Technology Development in 2012.pdf

7/29/2019 Technology Development in 2012.pdf

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Executive Summary

Apparel magazine and Gartner have joined forces forthe seventh consecutive year to collect and analyze informa-

tion about the technology spending plans and trends that

fashion, apparel, footwear and soft goods industry partici-

pants have for the coming 12 months.

Apparel companies are exploring a wide range of options for

improving the health of their businesses, reaching beyond the

cost-cutting focus of recent years to find the next big thing toimprove efficiency and support innovation. We are pleased to

provide insight on the apparel industrys attitudes and behaviors

relating to technology budgets, planned expenditures and

spending priorities in the context of this search for the next com-

petitive edge. The discussion supporting the data is designed to

help companies identify new opportunities for creating business

efficiencies while also creating the agility to support increasingly

diverse and global shopper constituencies.

We sincerely thank all those who participated in the survey; it isthe willingness of executives to contribute information that

makes it possible for this report to provide a comprehensive

view of the apparel industrys spending plans and priorities.

AN Apparel EXCLUSIVE REPORT

www.epicor.com/retailwww.texbase.com

Produced By:

SPONSORED BY


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AnApparel Exclusive Research Study & Analysis

In this years Top Technology Trends in the Apparel MarketSurvey, participants report spending an average of 4.5 per-cent of their total revenues on IT budgets in 2012, down

from 4.8 percent in 2011. Additionally, the number of compa-nies expecting to increase their IT budget for next year moder-ated slightly to 41 percent, down from 45 percent that reportedplans to increase spending the previous year.

Notably, among companies that plan to increase their ITbudgets in the coming year, the amount they expect to up theirspending continues to increase. Among this years survey par-ticipants that plan to increase spending in 2013, the averageexpected increase is 12 percent, up from 10 percent in 2012 and

8 percent in 2011. In many apparel companies, technology hasmade the transition from being considered primarily a meansto increased efficiency and is now regarded as a strategicenabler for balancing efficiency, innovation, and the demandsof ever-broadening channel and geographic reaches. Fundingbadly needed technology upgrades is now accompanied bystrategic investments to set the stage for future businessgrowth. However, companies took the lessons of the last reces-sion seriously and often create a plan breduced IT budget incase of sudden shifts in the economy.

Fewer apparel companies expect increased sales in existingcategories to drive future growth, with 77 percent of companies

viewing this as one means to support revenue growth, down

from 83 percent in 2012. International expansion, the additionof retail stores globally, and acquiring or merging with anothercompany as means to drive growth all increased over 2012.

The business initiatives that survey respondents indicatedwill support growth plans appear to have shifted substantiallyfrom reduction of product costs to improvements in executingbusiness processes to bring those products to market more suc-cessfully. Twenty-three percent of survey respondents namedreducing product costs to improve marginsas their top busi-ness priority for the coming year, down from 29 percent in2012. Instead, 16 percent indicated that improvements to newproduct commercialization and launch processes will be the

most important business initiative. The number of respondents

indicating that lead time reduction will be their top businessinitiative nearly tripled from 5 percent in 2012 to 14 percent inthis years survey.

Supporting this emphasis on the execution of new productlaunch and related supply chain processes, 16 percent ofrespondents pointed to supply chain planning as the No. 1application area with which they are most concerned, up from

just one percent in 2012. Heavy emphasis on implementing andexpanding the use of PLM technology in recent years appearsto have paid off for companies, with just eight percent indicat-ing that it is their area of greatest concern, down from 26 per-cent in 2012. E-commerce and merchandise assortment plan-

ning also came in at eight percent, indicating that many appar-el companies see room for improvement in the applicationsthat they currently have deployed. Additional survey workshows that apparel companies have turned the functional dialon improving speed to design products and improving thequality of products they bring to market. With PLM processesmaturing, the focus in many apparel companies has shifted tooptimizing the processes and technologies used to bring thoseproducts to market successfully. As enterprise growth andfinancial health increasingly rely on international expansionand the strategic growth of new channels to market, technolo-gies that deliver scalable, integrated ways to support the deci-sion-making required for truly international supply chains,

global sourcing and localized assortment management whileproviding relevant, secure visibility to enterprise functions andtrading partners are likely to substantially absorb increases to ITbudgets in the coming years.

Who Responded?

