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How is Apparel ERP software modernising supply chain management in the fashion industry?

Getting fashion products to market with maximum efficiency is not a matter of fixing one segment of the supply chain or another. Success requires a holistic, end-to-end approach. Learn how business process transformation and an Apparel ERP software approach can help.

State of the industry

Today there is tremendous pressure to shorten cycle times and get fashion to market much faster. This need to optimise time to market impacts almost every link of the supply chain, from design to delivery. For too many fashion companies, inefficiencies are eating away at their competitiveness. Executives recognize that decisions made closer to the market are bound to bring stronger results, and they are looking for solutions to address multiple pain points, during pre-season planning and design through production, logistics, and allocation to end-of-season markdowns and liquidation.

Aided by the latest Apparel ERP software, there is an opportunity to squeeze time out of traditional processes. Efficiency gains allow fashion companies to delay the start of product development by weeks concerning several product categories, developing products much closer to the market.

What is ERP in apparel?

ERP stands for ‘Enterprise Resource Planning’. It is a type of software solution that integrates all of a business’s core systems – from finance to accounting, sales, warehousing and supply chain. In the apparel industry, it is used to connect data across departments in order to increase control, oversight, efficiencies and productivity.

Best ERP for the fashion industry

The best apparel manufacturing ERP software specifically works to optimise each facet of the supply chain process, including:

Pre-season business planning
Design and pre-production
Managing the product lifecycle

Pre-season business planning
Enhanced data insights

During the critical planning phase, many apparel decision-makers have had to make commitments without the benefit of reliable market forecasts. They often have had to pull historical data from separate wholesale, retail and e-commerce systems to forge the best-laid plans they possibly can. But by the time they are capturing sales orders for the upcoming season, there could be business factors playing out that would materially change their current course — if they only had clearer visibility into those factors.

To combat this problem, brands are utilising Apparel ERP software to more fluidly compare plans to forecasts. As pre-season planning progresses, the business can evaluate forecasts, which will change based on actual sales, customer behaviour and market information. They can see how forecasted results affect gross profits, volumes, and sourcing. Then they can adjust their business plans accordingly and take steps to mitigate issues that may be building up during the current season.

An accurate forecast may only be available weeks or even days before a wholesale selling season starts, whereas the business plan typically is in place months or a year in advance. When fashion professionals can truly leverage both, they can better see the best mix of product types they need to stock and sell to hit their gross margin targets.

For example, after one week of selling the wholesale selling season spring, actual sales could show a significant decline in sales vs. a planned increase. The business planner can take action to try to address this discrepancy, both for the current wholesale selling season and future seasons. Planners and salespeople can look into their ERP solution to see the margin made on sales orders by both the order line level and the overall order level. This provides helpful clarity into how to adjust your product plans during this wholesale selling season’s phase before garments are produced. The fresh insights from the forecast also can be used to adjust raw material procurement and production capacity commitments with vendors, for future seasons.

In his blog post, “Predicting Buyer Journeys and Inventory: Retail Future in a Nutshell,” Sahir Anand, vice president of research and principal analyst, EKN Research, addresses the missed opportunities when plans are built without the latest market insights. “A sizeable volume of inventory is not based on customer science, reliable forecasts or likely demand scenarios related to prospective shopping patterns or sales trends,” he said. “These problems exist not only due to lack of reliable and timely customer insights but also due to legacy ERP, business intelligence, demand forecasting, and inventory management systems.” With newer technology, such as predictive analytics, “retailers can analyse customer and marketplace information that can be used to triangulate demand forecasts with merchandising plans and to respond to changing market dynamics in real-time,” he said.

Design and pre-production
Standardise for Faster Speed

One of the greatest time-to-market challenges facing fashion enterprises is a lengthy design/development process that starts very early, long before designers can see which trends are hottest. This traditional calendar drives huge volumes of work on styles that may never see the light of day.

Product design often begins 9 to 12 months before styles are due on the retail selling floor.

Multiple fashion businesses study the same sources of trend information while trying to maintain unique looks targeting their consumer markets. Of the initial designs they create, companies may drop half of them as they get closer to the market and decide some styles are not winners. Yet before that happens, weeks if not months could be spent developing samples, conducting fittings and making revisions.

This problem can turn into a crisis as companies face intensifying pressure to turn out more frequent collections.

When the information that helps creative teams know what to design is significantly better, there is a major reduction in workload and incurred costs. To buy time to wait for clearer market insights, companies must reclaim precious days currently being drained by production-intensive processes, such as sample making, and rounds of unstructured communications about specifications and product details.

