Leveraging ERP systems to embrace change in the fashion industry
What is ERP?
We live in an amazing era of technology-driven change. The way we buy fashion has been transformed: shopping has lost the shackles of the traditional storefront and is now at any time and every place.
“ERP is designed to enable a total view of what is going on in an organization at any instance and over time, so you can problem-solve on the ground and plan for improved efficiency in the future. Its main function is to pass accurate, timely information back and forth within a business, between people and technology in order to prevent miscommunication, speed things up and reveal possible inefficiencies.”
Consumers are able to choose any number of ways to interact with your brand from brick-and-mortar stores, mobile phones, the Internet, to social media. As such, the way fashion companies design, manage, sell, communicate, and market products have changed beyond recognition. Our need to keep up is ever more important as we aim to find balance in the key principles of low-cost goods, flexibility. quality, on-time delivery, and speed to market coupled with a loyal customer base. None of this is possible without leveraging the incomparable power of ERP software.
ERP software, if managed well, can be the catalyst that takes your business from good to great by eliminating expensive, time-consuming, and error-prone interfaces and replacing them with a new and efficient way of working. From the initial concept to the product in-store, ERP is changing the face of the clothing and fashion industry.
The importance of leveraging technology
Leveraging technology in ERP is the difference between flat sales and achieving exceptional growth. The most successful companies will be those that take advantage of web-based technology by implementing systems built on sound existing infrastructures and well-functioning ERP systems. Everything from apparel, and footwear, to accessories to name a selection, has been greatly influenced by developments and innovations in technology.
One of the biggest effects has been in production processes where automation and speed to market have reduced lead times allowing ‘fast fashion’ to happen. Gone are the days where design, production, order processing, and distribution are done by hand. Globalization has resulted in a need to forge tighter links up and down the supply chain to integrate business functions and allow data to be shared across many boundaries and divisions.
As companies grow it becomes increasingly important to engage with an effective ERP system, one that is geared to the fashion, apparel and textile industries and one that allows a fast analysis of trends and developments.
Trends in enhanced ERP systems
Current trends in ERP systems include the move toward standardization, to cloud-based solutions, and a move to more customer-centric approaches:
Move towards standardization
The current trend in ERP systems is moving away from customization to standardization. The benefit being that generic ERP provides everything retailers need without the lengthy processes involved in tailoring systems to individual nuances. More often than not, nuances identified by companies, in fact, do not exist. Retailers need to trust the expertise of existing ERP systems. There are also clear financial benefits in taking advantage of a tried and tested, standardized package. Customization costs money, takes longer to develop, and runs a greater risk of being unable to integrate with existing company systems such that by the time a package has been customized any benefits have been lost.
A great ERP specialist will use their knowledge of fashion and apparel to adapt and enhance an existing ERP package and pre-configure it to specific business models, processes, and tasks. Functionality such as being able to consolidate inventory in pre-packs with unpack/repack capabilities and to be able to automatically adjust customer specific prices will ensure flexibility and scalability to drive future growth and expansion.
Move to cloud-based solutions
Cloud-based ERP systems have many advantages and few drawbacks. Cloud computing systems are cost-efficient and have been found to enhance worker morale and by extension, productivity. To gain the benefits of cloud-based systems, the ERP solution must be scalable to fit business needs and one of the following options should be adopted:
- Private cloud – Best for use in conjunction with legacy systems that do not contain built-in cloud capabilities.
- Hybrid solutions – Using only those elements of the cloud systems that are essential to their business needs.
- Public cloud – Systems based entirely in the cloud. Whilst this solution might be the most costly in terms of time and money, there are long-term benefits to be gained.
Why ERP is critical in the fashion industry
Fashion retailers are involved in one of the most logistically complex industries. Clothing retail has much shorter product lifecycles in comparison to other sectors, and the pace of change in demand is significantly higher. Each season a whole new collection is produced and in recent years this has moved to quarterly refreshes and fast fashion lines. We are challenged by keeping track of merchandise (that ranges in style, size, fabric, and color-way), whilst anticipating demand, forecasting sales, reducing delivery times and minimizing unplanned markdowns.
The need to assess manufacturing costs, sorting and extracting styles to be produced makes managing end-to-end processes incredibly complex. Being able to handle all this information in one system means more efficient and accurate business decisions can be made thanks to ERP software.
Key benefits of an efficient and effective ERP system
ERP integrates all departments and functions into a single computer system able to serve each department’s needs. The following summary highlights the key benefits but relies on selecting and implementing the best ERP solution for your company.