The survey was conducted throughout October 2012. Wecollected 85 responses via a web-based survey. Forty-four per-cent of respondents identified themselves as apparel manufac-turers, brand marketers or wholesalers, up from 31 percent in2011. Twenty-nine percent identified themselves as verticallyintegrated retailers (companies that produce and sell apparel),

20 percent as retailers (companies that sell multiple brands,

Strategic IT a Must to Drive

Innovation, Channel GrowthFor many apparel companies, technology has made the transition from being considered primarily a

means to increased efficiency and is now regarded as a strategic enabler for balancing efficiency,

innovation, and the demands of ever-broadening channel and geographic reaches.

By Janet Suleski, Research Director, Supply Chain & Apparel

and Lucie Draper, Researcher, Research Data & Analytics, Gartner

4 Strategic IT a Must to Drive Innovation, Channel Growth


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http://www.texbase.com/data


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possibly including private-brand merchandise), and 7 percentas other qualified companies that participate in the apparelindustry. The portion of companies that indicated they haveannual revenues of greater than $500 million was 34 percent,

while another 37 percent reported annual revenues of $25 mil-

lion to $499 million. The remaining 29 percent reported rev-enues of less than $25 million, compared to 39 percent in 2011.Readers that review the survey data year-over-year should takeinto consideration the shift in the respondent base this year tolarger companies and how this may impact survey results.

This year, 35 percent of survey respondents came from theranks of corporate management, nearly identical to the 34 per-cent in last years survey. IT and systems management profes-sionals accounted for 21 percent of respondents,and 24 percentcame from product development, sourcing/procurement orproduction. Among survey respondents, 65 percent operate atleast one store, and 28 percent operate 100 or more stores.

Among the companies that today do not have physical storelocations, 43 percent sell direct-to-consumer only, and 18 per-cent plan to launch a direct sales channel or open one or morestores in the next two years. The number reporting that theyhave no plans to sell direct to consumers or open store loca-tions in the next two years fell from 49 percent to 39 percent.

We are confident that the survey results reflect trends in tech-nology spending plans among the apparel industrys line-of-business and decision-makers and technology leaders that aredesigning and making funding decisions about business andtechnology strategies in 2013 and beyond.

Key Business Initiatives

In previous yearsreports, we noted that survey respondentshad started to shift from focusing on reducing product costs tomaintain margins toward looking for new ways to provide

value to customers and shoppers. While the search for valuecontinues, Gartners work with apparel companies has uncov-ered a great deal of interest in improving the likelihood that anew product or new product category will live up to the finan-cial, volume, sales channel and other metrics the company setsfor it. To capture the interest in this area, this year we added anew response to the question asking survey participants whattheir most important operational business initiative will be inthe coming year improving the new product commercializa-

tion and launch process.As in prior years, the top initiative companies named as the

most important for the coming year was reducing product coststo improve margin. However, the number of companies nam-ing this as their No. 1 initiative has declined significantly overthe past four years, from 39 percent in 2009 to 23 percent in2012. A total of 30 percent of survey respondents namedimproving new product commercialization and launch orreducing lead time for new products as their top initiative. Thissuggests that companies are more confident that they aredesigning the right products for their target consumers, andnow they are looking for better ways to bring the product to

markets successfully. Increasingly, apparel companies are tar-

geting improved alignment between new product develop-ment, supply chain, sales and marketing, and merchandisingand store operations groups.The mechanism being most heav-ily explored to achieve the desired results is expanding the gov-ernance role of the sales and operations planning (S&OP)

process as a critical means to improve new product launch.Investments in supply chain technology are being pursued toimprove the information that can be brought to the table for themore frequent and increasingly important S&OP meetings.

International expansion continues to rank as one of themost important business initiatives for many apparel compa-nies. While a substantial number have at least some stores out-side of the United States, expanding international distribution,

whether through channels, franchises, or owned-stores,remains a hot button for business leaders as companies seek tolock in market share, diversify customer bases to diffuse finan-cial risk, and tap new sources of inspiration and fashion sense.

Trending downward this year is the number of companiesnaming business intelligence and analytics as their top busi-ness initiative, with 8 percent of survey respondents namingthat as their top business initiative in 2013, down from 13 per-cent in 2012.

In 2011, we added introduction or expansion of mobileapplication capabilitiesas one of the answers companies couldchose as their most important business initiative. Three percentof survey respondents, or 4 companies, chose this answer last

year; in 2012, 5 percent, or two companies, chose this answer.While caution is advised in interpreting this data, responsesover the two years suggest that mobile investments cannot bedescribed as dominating IT spending decisions.

