Just-Style Interview with Mark Burstein on Apparel Industry Technology TrendsMay 4, 2011
Leonie Barrie, managing editor of Just-Style, interviewed Mark Burstein, president of sales, marketing and R&D, of NGC Software for Just-Style’s 2011 Management Briefing regarding industry software and the latest trends. Here is an excerpt from the interview./p>
Just-Style: Among the biggest challenges facing global apparel supply in the year ahead are rising raw material costs, the changing business climate in China, upward pressure on retail prices, fragile consumer demand, and the need to have the right inventory at the right place at the right time, according to industry experts. What is NGC's reaction to these trends? www.juststyle.com/question1
Burstein: Apparel supply chains face cost pressure on multiple fronts in 2011. Raw materials prices have soared, with cotton reaching an all-time high in February. Wild fluctuations in the cost of materials can leave apparel and fashion companies in a precarious position. Companies that don't properly manage their raw materials commitments can get caught in the spiral of escalating prices and end up losing money on the merchandise they sell. Private-label apparel companies may be unable to pass along these increased prices to their retail customers, and retailers are very reluctant to raise the price to consumers.
Skyrocketing fuel prices are another key concern. Oil is hovering near $100/barrel and is headed higher, driven by the turmoil in the Middle East. This means that companies must carefully manage their design and production timelines; if schedules slip, expedited shipments will be much more expensive than before. These problems are further compounded by the rise in labor costs, which forced many apparel companies to rethink their sourcing mix last year.
Just-Style: After weathering the storm of recession, today's apparel companies now face a significantly more challenging and competitive market. How can technology help apparel companies compete? www.juststyle.com/question2
Burstein: Lead time optimization is a red-hot topic. The apparel industry is focused on shortening the distance from concept to consumer because consumers are fickle and trends are changing faster than ever, fuelled by social media and instant access to information. Lead time optimization involves streamlining the way that companies manage the design/production process and share information across different groups, from merchandising to product development, sourcing and production. Companies must focus on saving time at every step, quickly determining which orders to place, executing their raw materials requirements, determining which of their factories can produce more quickly. All of this centers around information access, planning, collaboration and visibility -- and these are the core strengths of PLM.
PLM helps companies improve speed to market through lead time optimization, enabling apparel companies to increase profitability, improve customer satisfaction, and reduce costs. This also reinforces brand leadership and drives growth: if apparel companies are trend-right and delivering the products that consumers want the most, their business will explode.
Just-Style: Where should apparel firms be focusing their software investments now if they want to remain competitive into the future? www.juststyle.com/question3
Burstein: Extended 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 realize the greatest benefits when they can integrate PLM with sourcing and production. According to a recent Gartner study, only 5% of businesses have optimized 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, labor and transportation are at all-time highs.
Just-Style: Using the right software is key to helping the apparel industry tackle some of the issues it faces in 2011. Firms need the right analyses and information to take the right decisions at the right time and remain competitive in a changing environment, from product development through to the shop floor. What does NGC view as core technologies for the apparel industry? www.juststyle.com/question4
Burstein: PLM systems directly address many of the apparel industry's most pressing issues. Take the cost of raw materials: today's web-based PLM systems help companies closely manage their raw materials with sophisticated materials management capabilities that allow instant visibility into materials requirements, purchases and inventory at remote locations.
For example, NGC's PLM offers functionality to forecast raw material requirements, place commitments with multiple suppliers, and draw down those commitments as POs are issued and the materials are consumed. By using this PLM capability, one well-known fashion brand not only locks in raw materials costs for each season, but has also improved speed to market by three weeks and reduced markdowns by 33%.
Another important part of this is the ability to make just-in-time decisions. PLM systems provide visibility onto the factory floor, enabling companies to make their go/no-go decisions based on the most recent sales information. The most sophisticated PLM systems can track sales at the SKU level in real time through built-in interfaces to ERP, POS and other enterprise systems. By using the latest sales figures and postponing their final production decisions until the last minute, companies can allocate their materials to the hottest sellers and quickly cut their losses on slow-moving products.