Articles

Accelerating Speed In An ‘Industry 4.0’ World!

sydney schroen
Jun 21, 2017

              Ed Gribbin, President, Alvanon Inc

June 2017

Brands and retailers need to fundamentally re-invent how they create products and launch them in the market at earliest if they want to compete for the attention of an increasingly fickle and rapidly changing consumer sentiments. Ed Gribbin, President, Alvanon Inc. suggests some of the ways by which retailers can sustain in a competitive environment.

 

 

Consumers, more than ever, are inundated with demand for their attention and their attention spans are getting shorter. They’re spending far more time on their mobile devices than they do in stores; as a result, we are facing a record number of retail bankruptcies this year and Bloomberg is projecting over 8,600 retail stores closure. In addition, consumers are shifting a greater percentage of their disposable income to experiences, such as entertainment, dining out and travel. Also, shoppers have started realizing that they don’t actually need new clothes, so why to buy? The reason for the same would be too much stale inventory, too many stores and too much time taken to bring new products to the market.

You must have heard of the ‘housing bubble’. Well, welcome to the ‘apparel bubble’! So, what can brands and retailers do to prevent the ‘pop’? They can start by recognizing that we are already in an Industry 4.0 world and that they have access to technologies and processes that can help them maintain their relevance, continue to excite and retain customers, and even grow their businesses. The convergence of huge amounts of data, advanced analytics, machine learning and digital to physical transfer have created a path not just to survival but to success for the companies that embrace and exploit them.

With the online consumer search data that is available today, we can know what is macro-trending across our entire target customer demographic (for example, 78 per cent of 18-24 years old women searched for ‘floral print sundresses’ in the past three days); we can get down to know what an individual wants and even what you and I are looking for. Personalized offering, focused on an audience of one, can also be produced.

The reality is supply chains have gotten incredibly long and complex over the past thirty years, primarily because brands and retailers have been chasing lower and lower costs.

The challenge we face is how do we make or source the products that are in demand if we are stuck in an ‘old world’ 18-month product development cycle? Even the incremental improvement will not work; we must blow up the old model and start over. If anyone thinks it’s not that urgent, consider that Amazon has, in a few short years, become the largest seller of clothing in the US and was recently awarded a patent for an on-demand manufacturing system designed to quickly produce clothing – and other products – only after a customer order is placed.

The computerized system envisions an order being placed on a mobile device that goes directly to automated spreading, cutting, assembly and delivery technologies, and gets the product to the customer, customized to fit their body shape, almost instantly; most likely by a drone directly from the factory.

The change that the industry needs requires four critical components:
• Decisive leadership and empowered product teams
• Embracing of digital technologies
• Shorter and more responsive supply chains
• Direct-to-consumer logistics plan

The reality is supply chains have gotten incredibly long and complex over the past thirty years, primarily because brands and retailers have been chasing lower and lower costs.

Getting it to the customer is what matters and this is something that Amazon excels at. Consumers no longer want to wait and, frankly, they don’t have to. Someone out there will get them what they want, and when they want it

The transformation needs to start by changing the leadership mindset from developing ‘Fall/Winter ’19’ to developing this ‘July’.

How is that possible? Well, it starts by developing a reliable portfolio of fabrics that are consolidated and staged as greiges or finished goods with reliable suppliers, many of whom are hopefully in close proximity. Zara, as an example, sits on 8+million metres of fabric and can design on fabrics that already exist and produce new styles in two weeks. Not everyone can do that, but everyone can develop a fabric strategy that enables fast-track production.

It also starts with decisiveness on the part of the creative, merchandising leadership and product teams. If you are developing a season that is 16 or 18 months ahead, you get ‘smarter’ throughout the process and tend to change or tweak and request more sample iterations until the last possible moment. If you are deciding on styles for ‘July’, you better decide quickly, looking at maybe one sample, perhaps even a ‘virtual sample’. 3D visualization and virtual prototyping technologies exist today and are being embraced by the most progressive brands and retailers. The software’s ability to render fabric aesthetics and even performance characteristics realistically has improved radically over the past year to the point that in many cases, a virtual prototype will look like a high-resolution photo of an actual garment.

From a decisiveness standpoint, the additional good news is that if you are only producing for ‘July’, you are not committing to tonnes of inventory expected to sell over a 4-6 month season. You are only buying for a month and actually mitigating the risk involved. And, if you’re only buying for ‘July’, you better start thinking about ‘August.’

All of a sudden, there is no time for second-guess, re-sample and debate. The entire chain in the product development cycle has to be empowered to look, assess and decide. This includes buyers, merchandisers, technical designers, sourcing
teams and suppliers. Everyone in the chain needs to be trained to assess, approve and move on; they all may not have the skill sets or confidence to do that today, but training resources exist to enable that.

Top retailers have embraced Vendor Fit Management (VFM) programs where a third-party trains and certifies specific vendors to manage technical fit approvals at the factory level significantly speeding up the production process. Many VFM programs also utilize 3D virtual fitting before producing any sample so that the one physical sample actually produced is pre-approved for fit, style, colour and detail, and is actually the pre-production sign-off sample.

The reality is supply chains have gotten incredibly long and complex over the past thirty years, primarily because brands and retailers have been chasing lower and lower costs. The length of a supply chain, however, is actually a cost in itself that most brands and retailers don’t consider. The longer it takes to get from design to the customer, the more value erodes from the product. Low Freight On Board (FOB) price is no longer an advantage if it’s not what the customer wants right now.

Sourcing at least some portion of production domestically, or in proximity to market, is a critical step in being responsive. Product that sits in a container, on a boat or train or truck, for eight weeks or more, is the product that is just waiting to get marked down. The major sports brands – Nike, Adidas and Under Armour – have all committed to domestic production of some styles specifically to be faster and more responsive to their customers; and they have the added capability of being able to customize products for individual customers at the same time.

Lastly, moving products from ports to distribution centres and from distribution centres to retail stores is not working out for most retailers. Getting it to the customer is what matters and this is something that Amazon excels at. Then it’s no surprise that this is why mall traffic is down and stores are closing in record numbers. Every brand and retailer need to have a direct-to-consumer strategy that takes waiting out
of the equation. Consumers no longer want to wait and, frankly, they don’t have to. Someone out there will get them what they want, when they want it.

The age of the smart factory is on its way and it will be controlled from the cloud.

Stantt – a men’s shirt brand finds a ‘Genie’ in unique sizing system

There is a start-up men’s shirt brand in New York named Stantt which figured out that standard men’s shirt sizes don’t work for over 60 percent of men. If the chest fits, the belly may be tight; if the shoulders fit, it might be too long. The problems go on and on. So they came up with a ‘unique sizing system’ that has nearly 80 different sizes and considers all possible fit/measurement combinations. You cannot profitably stock all of those sizes in a store, especially if they’re available in hundreds of fabrics.

Their solution? When a customer places an order online, for their custom fabric and size, the order electronically appears in an automated cut queue in a factory in Central America. It’s cut, sewn, finished and shipped in about two days. That’s fast, that’s responsive and that’s how every brand and retailer need to think in this consumer driven 4.0 world.

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