Intentia: Stepping Out With Fashion and Style Part One: Characteristics and Trends of the Fashion Industry

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So your software vendor says that they can do fashion. You better make sure that the software features go far beyond styles, colors, and sizes. The requirements for the fashion industry are some of the most demanding and unforgiving in the world of manufacturing. If you're not careful, you may find your profits falling on the cutting floor and money being swept out with the scraps. Read on to find out why running with a pair of scissors is not the only dangerous thing when selecting software for the fashion industry and why Intentia's offering bears investigation. And even if you're not into fashion, learn what hurdles another industry has to jump to remain competitive. You may feel fortunate to be in the industry you are.

We are surrounded by fashion. In fact we come into contact with it so often that we tend to take it for granted. However, if you are in the business of fashion, you know that people's tastes are extremely fickle and ever changing. Your enterprise-wide software has to be nimble enough to turn on a dime. It also must be able to anticipate more often than to simply react.

This research note explores industry characteristics and trends and resulting software challenges. After getting an understanding of the fashion marketplace and competition, we will look at Intentia's Movex software offering. Movex's functions and features that will allow you to cut, sew, and package your products efficiently before they are out of fashion.

And, while you may not be into haute couture or consider yourself a fashion plate, you may find how the fashion world solves problems similar to those found in your industry. For sure, you will have a better appreciation of what it takes to put that shirt or skirt on the shelves and not so quick to say it costs too much.

This is Part One of a four-part note.

Part Two discusses the challenges facing software in the fashion industry.

Parts Three and Four review some of the significant functions and features offered by Intentia's Movex software for the fashion industry.

Industry Characteristics and Trends

All successful companies cater to the needs of their customers. However, in fashion these needs may be more viewed as whims or temporary flights of fantasy than established trends on which you can base production and supply chain decisions. Case in point: how long has the Pentium IV computer chip has been placed on PC motherboards compared to double-breasted suits? Furthermore, in somewhat of a reversal, the requirements of fashion manufacturers are being driven more by the demands of the retailers that sell the clothes than the supplier.

A recent example between Levi's and Wal-Mart highlights a developing trend. Up until the early 1990s Levi's could pretty much deliver the merchandise and retailers would sell it. Now to do business with Wal-Mart, Levi's had to develop a new line of jeans to Wal-Mart specifications and meet very stringent guidelines regarding performance and cost control. While Levi's is still driving the car, Wal-Mart supplies the operating manual. This scenario is being repeated throughout the fashion industry as the balance of the scales shifts.

As you would expect in an industry with a diverse customer base, namely the general public, the life cycle of product is expressed in months, not years. To appease this public, a product is produced in every reasonable size and color combination. Consequently, the number of stock-keeping units (SKU) tends to be much larger than in other industries. Missing an opportunity window—that is short to begin with—may mean that you could be stuck with obsolete merchandise. Predicting the taste of the general public can, at best, be a crap shoot.

While outsourcing of production is not an unusual practice, in the fashion industry it has become a fine art. Shirt cuffs are made by one company; collars by another company; and buttons by a third company. The components are all brought together on the sewing floor to complete the finished product. Because operating and profit margins are meager, the outsourced companies can be spread throughout the world where labor and material costs are in cheap but plentiful supply. These factors create longer than usual lead times and constant managing of an extensive and far-flung supply chain. As a result, fashion is handicapped by a long time to market in the face of a narrow window of opportunity in which to attract the consumer's attention.

Illustrated in figure 1 is one of the simpler but common supply chains in fashion industry. Spread your suppliers across the Pacific Rim. Base your assembly operations in Europe. And, of course, there is a need for distributions facilities in the major population centers of the world. Accordingly, even a simple supply chain model grows in complexity as the channel partners grow in geographic distance.

A somewhat unique problem complicating the life of fashion is seasonality.

Imagine a huge shipment of winter coats usually hits the receiving docks as the spring flowers are starting to bloom. Not a problem; hold the coats for six months for the fall season. Chances that styles and tastes will be frozen are as likely as a block of ice will not melt in a 35C (or 95 F) degree heat. Improper management of the supply chain can result in a greater risk of inventory exposure and obsolescence. Consequently, the fashion industry is faced with seasonal items (i.e., coats, jackets, fabrics) and non-seasonal items (i.e., ties, undergarments, shirts). From a software perspective there are requirements for make-to-order (MTO) and make-to-stock (MTS). However, these requirements are influenced by the special factors of fashion. In other words, you may want to have a constant stock of men's white dress shirts but will make to-order shirts in less popular colors.

Difficulties in Managing the Supply Chain

One thing that should become increasingly obvious when working in the fashion industry is that the supply chain is extremely complex and difficult to manage, even with the use of automated tools. There are likely to be all possible combinations of components manufactured by your own resources and fully sourced throughout the world. Consequently, obtaining an accurate and current picture of the supply chain is not an easy task. Likewise, when the picture does come into focus, it is difficult to react to changes.

Directly or indirectly affecting these characteristics are several industry trends. As constant pressure is being placed on low operating margins and limited operating capital, consumers are demanding better service. These demands are being translated into penalties if delivery schedules are missed or late. As quotas, particularly in the United States, are relaxed, globalization of product components is increasing. Suppliers are looking beyond traditional geographic boundaries and are shopping the worldwide marketplace. Consequently, sourcing of these components is shifting and stretching the capabilities to manage the supply chain and meet delivery schedules.

Compliance requirements are becoming more stringent. In additional to delivery and quality constraints, the public's outcry to questionable labor practices of companies like Nike and The Gap has now placed the microscope on human rights issues. No longer is the cheapest necessarily the best in the arena of public opinion.

As cited in the Wal-Mart example earlier, retailers are taking greater control over the supply chain. Traditional boundaries between the retailers and suppliers are becoming increasingly fuzzy and difficult to differentiate. Everyone wants to own the consumer or, at least, a piece of him. Suppliers are taking a more dominant role in "store ready" inventory. For example, TAL Apparel Ltd., a closely held Hong Kong shirt maker, has a direct pipeline into point-of-sale data at JC Penney stores. With this information TAL can readily determine safety stock levels and can initiate replenishment to prevent out-of-stock conditions. Instead of asking Penney what it would like to buy, TAL tells them how many shirts were just purchased and now need to be replaced. As a result, to reduce inventory carrying costs and to better leverage available operating capital, vendor managed inventory (VMI) is being taken to another level of control and convergence.

Figure 2 below summarizes the trends in the fashion industry and their effect on manufacturing and production.

What is most intriguing about the trends is that all are out of the control of the supplier. While external forces influence many industries, the rapidity in which trends impacting the fashion industry change is somewhat unique.

This concludes Part One of a three-part note.

Part Two discusses the challenges facing software in the fashion industry.

Parts Three and Four review some of the significant functions and features offered by Intentia's Movex software for the fashion industry.

About the Author

Joseph J. Strub has extensive experience as a manager and senior consultant in planning and executing ERP projects for manufacturing and distribution systems for large to medium-size companies in the retail, food & beverage, chemical, and CPG process industries. Additionally, Mr. Strub was a consultant and information systems auditor with PricewaterhouseCoopers and an applications development and support manager for Fortune 100 companies.

He can be reached at

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