At the moment two technical innovations are being adopted by a growing group of fashion businesses in the effort to cut lead times, allowing for later product development:

Improve input and be much more secure in decision making to come to the right collection. Forecasting, trend analyses, etc. can be improved by several current technologies, including AI. The later designers start to work on new collections. This then allows for fewer design drops before market and clearer focus during development getting closer to the “first time right” principle. It is possible to reduce the sampling process by 4 to 6 weeks. In effect, this reduces sample costs by up to 20%.
The virtualisation of the design process to be used during the product development instead of physical products for prototypes and salesmen samples, so that decision making can be immediate, without waiting for the usually lengthy production process. These virtual designs can be used in finalization meetings, in sales collateral (replacing photoshoots to produce product images) but are also used when selling collections to wholesale customers. A small number of physical samples would only be needed for technical design teams, to optimise the product and the fit of the product and to guard product quality. This could cutback months of development lead-time and reduces sample costs up to 70%, depending on the level of virtualisation.

Combining both measures will allow cutting back up to 3 months out of the development cycle, reducing sample costs by 75 to 80%.

There are integrated Apparel ERP manufacturing software solutions with robust product development capabilities geared to help fashion businesses standardise their pre-production processes and communications. Virtualisation calls for standardisation and building libraries for materials, colours, artworks, product fits (block measurements), product templates and the product setup itself.

Apparel ERP software solutions provide these standardised libraries to capture details for all parties (including suppliers) coming to virtual and actual samples and ultimately procurement orders.

Besides, suppliers can access all relevant product information through portals, which serve as gateways for sharing details, bidding on projects and exchanging production progress updates between brands, suppliers and service providers. For designers and planners, pre-defined choices, drop-down menus, and aggregated views enable efficient handling of multiple product dimensions. When this front-end PLM functionality is integrated with downstream business processes, it also allows teams to easily access and apply historical sales data and the current financial metrics, such as gross margin and recommended retail pricing, to their line plans.

The sooner businesses make the transition to this type of integrated technology, the better, according to CIMdata, which stated: “The key point is to not delay, as every product developed and launched from within your current environment is probably leaving money on the table as well as carrying a high risk of failure.”

Managing the product lifecycle
Pre-Season to End-of-Season

While the acronym PLM often gets associated with pre-production activities, the work of product lifecycle management never really ceases until the product or collection reaches its true end of life. As collections fall into place, companies enter another realm of decision-making — one in which integrated technology is more important than ever.

To streamline and reduce complexity in preseason planning, some apparel brands are pre-allocating products based on rules. With this practice, they can increase customer satisfaction by pre-allocating future stock to a customer early in the planning process based on order and/or customer priority. Advanced ERP solutions can automatically alert the brand if there will be any issues in allocating the promised goods, at which point the company can immediately update and change sales orders, possibly replacing some products with available goods to ensure delivery. Throughout the season, this automated allocation based on rules continues, and teams only have to deal with exceptions or situations in which the planned product distribution is not possible.

In planning for the optimal stock, fashion businesses also can institute more pre-packs into their portfolios. Next to selling “open sizes,” which allows customers to pick and choose any size assortment, the fashion brand can offer fixed assortments (pre-packs) with relevant size breakdowns based on their knowledge of regional markets and the customer’s target consumers. As a result, apparel manufacturing runs can be more predictable and profitable because the company can optimise fabric utilisation. Less commercial sizes that have less demand, such as XXS, can be ordered separately.

The centralised nature of an end-to-end ERP solution is critically important for managing end-of-season planning, logistics, and markdown modelling. The different teams need access to a single version of the truth and clear rules on when to adjust prices and move merchandise from store to store. All of this ties back to the core margin planning tools so instrumental in setting optimal stock to begin the season. The Apparel ERP solution helps guide managers as they try to sell the most merchandise within the target time window and quickly act on overstock situations. These decisions need to be managed centrally so as not to burden retail store personnel, increasing costs and consuming time.

Conclusions

Optimising time to market is a top goal for many fashion brands and retailers. Those who can get the right product in the right place at the right time — most efficiently and cost-effectively — will be clear winners among consumers and all stakeholders.

Traditional processes and legacy software severely hinder an apparel company’s ability to react with agility to market trends. Refined approaches to everything from planning to design to distribution may be required, with data-driven decision-making at each stage. Integrated ERP technology can supply the supporting framework for making these changes after a clear plan for business process transformation is in place.

Xpedition’s all-in-one business management solution for fashion is a fully integrated, proven platform that provides businesses with all the necessary tools to boost productivity, improve speed to market and minimise cost. The solution is underpinned by Microsoft Dynamics 365 Business Central and K3|pebblestone and is completely cloud-based.

As one of the UK’s leading and trusted Dynamics 365 implementation partners, Xpedition has an enviable reputation as a reliable advisor to ambitious fashion organisations, particularly those looking to build more efficient and sustainable operations. Speak to one of our Consultants today to discover how Xpedition could support you to transform your business with Apparel ERP software.