About PLM - Other technology

As apparel brands seek other strategies to boost enterprise efficiencies, applications to help them avoid merchandise discounts and inventory losses are gaining popularity and will become essential investments in the next five years, according to industry observers.

The most talked-about applications in this space are merchandise management systems (MMS) and markdown optimisation solutions (MOS).

MMS systems help retailers forecast sales by collecting the current and past sales performance of their fashion collections.

Oracle's Retex Solution and SAS's merchandise planning applications are the leading suppliers of this type of software.

"Given where the economy is today it has never been more crucial to obtain POS data as soon as possible to make decisions about when and how to make markdowns," says Mitford. "If a product is not selling well on the day it reaches a store, it must be marked down promptly. If you wait two weeks to put it on sale it may be too late."

George Lawrie, a retail consultant with Forrester Research, says MMS including those by SAS and Oracle feature so-called demand signal repository (DSR) applications which help brands track the performance of a new clothing range.

"The programmes let them [retailers] know which things are selling in which stores within just a few hours of a shipment," Lawrie explains. "In this way, they can manage inventory more intelligently. This is crucial when it comes to sorting collections across geographies because once a shipment leaves the factory it's very difficult to move it around."

According to Lawrie, current sale forecasting methods involve cumbersome manual processes. "Many companies list what they want to sell in Excel spreadsheets so you will have lists that say 'I want to sell 60,000 items of this shirt here and 40,000 of that trouser there'. So companies want to integrate powerful analytics to improve these activities."

MMS applications also help apparel firms collect data on past sales. "The retailer gets a history of what garments, sizes and styles sold, for example, in its Hoxton store in London [a trendy quarter] compared with its shop in Croydon, England [a more blue collar town]," Lawrie points out. This helps the company allocate the next collection by telling it where it will get the best results from stocking certain garments."

Lawrie says these technologies can save money. "In-season replenishments can be very costly. If you are bringing stuff from different parts of the world, you may need to ship by plane which can add to costs," he muses.

Adds Lawrie: "Fashion apparel is a gambling business. The trick is to anticipate sale trends, collect data, derive insight and come up with a successful plan to roll out a collection."

Clothing sizes are the easiest to collect data about as they tend to be more stable across geographies. However, things get fuzzier when it comes to colours and styles. Despite this, some manufacturers have managed to mine past data on best-selling thread counts and cuts to blend those specifications into future garments.

Lawrie also expects MOS programmes to woo investment as they help brands know when and how much to discount a collection's garments while making the best possible return on investment.

i2, JDA, Oracle and SAP are some MOS software suppliers, adds Lawrie. Observers also expect apparel companies to invest in radio frequency identification (RFID) technology, which enhances inventory visibility as well as reducing shrinkage and out-of-stocks for fashion firms. RFID identifies a shop's objects or garments (including their complete label spec) using radio frequency transmissions, transferring data between hundreds of products and a main IT system.

While electronic POS systems enable real-time information of what is sold at any time in any store, mistakes can be made and the recording of goods in and out of a shop does not take account of any loss or shop lifting.

RFID allows retailers to know what is available in any store at any time, and where style, colour and size shortfalls are, helping them ensure the correct merchandise is located in the right shops at the right time.

RFID also has tracking and tracing capabilities for garments made in different continents, transported by road, ship and air, warehoused, coordinated and shipped to individual stores. It also offers a means of brand protection and enhanced marketing opportunities.

By incorporating RFID tags into garment labels or even into the garments themselves, RFID can identify a garment's source, while the tag's unique ID certifies that the garment is authentic and also makes it possible to identify and control counterfeits.

Therefore, RFID tags enable inventory visibility throughout the supply chain, reducing shrinkage and out-of-stocks.

British retailers Marks & Spencer, Tesco, Wal-Mart and Metro are becoming early adopters of RFID as are other smaller fashion retailers.

Spanish children's clothing chain Boboli recently announced a pilot project to use RFID to streamline inventory and boost sales. Observers expect others to follow the trend.

Paxar, ADT and UPM Raflatac are leading manufacturers of RFID technology.