PLM for apparel 2015.pdf

Given the scale of PLM investment todate, along with the planned investmentsand hoped-for returns on thoseinvestments, there is much opportunityfor apparel and retail executives andsupply chain leaders to leverage thetechnology as a whole for a muchbroader set of benefits.

PRODUCED BY

BY JANET SULESKI AND ANNA TONCHEVA, GARTNER

SPONSORED BY

www.ngcsoftware.comwww.infor.com/fashion www.ptc.com

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PLM FOR APPAREL 2015

In the 10 years since the first joint survey between Apparel and AMRResearch (later Gartner), the percent of respondents reporting hav-ing invested $500,000 or more in PLM technology has grown aremarkable 92 percent, from 24 percent to 46 percent of respondents.Expectations for return on investment have grown as well. In parallel,both driving the growth and being driven by apparel users functionalrequirements, software has evolved from product data management(PDM) functionality to product lifecycle management (PLM) function-ality, and is now wavering at the border between PLM and ProductInnovation Platforms, defined by Gartner as next-generation informa-tion technology platforms that facilitate continuous creativity, yieldingimprovements to products, product portfolios, and multiple relatedsupply chain processes throughout their various life cycles. Over time,this next stage of evolution will drive a new round of investments inPLM processes, technology and business talent.

Apparel companies today believe PLM evolution will be driven byfactors such as the desire to standardize an expanding list of PLM activ-ities across multiple channels and geographies, reducing time-to-mar-ket, improving product quality, and generating better designs. Lowerproduct costs, which ranked as the No. 2 expected business benefit in2006, now ranks fifth. Apparel companies continue to watch costsclosely, but with many costs squeezed out of supply chains over theyears and the pursuit of low-cost manufacturing above all other busi-ness goals coming under critical scrutiny, this is not the competitive dif-ferentiator that it was a decade ago. As noted in our 2014 report, PLMtechnology providers will be asked to provide the functionality to sup-port the orchestrated processes that apparel companies are building todrive value. This, along with the interest in business intelligence andanalytics to make intelligent tradeoff decisions throughout a productslife, the appeal of using social and mobile technologies, and the attrac-tion of cloud-based deployments, will drive functional progression.

This years portion of survey respondents with plans to make furtherinvestments in PLM technology rebounded to 63 percent from 50 per-cent in 2014. Among companies planning to make future investments,the portion expecting to invest $500,000 or more jumped to 41 percentafter dropping to 21 percent last year. While companies are planning tomake further investments, the likelihood of those investments happen-ing in the next 18 months dropped slightly from 52 percent to 43 per-cent. For those investing over the next 18 months, 56 percent are plan-ning to add customized capabilities and 36 percent plan to roll outadditional software modules alongside their installed PLM functionali-ty. For the second year in a row, the top-ranked benefit that appareland fashion companies hope to achieve from investments in PLM strate-gies and technologies is the standardization of processes.

Still emerging is the next role that PLM will play as a true competi-tive differentiator; just 18 percent of companies describe PLMs role intheir businesses today as a differentiator, and another 16 percent asbeing embedded within their end-to-end supply chain processes. Giventhe scale of investment to date, the planned investments, and thehoped-for benefits and returns on those investments, there is a lot ofopportunity for executive and supply chain leaders to leverage PLM fora much broader set of benefits.4

13

AN APPAREL RESEARCH STUDY & ANALYSIS

ABOUT THE SURVEYApparelmagazine and Gartners 10th annualsurvey of the apparel industrys adoption anduse of Product Lifecycle Management (PLM)technology provides the industry anopportunity to look back over a decade ofdevelopment and a decade of progress indesigning the PLM discipline and implementingsupporting technologies. In this time, PLM hasdefinitively moved from its traditional bailiwickof product design teams to take a much largerrole as a process and technology backbone forretail, footwear, and apparel supply chain,second only to ERP in terms of businesscriticality in many companies.

The survey was conducted in March 2015 toseek out industry participants opinions on thelatest PLM investments, future spending plans,and strategic objectives being set by processand technology leaders in apparel, footwear,accessories and home fashions. We offer oursincere thanks to the 51 companies thatparticipated and shared information abouttheir PLM plans and initiatives; without yourparticipation, making this study availablethrough Apparelwould not be possible.