All aspects of the business process from concept to consumer can be integrated. ERP aims to integrate all departments from design, manufacturing, financial, customer services, sales, and distribution. Productivity and work-flow are significantly improved.
One of the key benefits of an advanced ERP system is the ability to focus on cost control. By inputting data in one place, with ‘one truth’ and managing the inventory from concept to solution, the cost savings can be significant. By centralizing all key product data, savings can be made on sourcing similar materials and forecasting more accurately. For example, where fabric is common to a number of different garments across different divisions, ERP helps to calculate the total fabric required and so better deals can be achieved. In addition, ERP helps to improve communication and flow within the company. For example, any changes to the fabric such as composition or washing instructions can be centralized which makes communication to relevant teams seamless and foolproof.
Effective ERP systems enable managers to see comprehensive statistics on costing and revenue allowing adjustments to be made to production lines, sourcing of raw materials, and other contributing factors. Ultimately there is no chance of data manipulation, with the use of ERP, user input is monitored and each input logged so that it is easy to see which person is responsible at every stage. Having the right information in the right place at the right time anywhere in the world undoubtedly improves productivity.
Reports can be compiled in a short time with pre-sets entered and run on a daily basis. Summaries for use in management meetings provide total operational overviews, in stark contrast to reports assembled by Excel, ERP allows concurrent dates to be entered, meaning time will be saved and management can have an accurate picture of what is happening across the business from production processes to planned dates for item availability in the warehouse. ERP means that optimum inventory can be maintained. Put simply, time and money investment can be allocated to areas that need attention quickly, efficiently, and accurately.
Reduction of duplicate work
It is hard to imagine how much data is duplicated from concept to customer and how many times information is miscommunicated. Automating operational tasks and providing easy access to information means significant time savings can be achieved, and the risk of human error is greatly reduced.
Flexible and scalable solutions
The ability to take full advantage of the power of an enhanced ERP solution is to choose a partner who is able to be as flexible and dynamic as your organization. In embarking on the implementation you must believe in the growth capabilities that your company can achieve. Therefore choosing a partner that has scalable solutions that are future proof is of utmost importance.
Customer centricity- Food for thought
As consumers integrate the latest technologies into their everyday lives they demand more from retailers. The modern consumer expects every interaction across every channel to be seamless and simple. Further, they expect to be able to shop at all times of the day (and night) and to have fast, flexible delivery options available to them at all times too.
Gaining competitive advantage
To ensure that customer experience across all channels delights and excites means smarter systems and better processes are called for. As well as a new perspective on business process management, the key to success is to build a supply chain that services the full spectrum of customer needs using ERP software. Consumers enter a store or go online expecting to be able to locate the item they want when they want it.
Stock availability is critical to match each individual customer with the particular item they want. By utilizing the power of an enhanced ERP system, retailers are able to have the inventory levels of their worldwide stock at their fingertips. It makes the difference between losing a sale and gaining a customer.
The fit of the garment
Brick-and-mortar retailers are beginning to see the effect of poorly fitting clothes and footwear in high return rates via online shopping. Customer reviews hold vital information to assist other purchasers to understand how the garment will fit as well as allow buying and merchandising teams to make simple amendments for the future. Simply put, yet more valuable and actionable data that can be trawled using ERP software. However, what if the description of that garment is able to contain far more fit information about the garment than we see currently? All the size data is held in the specification of the garment and therefore in the ERP system as well. In the future, we will see a marrying up of the size information and the communication to the consumer. The only way to enable this seamlessly is via an ERP system designed for the clothing industry.
Understand your customer’s size and shape
To improve the fit of clothing retailers need to go back to the start of the process and become truly customer-centric. However, it is hard to know what the shape of your customer is. This is where research needs to be combined with big data to ensure both attitudinal, factual, and behavioral indications are taken into account. This is perhaps where the future of retailer/ERP integration is leading us.
Marrying data analytics and qualitative research
In utilizing an effective ERP system, companies are able to manage and find actionable insights behind customer behavior to predict future activity. However, by incorporating smaller data sets to understand the psychology of the audience such as interviews, focus groups, and other research methods, businesses can start to access the ‘why’ behind market trends. Techniques such as immersion sessions work well to bring consumer sentiment to the front of the minds of decision-makers. ERP software then really is at the foreground of a customer-centric approach.
Resource Credit | K3 Technologies