Introduction
Speed-to-Market is
a critical factor in new product success, especially for apparel and footwear
industries. Both independent companies and private brands feel the pressure of
consumers and the retail channel demanding the right product at the right price
in the right location – launched at the right time. The unique challenge for this industry is the
sheer volume of style-color-range-size SKU variations needed to be launched
each season.
As Faith Baldwin
puts it, “Time is a dressmaker specializing in alterations.” The speed of new product introduction can spell the
difference between success and failure. Organizations are using shorter product
life cycles in order to increase market share and maintain margins longer. This in turn leads to higher return on
development investment and more rapid payback. An organization can establish procedures and
policies to implement speed-to-market, but they will not be effective without the
tools necessary to assist each product function and effectively exchange
information. Those that do can capture premium
segments and control larger market share. Zara is an often quoted example – its eight
week cycle from concept to market is viewed as a role model. The temptation is for other companies to
adopt the week new product introduction cycle as the desired de-facto standard.
No one size (or speed) fits all
Should concept to
market in eight weeks be standard for all apparel? It depends…upon on product categories, as
well as competitive strategy.
Product strategy
and lifecycle decisions also influence supply chain design. Based on research in this area, Dr. Marshall
Fisher developed a framework to align product strategy with the makeup of the
physical network. According to Fisher,
there are two types of products, functional and innovative. In the apparel industry, this translates to
Basic and Fast Fashion products. Basic
products have longer lifecycles, requiring a different model for
speed-to-market. They are characterized by
lower markdowns and more predictable demand (example six-pack of white socks
sold at departmental store). Fast
Fashion products have relatively unpredictable demand, short product
lifecycles, but carry product margins that initially appear more attractive
than Basic products. Fast Fashion products should leverage the Zara
model, since they are characterized by a very short lifecycle (8-13 weeks),
lower demand predictability, and highest markdown risk. Basic products require more efficient supply
chains, which emphasize low cost and minimal inventories. Fast Fashion products require buffered, quick
response supply chains. This cost
tradeoff needs to be considered during the development of product strategy and positioning. Across both categories, cycle time is under
pressure, but sensitivity varies based upon the model.
Accelerator
Organizations
Organizations that lay stress on speed-to-market
are also known as “Accelerators.” These organizations focus on speed in design,
production, sales, response, and customer service without compromising product
quality. For the accelerators, the product life cycle graph shows a spike as
compared to the traditional smooth curve. To become an Accelerator, an organization
must excel at the following:
·
Use of
technology enablers, linked to business strategy
·
Well-defined business processes and procedures
to cluster product development functions
·
Lead time optimization – understanding
what propels styles to market
Extending the front end of the life cycle
increases payback and profitability.
Figure
1: Implications of new product development for Accelerator Organizations
Technology enablers
Technology
affects every aspect of process, beginning from design to production and
delivery to the store. Product Lifecycle
Management (PLM) was once associated with discrete manufacturing, but has now
become important in the apparel and footwear industry. PLM for apparel and footwear has extended PLM
beyond line adoption and extended it to sourcing, costing, order tracking, and
logistics. Traditionally fashion,
apparel and footwear companies have relied heavily on spreadsheets for product
data management and phone, fax and email for collaboration. Software providers are trying to address
these requirements, and though progress has been made, much work remains before
companies can realize the benefits of PLM technology into process workflows
without significant customization.
PLM applications
support design and development processes, enabling tight integration to
merchandising, assortment and line planning, and sourcing. PLM value realization is driven by integration
to upstream planning and downstream execution systems. Therefore it makes sense to define how
processes supported by PLM should integrate to other critical areas and create
a single source of truth. While implementing a PLM system at a leading apparel
& footwear retailer we were actually able
to calm the end user community by diverting attention to the technology and
that technology being implemented was going to ease the roles, not complicate
or dismiss. Video conferencing
with rich interaction and meeting support is another tool that organizations
can employ for real-time collaboration with suppliers. An example is a leading US apparel firm
that uses video conferencing with its suppliers for fit samples when conducting
the 2nd fit for styles.
Selecting the right systems to support acceleration is very important.
Private Label apparel product development has nuances that shouldn’t be
under-estimated. The concepts of “slow item build” and “slow purchase order
build” are not standard out-of-the-box functionality offered by PLM
solutions. The right combination of
packages and tools selected across PLM, Global Sourcing, Planning & ERP can
make or break an implementation
Business Process
To become an
Accelerator, companies require a detailed understanding of who does what and
who owns each step in PLM processes. Many
organizations realize they operate with unclear processes and accountabilities.
Organizations need to define processes
end-to-end and not simply as functional activity blocks. These broadly defined process need to be shared
with all stake holders to drive understanding of who does what and when. In spite of general awareness of process
reengineering and lean principles, in many organizations departments still work
in silos and do not leverage best practices.
Companies should automate non value-added steps from their process using
linked workflows. However, to achieve adoption and long-term sustainability
they need to avoid the temptation of trying to drive automation too far, too
fast and overwhelm stakeholders.
Collaborating with
suppliers earlier in the design process can also help companies reduce product
iterations and product cost. To manage
across extended enterprises, quality control processes need to be
enforced throughout the supply chain and tools provided to capture quality
issues early in the process.
Getting products faster to market at the
expense of quality can be devastating for these organizations. It is important for companies to understand
that in the dialogue on speed-to-market, quality is sometimes overlooked. For example, a leading retailer had to recall
the an entire line of girls’ clothing as they posed an entrapment hazard, while
a footwear company had to recall approximately, 700,000 units of children’s
clog shoes due to a choking hazard.
Voice
of the consumer
Excellence in PLM
starts with an understanding of the customer and market. In this area, apparel and footwear companies
can look to the CPG industry for applicable best practices. One best practice is to establish a marketing
focus group and identify a sample of consumers with the same profile as your
target consumers. Provide these
consumers shopping tasks and solicit feedback for market trends from their
perspective. These trends and desires
include volatility in fashion preference, which drives product lifecycles and
allowable new product introduction timelines.
Treat sample group feedback as feedback from the actual consumer. Selection of the right focus group is paramount
and should be done carefully. Business
intelligence and data mining techniques are helpful to determine target
consumer profiles. When developing
consumer profiles, it is useful to give them names and build a set of
attributes so that it is easier to conceptualize the target consumer and select
them for the focus group. For example, is your target consumer Debra, who is 35
year old, married with two kids, with disposable income of $85K; or is it
Kelli, 22 years old, starting out in her career, disposable income of $50K?
Knowing the target consumer and publishing it to the larger organization is
important to ensure the organization recognizes and works together to meet the
needs of your target consumer. We improved
the hit rate and reduced the number of styles in work at leading retailer
through more rigorous quantitative and qualitative line planning and
integrating with a PLM system.
Conclusion
Is faster speed-to-market
really better? Yes, for companies that require short lead times to respond to market
trends. No, for companies that rely upon basic products or consumer insight to
create demand for their fashions. Of
course, most companies have product families that fall into each category. Regardless of the cycle time profile, PLM for
apparel and footwear companies has become a powerful lever to drive
improvements. Whether just starting to
systematically address product lifecycle processes, or refining a mature
process, PLM today provides companies one of the few safe bets in an industry
marked by volatility and price pressures.