This year, 43 percent of survey respondentswere manufacturers; 35 percent werevertically-integrated companies that designand sell apparel and other products directly toconsumers through their own retail channels;and 22 percent were retailers that sellbranded apparel merchandise or a blend ofbranded and private-label merchandise. Ofthe 48 companies that indicated an annualrevenue range, 10 percent had annual sales ofmore than $5 billion, 31 percent had annualsales of $1 billion to $5 billion, 36 percent hadsales revenues of $100 million to $1 billion,and 23 percent had sales revenues of $100million or less.

This report is meant to be a usefulbenchmarking and research tool to help guideyour companys thinking about the currentstate of your PLM process and discipline,compare your investments to date and howthey measure up to your industry peers, assessyour PLM maturity and map your path to thenext level of PLM maturity. We welcome yoursuggestions and feedback for the kinds ofdata you would like to see collected andpresented in next years survey.

2015 SNAPSHOT AND EVOLUTIONDefining the Scope of PLM

One of the greatest challenges in tackling PLM within theapparel industry is that getting a consistent definition for whatcompanies include in the scope of PLM is difficult, if not impossi-ble, yet essential for getting PLM initiatives right. For the purpos-es of this research, Gartner defines PLM as a discipline for guid-ing products and product portfolios from ideas through retire-ment to create the most value for businesses, their partners andtheir customers. PLM applications have traditionally been focusedon the subset of PLM activities that occur from ideation captureand product data management, and typically conclude at eithertech pack creation or the cutting of the final purchase order,though this is changing. Our survey focuses on how apparel com-panies whether they be retailers, vertically-integrated retail-ers, brands, or manufacturers conduct PLM activities withintheir companies and use technology to support those activities.

In apparel, more so than other industries, enterprises haveblurred the boundaries between the discipline and the technol-ogy, resulting in confusion regarding what is and is not a PLMapplication for these industries. PLM is described by retail,footwear and accessories (RFA) companies in endless combina-tions to cover process steps in: Design-to-order: For example, inspiration capture, line plan-

ning, storyboarding, product specification development, rawmaterials visibility and management and finished goods sourc-ing. May include the creation of the purchase order.

Order-to-shipment: For example, the creation of the pur-chase order, visibility to manufacturing status, creation ofthe outbound delivery notice or ASN, creation of shippingdocumentation, traceability to the dock and invoicing the(B2B) customer.

Shipment-to-cash: For example, visibility to the location of theshipment and import status, distribution of product to ware-houses or stores, allocation to channels or stores and visibilityto merchandise, inventory and operations execution (MIOE).

Gartner takes the position that, at this time, a PLM for RFAapplication and processes must support the design-to-orderspan of activities. Company definitions of the scope of PLM, andPLM applications offered by vendors, may also cover a range ofactivities that include order-to-shipment, shipment-to-cash,product portfolio management and product phase-out process-es. The important thing is that your company have a sharedscope, definition, and language for PLM as it evaluates initia-tives to improve processes and the application of technology.Without this, PLM investments are less likely to achieve targetbenefits and returns-on-investment.

Where Are We Now?The apparel industry has come a long way in 10 years as

measured by investment, deployed technology and benefitsachieved from that technology. In 2006, just 15 percent of sur-vey respondents reported having invested more than $1 millionso far on their PLM initiatives, and half of respondents hadspent less than $100,000. In 2015, 33 percent of respondentssaid that their companies had spent more than $1 million on

PLM FOR APPAREL 2015: A DECADE OF PLM DEVELOPMENT14

Figure 1: Spending on PLM Technology to Date

13% 13% 3%7% 7% 27% 13%20%

PLM initiatives to date. Twenty-eight percent of companies hadspent under $100,000, and 39 percent had spent somewhere inbetween those two figures (see Figure 1). Over the past threeyears, the figure for the percent of survey respondents thathave spent more than $1 million has wavered a bit, but at itsessence, more than one-third of all responding companies havetaken the steps over time to invest an enormous amount of cap-ital into PLM.