Growth Plans

This years survey participants reported plans for supportingfuture growth that remain largely consistent with the plansindicated in last years survey. As the global economy has stabi-lized and recovered to a certain extent over the past three years,growth plans have become more consistent as apparel compa-nies adjusted to external conditions and focused internally onaligning operational activities with strategic goals that increas-ingly focus outside-in to provide more value to shoppers.

Year over year, apparel companies moderated expectationsthat growth would come from increased sales volumes of exist-

ing products, with 77 percent reporting that growth would bedriven by existing products, a figure that is down from 83 per-cent last year. Among this years survey respondents, verticalretailers were the most cynical, with 64 percent naming existingproducts as a source of growth. Rather, expanding internation-ally, adding new sales channels, or acquiring or merging withanother company stand out as areas that vertical retailers willexplore in 2013.Retailers are the most optimistic about increas-ing sales of existing products, with 88 percent naming this as agrowth driver for 2013. Few retailers expect to acquire or merge

with another company, but mobile technologies remain a high-ly attractive area for growth. Nearly half of retailers expect to

introduce or expand mobile selling activities in 2013.


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Figure 2: Plans to support future growth goals, by industry sector

Vertical Retailer Retailer Manufacturer

64%

78%

88%

56%

81%

59%

48%

32%

35%

22%

6%

44%

47%

22%

16%

11%35%

52%

32%

24%

Increase salesvolume of current

products

Introduce newproducts or

categories

Add new saleschannel

Add retail stores toyour own chain

Add retail formats toyour own chain

Expandinternationally

Acquire or mergewith another

company

Introduction and/orexpansion ofmobile sales

channels

16%

20%

47%

22%

2010 2012

Other

Rationalizing supplier & manufacturer base

Increasing supply chain visibility of product status

Introduction/expansion of mobile application capabilities*

Improving or expanding CRM capabilities

Increasing supply chain agility

Improving or expanding business intelligence/analytical capabilities

International expansion

Reducing lead times for new products

Improving the new product commercialization &launch process

Reducing product costs to improve margin

* New in 2011; Customer acquisition/expand customer baseonly asked in 2010 (4% included in other)

14%

3%

7%

12%

12%

9%

9%

7%

27%

2011

9%

7%

5%3%

7%

10%

13%

11%

5%

29%

8%1%2%5%

5%6%

8%

12%

14%

16%

23%

Figure 1: Most important operational business initiatives

Apparel manufacturers and brand marketingcompanies expect that growth will primarily comefrom introducing new products or categories ofproducts and increasing sales of existing products.Notably, 32 percent of apparel manufactures seegrowth coming from international expansion and22 percent may grow by acquiring or merging with

another company. Like retailers, apparel manufac-turers are becoming more global in their strategiesand outlooks. As retailers and vertical brand com-panies push supply chain segmentation and thestrategic alignment of product type fast fashion,seasonal or basic to global networks of suppli-ers, apparel manufacturers realize they need to goglobal to serve their customers better. And, appar-el manufacturers and marketers with their ownretail business units may realize a unique opportu-nity to acquire manufacturing capacity in marketsthey serve through retail outlets, or add retail out-

lets to markets where they will build or buy man-ufacturing capacity.

IT Spending

Apparel companies average 2012 budgets fortechnology, including capital and operational costsfor hardware, networking, telecommunications,software maintenance and licenses, third-party ITservices and internal headcount, was 4.5 percentamong survey respondents, down from 4.8 percentin 2011. The number of companies expectingincreases in IT budgets in 2013 moderated slightly to41 percent, down from 45 percent in last years sur-


Strategic IT a Must to Drive Innovation, Channel Growth 7


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vey.The number of companies expecting no change in IT budgetsjumped to 54 percent from 44 percent, drawing from both thepool of companies expecting budget increases and the pool ofcompanies expecting decreases. Overall, IT budgets are expectedto increase by 4.1 percent in 2013, up from 3 percent in 2012.

The jump in the expected average increase is driven by theremarkable 12 percent mean percentage increase expectedamong apparel companies with plans to grow their IT budgets.

