About PLM - Other benefits of PLM
Apart from boosting product development efficiencies, apparel companies are increasingly concerned with reducing markdown and stock-out losses which can add up to as much as 30% of retail sales. A 1% reduction in markdowns leads to a 12% improvement in profit, industry observers say.
PLM software allows retailers to add best-selling garments or drop poor-selling ones from the supply chain quicker than with traditional methods, helping them reduce inventory losses. It also helps boost product quality by minimising errors in the design and development process "so you won't have as many merchandise returns," Mitford points out.
Despite its benefits, PLM software's impact on the inventory equation is limited unless it is fully integrated with other apparel-manufacturing technologies such as merchandise planning or POS applications to strengthen the product development and merchandising cycle, say observers.
After a garment is made, its spec goes into a retailer's POS system which collects its sales performance and transfers it into the enterprise resource planning (ERP) computer. ERP analyses this data and sends it into the assortment planning (AP) system. In the final phase of the circle, AP identifies a collection's best-selling garments and transfers that intelligence to the firm's line planning (LP) system where PLM takes over.
In many existing PLM applications, the LP data must be entered manually, causing data management and other problems, say observers.
According to Poulton, some PLM products incorporate LP functionalities but many don't. "There is a disconnection here but the industry is aware of it and working to fix it," he says. "Demand [for LP-PLM] is growing very strongly and the industry is responding with a diverse range of products."
Poulton adds that PLM-LP programmes must also innovate to bridge with APS software to further increase efficiencies in the circle. "These parts of the chain are not connected very well at all," he says, adding that Yunique is working to introduce APS-LP-PLM programmes. Its current software range already includes LP functionalities. "This is an evolutionary process," he acknowledges. "There is no silver bullet solution that makes everything better. The enhancement of the whole chain is what makes everything better."
Mitford agrees with Poulton. She says PLM and LP integration is a crucial step to streamlining the manufacturing chain and cutting inventory losses. "The companies that are achieving significant improvements in profitability have taken system implantations to the next level by integrating PLM with merchandise planning applications on the front end and ERP on the back end," she explains. "Merchandise planning applications provide direction on what type of products should be made, target retail price and overall assortment. By integrating this information into PLM, the design team is given a very clear direction about what they should be spending their time designing."
The process leads to increased efficiencies, higher adoption rates and ultimately higher profitability by ensuring that the right products are sold in the shops, Mitford says. This is because well-designed collections sell at higher prices so companies won't end up with excessive inventory levels of off-trend products, she adds. PTC offers MP solutions in its FlexPLM software and the company is continuously working to modernise its product range, and apparel companies that have recently implemented PLM software seem happy with the results.
Riyadh Mokreni, logistics manager at Tunisia's Denim Authority (DA), says PLM has helped boost product development and manufacturing efficiencies at the jeanswear maker. "We are saving money with this system," Mokreni says. "It is helping us manage our collections more efficiently and improve our customer service."
Before buying the PLM range of French manufacturer Lectra, DA was using Excel and other basic software to manage its collections. "This was a very slow process and we needed a lot of time to process the orders," Mokreni recalls.
Industry analysts agree that PLM software works. According to recent research by trade consultancy Aberdeen, 65% of apparel and footwear firms that have bought PLM software see higher sales after using it for over a year.
"Best-in-class fashion, apparel and footwear companies are using PLM to improve their ability to respond to rapid demand changes and complex global supply chains," Aberdeen's vice president of product innovation and engineering research, Jim Brown, told just-style recently.