Companies have made great strides in adopting and usingPLM technology as a result of these investments (see Figure 2).In 2006, 80 percent of companies had adopted or planned toadopt bills of material/product data management functionality;today, that figure is 90 percent. Eighty percent of survey respon-dents today include or plan to include direct materials sourcingand supplier collaboration in their PLM deployments, up mod-

estly from 77 percent in 2006; and 73 percent have implement-ed or plan to implement collaborative design or CAD sharingcapabilities, up from 57 percent in 2006.

Compared to 2014s survey results, apparel companies havemade the greatest progress in adopting costing (78 percent vs.60 percent), product portfolio management (57 percent vs. 40percent), and line planning (59 percent vs. 55 percent) function-ality. The adoption of this planning layer of capabilities isindicative of companies moving to the next stage of technolo-gy-enabled PLM proficiency after establishing their operationalfoundations with bills-of-material and product data manage-ment, costing, and materials management functionality.Planning in turn lays the groundwork for the future of PLM,which is evolving today under the influence of social, mobile,cloud and big data developments.4


Bill of Materials/Product Data Management

Costing

Materials Management

Line Planning

Product Portfolio Management

Workflow/Critical PathManagement

Calendar Management

Collaborative Design/CAD File Sharing

Merchandise Planning/Management

Direct Materials Sourcing/Supplier Collaboration

Product Ideation

Business Intelligence (BI)/Analytics

Executive Dashboards

Virtual Product Prototyping/Modeling

Sustainability, social or consumersafety compliance tracking

Other, n=18

Figure 2: PLM Efforts and Adoption Status

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Figure 3. Bottom Line Improvements Experienced Through PLM To Date

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reducing lead times ranked as the top business initiatives com-panies were considering for 2014. These goals, linked closelywith PLM processes and applications, were the No. 1 way appar-el companies planned to achieve future growth goals. As aresult, the percent of survey respondents planning to makeadditional investments in PLM technology rebounded from 50percent in 2014 to 63 percent in 2015 (see Figure 4).Additionally, survey respondents indicate a willingness to makelarger PLM investments than last year, with 59 percent planninginvestments of $500,000 or more, up from 39 percent in 2014.

The planned timeline for these investments has remainedrelatively consistent. The survey data shows that, directionally,more apparel companies are holding off on investments foranother 12 months than indicated the same last year.Companies continue to develop highly-focused PLM initiatives,as they did in 2014, and at the same time are laying the foun-dation for broader refreshes that will allow them to tap poten-tial advantages from developments in cloud, social, mobile andbusiness intelligence capabilities and evaluate the evolvingProduct Innovation Platforms that will increasingly support end-

to-end PLM activities, including new product development,commercialization and launch activities across multiple func-tions such as design, marketing, sales and supply chain.

Implementations of PLM strategies and technologies haveyielded solid results for many companies, but not always in theareas where apparel companies hoped they would be achieved.PLM initiatives have delivered on expectations for process stan-dardization, lower product costs, and fewer markdowns (seeFigure 6). Hoped-for goals for faster time-to-market, however,have yielded mixed results. While survey respondents indicatethat PLM initiatives have helped reduce product developmenttime, fewer companies have actually seen faster time-to-mar-ket, suggesting that time for other activities such as planning,sourcing and distribution may have actually increased as time todesign a product fell. Twenty-five percent of respondentsranked faster time-to-market as their hoped for goal, and 66percent included it among their top three business goals. But,only 8 percent of respondents noted faster time to market asthe top business benefit achieved, and only 26 percent noted itamong their top three achieved benefits.4


2014(N=23)

2013(N=37)

Figure 4: Anticipated Investments in PLM Technology

15% 35% 50%

16% 21% 63%

35% 17% 4% 17%

18%

22%

26%3%

4%

18% 21%13%

2015(N=32)14% 23.5% 62.7% 31%16%16% 9% 28%

2015(N=32)14% 23.5% 62.7% 6%31%34%9% 19%

Untitled-2 1 5/14/15 10:03 AM

Outperforming expectations is better/improved design anddevelopment capabilities. Hand in hand with that, companieshave seen improved adoption rates for their proposed designs.Both are evidence that the internal workflows and collabora-tion enabled by better PLM processes and technologies areyielding products of which multiple stakeholders approve.Improved idea capture and sharing and workflow visibility havebeen instrumental in reducing the number of design cyclesapparel products go through during the development process,and are important contributing factors to the reduction in prod-uct development time.