With major PLM implementations behind many companies,expected increases will likely be absorbed to compete moreeffectively on the global and mobile stages. Apparel companygrowth and financial health are increasingly relying on growthfrom international markets and on maximizing reach to cus-tomers that increasingly shop using mobile technologies. As aresult, investments in technology that deliver scalable, reliableand integrated ways to support decision-making activitiesacross geographies, supply networks and selling channels will

be demanded by apparel companies in 2013 and beyond.Companies fiscally healthy enough to support a 12 percentincrease in IT budgets may see the opportunity to put addition-al competitive distance between themselves and industry peersby investing now in the technologies that will enable the nextstage of international growth and efficiency.

Much as last year, IT budget plans differ significantly amongthe three apparel industry sectors surveyed, and differ substan-tially from the previous years survey findings.Vertical retailersIT spending plans for 2013 more closely mirror 2011 than 2012,

with 55 percent of vertical retail survey respondents reportingplans to increase IT budgets, up from 32 percent. Growth in ITbudgets among companies planning increases averages 4.6 per-cent, up sharply from 1.8 percent reported last year. After a yearof restrained growth in IT budgets likely focused on deployingand ramping up already-purchased technology, vertical retailersare ready to resume investigation of new technologies, many ofthem related to improving new product commercialization andlaunch and supply chain planning and execution functions.

Additionally, many vertical retailers see substantial opportunityin pursuing further international expansion, and these effortsmay require additional technology investments.

Retailers are largely planning to hold IT budgets at the samelevels as last year, with 61 percent reporting no plans toincrease budgets. Thirty-nine percent plan budget increases

that average 3.4 percent, down from average planned increasesof 5.2 percent coming into 2012. After years of delaying neededor desired technology investments, retailers felt substantialpressure to begin the process of upgrading aging applicationsin the store. And, many software vendors have made greatprogress in expanding and enriching retail applications inrecent years. Retailers that purchased new applications in 2012may take 2013 to implement, optimize, and expand the reach ofthese applications before moving on to the next wave.

Among apparel manufacturers, the trend is also towardholding IT budgets steady. Fifty-nine percent of respondingmanufacturers plan to keep IT budgets the same in 2013, up

from 47 percent who planned to hold budgets the same in 2012

as 2011. The bulk of this shift came from manufacturers wholast year increased their IT budgets, as the percent expectingincreases dropped to 34 percent from 43 percent in last yearssurvey. With the shift away from a cost-cutting focus andtoward improving business processes and collaboration hap-pening in the apparel industry, manufacturers may be holdingcurrent investment levels steady as they wait for signals fromtheir retail customers about the kinds of capabilities bothtechnology and process that the retailers will want them toprovide in the next one to three years before revising their ITspending strategies.

Trends in Technology Areas of Concern

Spending in individual technology areas would ideally be like

weaving threads together to create a pre-defined pattern in afabric with the desired quality, resiliency, density and drape. Thetruth is that the end results of spending and deployment strate-gies are often uneven, a reality that apparel companies respond-ing to our survey pointed out in no uncertain terms this year.

This year, when asked to characterize their current portfoliosof business applications software, 31 percent of survey respon-dents indicated that their portfolios are not sufficient to supporttheir businesses. Another 13 percent characterized them as inte-grated and ineffective, while 10 percent described them as stand-alone and ineffective. With 54 percent of industry respondentsstating that, on one level or another, their applications portfolios

are not robust enough to take them to the next level of enterprise



% of revenue budgeted for IT:

Mean 5% 4.8% 4.5%

% change in IT budget among those increasing:

Mean 10% 8% 12%

Figure 3: IT budget as a share of revenue andbudget directions for next fiscal year

Decrease No change Increase

Q. What is your companys IT budget as a percent of revenue in 2012?

Q. Is your companys IT budget for the next fiscal year increasing,decreasing or remaining the same? By what percent?

2012

6%

54%

43%

2010

11%

52%

37%

2011

10%

44%

45%

Growth: 1.7%Growth: 2.1% Growth: 3.0%

*includes both capital and operational costs for hardware, networking,telecommunications, software maintenance/licenses/in frastructure,third party IT services, and internal head count.


