The panel discussion on ‘Making technology work in fashion’

The panel discussion on ‘Making technology work in fashion’

The battle to finance investments and justify returns are among the first hurdles firms face when introducing new technology across their supply chains. Yet communication, collaboration and change-management are all key to ensuring a successful implementation.

"I believe change can be fun, but it requires different thinking; you can’t plan anything differently if you can’t first think differently," believes Mike Fralix, president and CEO at research and consulting firm the Textile Clothing and Technology Corporation ([TC]²).

It’s a sentiment echoed by other executives speaking during a panel session on ‘Making technology work in fashion,’ hosted by the International Apparel Federation (IAF) at the recent Texprocess trade fair in Frankfurt, Germany.

Simon Fernandes, regional director for the UK, Southern Europe and South Asia at Alvanon, believes the industry is often reluctant to invest in new technology "because it's such a challenge to understand what the potential return on investment (ROI) could be."

"On average we help brands increase sales between 3% and 5%, full-price sell through between 5% and 10%, and reduce returns by 10% to 30%," he says, noting: "It's also important that the industry starts sharing more information."

For instance, as reported on just-style earlier this year, Tesco overhauled its technical fit forms, reviewed its protocols and processes, updated its PLM system, and invested in Lectra's Modaris 3D CAD system – helping to reduce children's wear returns from 19.4% to 14% in 18 months, cut the number of samples from 1.8 to 1.5 per style, and reduce the product development lead time to 1-2 weeks.

The retailer has calculated these actions will help save GBP20-40m annually: "So it all adds up," Fernandes points out.

Veit Group has focused on developing pressing and finishing machinery that is more sustainable, because these processes are the highest users of electricity in a factory, according to president Gunter Veit.

But even so, he believes factories find it hard to justify investments in new equipment "when the CMT price is getting smaller every year." The payback time for energy-saving technology "is only one and a half years, like on many of our Brisay presses; but [factories] don't invest because they don't know how long they will have a particular order and the margin is so small they cannot justify it. We have to build sustainability into our machines because we want to be a sustainable company."

He also laments the fact there is little cooperation between the brand owners and their suppliers on investing in sustainable technology. "There are only a few examples where brand owners say 'if you invest in sustainable technology, we will finance it for you; you will repay us with the garments you deliver'."

It’s a point picked up by Guido Brackelsberg, managing director at Setlog,which develops supply chain management systems. He believes suppliers won't make strategic investments in technology if they don't have long-term and stable relationships with their customers.

"The automotive industry talks about value; 95% of the apparel industry talks about price," he says, "and that's a challenge," he says. An investment decision "only works if the brand shares some of the financial added value that it gets out; otherwise it’s a struggle. The financial gains will definitely be there if you shorten the product lifecycle."

However, Çem Altan, managing director at manufacturer Aycem Tekstil Istanbul, which supplies European brands and retailers, says: "We have to invest in new technologies to compete with other manufacturers, and to keep ahead of our rivals in the Far East. Technology changes very rapidly, so you have to keep on investing. Labour costs in Turkey are increasing, and technology helps make our factories more efficient, improve productivity, and reduce cost.

"Most companies [in Turkey] have their own financing system, and we have government schemes to help SMEs with long-term, low interest finance – and when these finance tools are available you don't stop investing."

Taking a wider view, Fralix suggests: "We need a system to determine when an advanced technology should be the baseline; you shouldn't have to justify it, you shouldn't be doing business without it. We used to have to justify automated cutting systems, but that really ought to be the standard today."

Changing business models
Philippe Ribera, group software marketing director at Lectra, argues that return on investment is not just about the bottom line. "We need more collaboration; the successful companies today are thinking differently." For its part, Lectra is increasingly helping companies to adapt or even transform their business models to use new technology, as opposed to just selling them systems and software.

"We're not just talking about technology and how we use it. Change management is an extra prerequisite for using technology."

Fralix agrees a shift in thinking is required, and that "sometimes we talk too much about cost and not enough about profit; we don't always think about the impact of markdowns and closeouts."

He explains: "There's been a lot of talk about reshoring, near-shoring and back-shoring, but what hasn't been done is building a profit model to determine the product categories that, with technology, could be made locally, or near locally.

"You can predict what people want two weeks from now easier than you can predict what people want six months from now, and you can turn that inventory more often. In certain categories you can afford to pay more for a product but you're going to make more profit on in the end, because you're not going to be marking down all that merchandise."

He also suggests advances in technology over the next couple of years will "change the way you think about your supply chain model, as well as your financial model."

These include waterless colouring – "brands or retailers will be able to make their colour commitments two weeks from the store shelf instead of 3-6 months." And of course there’s also 3D or additive manufacturing, "that will let you ship your products before you make them. In other words you don't have to have a factory full of machines; you send your digital products to the point nearest to the consumer where you can convert them using additive manufacturing."

From Bayer’s experience introducing innovative new materials that address sustainability issues, Nick Smith, global head of textile coatings at Bayer MaterialScience, agrees the cost conversation has other dimensions too.

"It's important that the industry as a whole is starting to look at not only the cost to buy materials or to get cut and sew done, but also environmental costs and social costs in the value chain," he says, adding: "If you start to look at costs, as well as profits, throughout the whole lifecycle, the balance of the way you perceive the whole situation can change a lot."

Decision-making
Another challenge is that the way companies are organised can also be a barrier to change when it comes to investing in a new technology, material or process.

"The materials we're introducing into the market are something all the top fashion/sports companies want from a sustainability point of view," explains Smith, "and yet it's still very difficult to bring about change.

"And why is that? Because very often the different functions in a company have conflicting targets or conflicting KPIs; on the one hand a corporate guideline could be to replace this material with some new kind of material, yet there's another corporate guideline that says we have to reduce our costs by 5%.

"In the end there's no such thing as a decision-maker in a company; there are many decision makers. You have to win over many people before you can bring about change; you have to find something that convinces the designer, something that convinces the buyer, something that convinces the product manager."

Fernandes agrees. "Design, buying, merchandising, technical, product development, sourcing – each are in their own little worlds. For a company to function efficiently you have to streamline the process and everyone has to understand where they hand off and where their responsibilities lie.

"It's about educating and training people within the business and within the supply chain…and it’s integrating closer to the supplier; they have to be part of the business.