Apparel companies continue to ask their technology part-ners for a wide array of functional additions and improvements.In 2015 the wish-list rankings changed to reflect the interest inplanning activities, and functions that improve visibility and theability to respond quickly when plans go awry remained popu-lar. Among the planning functions, business intelligence/analyt-ics (26 percent), calendar management (26 percent), line plan-ning (28 percent), and merchandise planning (16 percent)ranked as the top capabilities that survey respondents rankedfirst or second as areas they would like PLM software and serv-ice providers to improve. Calendar management, costing, direct

materials sourcing, and executive dashboards rated highlyamong the visibility capabilities companies crave to more quick-ly identify and respond to problems such as schedule delays,supply problems, or misaligned product costs. Areas that slippeddown the wish list in 2015 include workflow and critical pathmanagement (down from the No. 2 spot on the 2014 wish list),virtual product prototyping/modeling (down from its No. 4 rankin 2014), and collaborative design/CAD file sharing (down fromNo. 5 last year). The 2015 rankings closely correlate to the 2013survey results, suggesting that in 2014 companies were kickingthe tires of some less widely-adopted capabilities before invest-ing to continue to improve visibility and planning functions andprocesses. Comparing the functional wish list to survey respon-dents plans to add PLM functions to their PLM capabilities overthe next 18 months, we see that plans to improve sustainability,social, or consumer safety compliance is an investment targetfor many companies, yet is ranked well down the functionalwish list. Several interpretations can be made: apparel compa-nies may be satisfied with the compliance capabilities offeredby their PLM technology providers, or they have not yet gottendeep enough into investments in this area to know preciselywhat enhanced capabilities to ask their providers to add.4


Figure 6. Primary Benefits of PLM Strategy, Hoped For vs. Achieved, 2015

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SHAPING PLM FOR THE FUTUREGiven the enormous importance of PLM to apparel organ-

izations, understanding the factors influencing the evolutionof the PLM discipline as well as technology is important forplanning future investments in people, processes and tech-nologies tied to this area. True to the maturing nature of themarket, the factors that apparel companies believe will guidetheir PLM strategy development are changing. Cost manage-ment and reduction once again retained its ranking as thetop influence on PLM strategies, but fewer companies rankedit among the top three influences when compared with2014s results. Notably, companies ranking it as the No. 1influence fell to 25 percent in 2015, compared to 37 percentin 2014.

Moving up the list as influences are the need to increase cen-tralization of PLM activities, and the increased availability andadoption of cloud or Software-as-a-Service (SaaS) deploymentmodels. PLM initiatives have helped stabilize and create consis-tency among PLM activities, which controls business risk andproduct costs to an extent. The increasing influence of central-izing activities likely has less to do with literally putting every-one doing product design and development in one place, butrather creating a center-led PLM strategy that creates integra-tion and orchestration across key activities, but still allows formanaging differences in channels, customers, products, andmarkets. Center-led supply chain strategies are becoming morecommon in apparel enterprises, and as new product design andlaunch activities continue to migrate into the span of controlfor supply chain organizations, companies can expect to see


Business Intelligence(BI)/Analytics

Calendar Management


Costing



Line Planning


Virtual ProductPrototyping/Modeling

Workflow/Critical Path Management




Sustainability, Social, or Consumer Safety

Compliance Tracking

Product Ideation

Other

Figure 7: The 2015 Functional Wish List

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Business Intelligence (BI)/Analytics



Sustainability, Social, or ConsumerSafety Compliance Tracking

Calendar Management


Line Planning

Workflow/Critical PathManagement

Other



Product Ideation

Virtual Product Prototyping/Modeling


Costing


Figure 8. Activities or Investments Planned for PLM Technology & Services, 2015

Plan to Implement in the Next 18 Months

51%

48%

39%

38%

37%

35%

29%

28%

28%

25%

22%

22%

20%

18%

16%

8%

more experimentation with center-led models being applied toPLM. Cloud/SaaS deployments of PLM technology are one leverfor providing consistent functionality and workflows based onbest practices defined at least loosely by center-led PLM teams.