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maturity, the challenge of layering in capabilities to synchronizeinternal teams, collaborate effectively with external trading part-ners, and achieve further lead-time reduction, improve success innew product launches, and effectively segment supply chains

remains a tremendous challenge for the industry.Once again, we reviewed IT applications of greatest concernin two different ways: rank-ordered by areas of greatest concern(Figure 5) and grouped by business area (Figure 6). As an indi-

vidual area of concern, supply chain planning outranked allother areas, with 16 percent of survey respondents citing it asthe one application area with which they are most concerned,up from one percent in last years survey. Core supply chainranked as the business area in which companies are most con-cerned about their applications, consistent with the overallfinding that apparel enterprises have turned their attention todetailed assessments of new product commercialization andlaunch processes and lead time reduction beyond cutting time

out of product design processes.PLM remains an area of concern, with 18 percent of compa-

nies naming product development, product design or qualityassurance as the application area of top concern, and anotherthree percent naming sourcing. The enterprise systems thatunderpin supply chain capabilities, providing transactionalsupport and master data management, ranked as the No. 1concern for 15 percent of companies, meaning that a total of 44percent of companies ranked either core supply chain or supplychain enabling applications as the application area with whichthey are most concerned. As apparel companies look to thenext wave of business strategies and applications to give them

a competitive edge, technologies that provided supply chain

collaboration, cross-functional synchronization, and analyticsto support rapid and intelligent tradeoff decision-making willbe needed to close the gap between todays supply chain sys-tems and the needs of the future.

Store and cross-channel applications such as POS, advanced

selling technologies (including mobile) and e-commerceplatforms dominate the attention at 18 percent of companiesresponding to the survey, indicating that fashion and apparelcompanies continue to work on providing robust systems tosupport activities both within and across channels, as cus-tomers increasingly expect seamless service across buyingexperiences and channels. Merchandising applications thatreach across channels and geographies and yet allow tailoredassortment down to the individual store level remain an appli-cations goal for many apparel enterprises as well. Amongapparel enterprises, the applications focus actively shifts year-over-year, and as expected the current shift has carried atten-

tion and investment dollars to supply chain investments. It islikely that replacement and upgrade cycles for merchandisingtechnologies many of which were installed prior to the 2008recession will ramp up over the coming 12 to 24 months.

The Role of Mobile Technology

The use of mobile technologies such as tablet computersand smart phones in retailing has a wide application beyondthe in-store technologies that grab attention in mainstreammedia. While usage is still limited, mobile technology, along

with social, cloud and information technologies, is rapidly re-shaping the use of technology in business enterprises of allkinds. In 2011, we added a question to this survey to assess in

which areas apparel companies were applying mobile tech-nologies. We asked the same question this year, and note thatthe adoption of mobile capabilities has been rapid among com-panies participating in the survey.

This years survey participants once again indicated that themost rapid adoption of mobile capabilities is happening in thee-commerce space, with 18 percent reporting that they are fullydeployed on mobile technology in this area, 12 percent plan-ning to deploy in the next 18 months, and 24 percent in pilottesting or deployment. Overall, 70 percent of survey respon-dents are engaged in some form with using or evaluatingmobile technologies for e-commerce activities. Use of mobility

in warehouse management systems (WMS) and business intel-ligence tied for second place, with 45 percent of survey respon-dents using or evaluating mobile technologies for use in theseareas. Apparel companies are actively bringing the power ofmobile technology to POS and advanced selling, merchan-dise/assortment planning, and allocation/replenishment activi-ties, with 35 percent or 36 percent of companies experimentingor deploying mobile in these areas.

Further behind is use of mobile technologies in supply chainactivities such as sourcing, supply chain planning, and customsand logistics management, with full mobile deployments ineach area in the single digits. Reasons for slower deployments

of supply chain functionality on mobile platforms are plentiful,



Figure 4: Change in IT budget next fiscal year,by industry sector

Decrease No change Increase

Q. What is your companys IT budget as a percent of revenue in 2012?

Q. Is your companys IT budget for the next fiscal year increasing,decreasing or remaining the same? By what percent?

Manufacturer/BrandMarketer (wholesale)

6%

59%

34%

Retailer

62%

39%

Vertical Retailer

9%

36%

55%

Growth: 3.9% Growth: 3.4% Growth: 4.6%

% of revenue budgeted for IT:

Mean 3.9% 3.4% 6.2%


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Figure 5: IT Software application areas of greatest concern

Q. Of the major application areas mentioned, which ONE category are you most concerned about?

16%

8%

8%

8%

6%

5%

5%

5%

5%

5%

5%

5%3%

3%

3%

3%

8%

Supply Chain Planning

Product Development

Merchandise/Assortment Planning

E-Commerce

Financials

Product Design

Warehouse Management Systems (WMS)

Quality Assurance

POS/Advanced Selling Technologies

Supply Chain Collaboration

Allocation/Replenishment

RFIDCRM

Sourcing

BI, Analytics & Performance Management

Master Data Management

None of the above

Store & