Intentia: Stepping Out With Fashion and Style Part Three: Movex, a Case Study of Fashion Industry Software

Introduction

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 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.

With an understanding of the characteristics, trends, and challenges facing the fashion industry, the remainder of this research note looks at how one developer, Intentia, has designed its software offering, Movex, to respond to the industry's needs.

The remainder of this note provides a brief overview of Intentia and examines some of the important features of Movex to include

• Item Creation and Maintenance
• Demand Forecasts and Management
• Sales Order Processing (Part Four)
• Production Planning and Control (Part Four)
• Inventory and Distribution Management (Part Four)
• Financial Management (Part Four)

This is Part Three of a four-part note.

Part Four continues the discussion of Movex's functions and features.

Part One discusses the characteristics and trends in the fashion industry.

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

Intentia Overview

Intentia, based in Stockholm, Sweden, is one of the world's leading suppliers of collaborative solutions. Intentia has approximately 2,700 employees serving more than 3,400 customers in the manufacturing, maintenance, and distribution industries via a global network spanning some forty countries. After a strong performance through the 1990s, Intentia suffered a sudden drop in total revenues upon entering the new century. This was due in part to the soft market after the over-hyped Y2K phenomenon and followed up by the global economic downturn. Intentia's AS/400 platform-centric approach of its Movex software, which has since been redesigned as a Java-based product, made it less attractive to a wider range of hardware solutions.

Intentia's second quarter 2004 results show a 26 percent increase in license revenue and an 8 percent reduction in costs and expenses compared to the same period of 2003, resulting in an operating profit of $14 MM Swedish krona (SEK) ($1.8 MM USD).

Recent reports, however, have indicated that Intentia is still attempting to stem the tide, increase revenues, and return to profitability, while also developing the internal infrastructure to increase and measure efficiency (e.g., deployment of consultants' utilization system and sales lead tracking system) and reduce costs. Measures approved by Intentia's board include personnel reductions and facilities consolidation, which are expected to lower costs and expenses by an estimated $290 MM (SEK) ($37.8 MM USD), or 10 percent, on an annualized basis. The company will record a restructuring charge of approximately $250 MM (SEK) ($32.6 MM USD) in the third quarter, which is equal to the expected cash flow impact over the period Q3 2004 to Q1 2005.

Item Creation and Maintenance

A challenge in the fashion industry is the large number of stock-keeping units (SKU). As was described previously, a simple man's shirt could easily generate more than 300 items or SKUs. Entry and maintenance of these SKUs can be a time-consuming and expensive proposition. The application software not only needs to support a flexible structure but also to automate this process to minimize keystrokes.

Figure 1 below illustrates the structure supported by Movex. It is divided into two segments. The first segment contains information that is common to all items associated with a SKU. In figure 1 all items for SKU A122131-140 are women's wear, casual blouse. There would also be common descriptive information such as short sleeve, open collar. Differentiating items within a SKU are attributes such as size, color, style, and fabric. Movex supports an unlimited number of user-defined attributes. Furthermore, the software provides a translation from how a user would recognize at item (i.e., small, red cotton blouse) to an item number (i.e., A122131-140-111) needed for locating and picking the product in the warehouse.

Figure 1

While a flexible structure is important, users can be overwhelmed by the amount of data that has to be entered for a single SKU. Movex takes advantage of its structure to minimize the data entry workload. First, the common information such as description, supplier, and style need only be entered once. Then it is automatically inherited by the items within the structure. Figure 2 illustrates the data entry process. Once the template is established for style, color, and size, the quantities entered into the matrix and the necessary items are generated.

Figure 2

Movex supports style composition for labeling. These are those tags that scratch the back of your neck. Using previously entered data users can select information for inclusion on the label. Again, this feature not only reduces data entry but ensures consistency with the SKU description. As you would expect in distributing products to a worldwide market, Movex also supports full language handling capability of attributes, descriptions, and labeling information. In connection with the global impact of fashion, the software can automatically generate European article numbering (EAN) and universal product code (UPC) designations.

As will be described in more detail under sales order processing, seasonal attachments can be assigned to SKUs to prevent ordering summer coats to arrive in the middle of winter. Bill of materials (BOM) and routings can be defined once at the style level, and Movex incorporates simple tools for building in SKU variations. For example, for sizes of small to medium, use three buttons; for sizes of large and extra large, use four buttons. Or, match the red belt with the red skirt and the blue belt with blue skirt. You might suggest that the belt be made part of the SKU for the skirt. In so doing, you could be prevented from selling the belts separately or the skirts without belts.

Tailoring the routing to the particular requirements of the SKU provides flexibility and manufacturing and assembly alternatives. Additional, value-added services such as printing and packaging can be incorporated into the routing definition. For your less sophisticated suppliers, such BOM and routing features can be developed for their assembly lines and used on a manual basis. While not a foolproof mechanism, such aids can help to eliminate production mistakes and resulting seconds.

Demand Forecasts and Management

Due to the long lead times and short life cycles, accurate forecasting of the demand for a product is critical to avoiding inventory obsolescence and missed sales opportunities. Movex supports collaborative and distributed forecasting. In so doing, all participants in the product development and supply chain process can provide input into anticipation demand of a product and, equally important, an early warning signal as to delivery schedules. By providing the ability to the receipt of forecasts via electronic data interchange (EDI) and the Internet, as well as the maintenance of forecasts via the Internet, time zone delays and delays in general can be avoided or, certainly, minimized.

Using mathematical techniques and algorithms, forecasts can be top down, middle out, and bottom up. The advantage of the top down approach is that you can forecast at the highest level, say women's blouses, and then let Movex automatically distribute the results down to the SKU based on normal consumer buying patterns. For example, Movex could forecast the demand for 10,000 blouses and drive down the forecast to individual SKUs based on color, size, style, and historical sales data.

Distribution patterns can be copied from one style to another. This can be particularly useful for a new product where no demand history exists. With integrated software such as Movex forecasts can be transferred to planning and production schedules and financial projections.

Don't overlook this important software component. An effective demand management component can help reduce the effects of a global marketplace and overextended supply lines.

This concludes Part Three of a three-part note.

Part Four continues the discussion of Movex's functions and features.

Part One discusses the characteristics and trends in the fashion industry.

Part Two discusses the challenges facing software in 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 JoeStrub@writecompanyplus.com.