We expect to see a surge of organizational innovation asapparel companies more clearly define the role of PLM in theirsupply chains and then design the organizations needed toeffectively support the chosen strategy. This was the first year inour survey that we asked companies to describe the primaryrole PLM plays in their companies. Among retailers, just 17 per-cent describe PLM as a business differentiator, a startling figurein light of the growth of private-label activities and the parallelgrowth in design, development, sourcing and launch activitiesthat retailers must support. Another 22 percent describe PLM asembedded within their end-to-end supply chain process, andfully 50 percent describe PLM as belonging primarily to product

design, development, and sourcing organizations only. Amongapparel manufacturers, the numbers are similar. If anything,apparel manufacturers are more fixed at the reactive stage ofPLM maturity, reflecting the struggle that companies have inbeing both responsive to customer (retailer) needs and con-sumer preferences, and bringing innovative designs, textiles,and even supply chain services to attract and retain customersand consumers. Evolving PLM strategies will require bold appar-el industry participants to create aspirational plans for supplychain leadership that may precede their companies abilities toexecute on the new organizational design from a cultural, tech-nical, process or talent perspective. The case for doing so willbecome more compelling as companies limit race-to-the-bot-tom cost cutting and increasingly focus on innovation and top-line growth for enterprise success.4

n=51

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Materials management

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Predictive calendar management

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Figure 9. Factors Influencing PLM Strategies Over Next Three Years


point), create designs more efficiently, and reduce or manageproduct costs. The apparel industry is now showing a greaterappetite for taking a critical look at PLM processes and strate-gies, which, if not exactly broken, may not be the right ones totake companies into an increasingly multi-channel, global, con-nected, data-driven, and cloud-based PLM future. Will theapparel industry increasingly put PLM into the role of a truecompetitive differentiator, or is the PLM discipline as it is cur-

rently constructed better aligned to be a lights-on opera-tional system, more like a manufacturing execution system or apayroll application essential to business but fundamentallyunglamorous? We hope next years survey will tell us moreabout whether the industry wishes to move the PLM disciplineforward as a differentiator or whether a new generation ofPLM organizational structures and Product Innovation Platformtechnologies better represent next years big runway success. n

PLM DevelopsExpertise, Resources

and CommonProcesses

PLM is Embeddedwithin End-to-End

Supply Chain

Figure 10. Primary Role of PLM in Supply Chain, by Market Segment

RETAILER (n=18) MANUFACTURER (n=33)

PLM is aDifferentiator

PLM is Defined asProduct Design andDevelopment Only

PLM Links Design/Development andSourcing Processes

PLM DevelopsExpertise, Resources

and CommonProcesses

PLM is Embeddedwithin End-to-End

Supply Chain22%

17% 28%

22%11%

18% 33%

24%12%

12%

Copyright 2015 by Edgell Communications Inc. All rights reserved.

Janet Suleski, Research Director, Supply Chain & Apparel, Gartner

Janet Suleski brings more than 17 years of experience working with retailers and software vendors to her role as research director,supply chain & apparel, at Gartner, and is a founding member of the retail advisory practice. Janet is primarily responsible forresearching, analyzing and writing about the technologies, best practices and trends in key retail software segments, includingretail ERP, product lifecycle management and business intelligence applications. Prior to her current role at Gartner, Janets researchand analysis focused on fresh item management, point-of-sale, price optimization and customer loyalty software and business

processes. She has also covered inventory optimization, strategic sourcing and procurement, collaborative planning, forecasting, and replenishment(CPFR), supplier collaboration and supply chain event management. Janet is a member of Apparels Editorial Advisory Board.

Anna Toncheva, Researcher, RDA Team, Gartner

Anna Toncheva is a researcher in the RDA team at Gartner, where she is designs, analyses and delivers the insights from qualitativeand quantitative research studies. Prior to Gartner, Anna spent more than a decade at IDC as a researchdirector/economist/analyst. Her focus was to analyze the relationships between IT spending and economic variables, developmultilevel hardware, software and services forecasts and segmentations, and guide clients in evaluating actionable go-to-marketstrategies and portfolio development.

ABOUT THE AUTHORS

PLM is aDifferentiator

PLM is Defined asProduct Design andDevelopment Only

PLM Links Design/Development andSourcing Processes

Documents

PLM for apparel 2015.pdf