are advised to stay focused on their business drivers when it comes to what technology is needed. This means implementing technology that can truly drive value for the company and its customers.

Companies are better served when they spend less time on IT issues and direct their focus to producing better products, being more compliant to customer needs, and building their competitiveness in the market. This can be accomplished faster and better when they select a technology partner that has the resources and capabilities needed to support and even manage the technology side of the business.

For many companies, we believe that making better use of business analytics tools presents a huge opportunity for increasing both top and bottom lines. In our view, analytics is much more than the off-loaded business intelligence systems that report on day or week-old information. In our fast- paced industry, executives and managers need true, real-time information to monitor the pulse of the business. Integrated systems can deliver the complete and up-to-the-minute information needed to support meaningful what-if planning, process visibility, and execution.

We believe that truly integrated systems are the key to success in the fashion business. But integrated systems need not mean the monolithic implementations that were once associated with ERP technology. To fit the needs of today's industry, these systems must be as much or more about enterprise collaboration as they are transaction management. They must deliver integrated PLM, sourcing, supply chain, and other important management capabilities.

Technology buyers are advised to be diligent in their search in order to find systems that can be easily personalised, configured rather than customised, and upgradable as business conditions change. After all, technology should be an enabler rather than an inhibitor to the business.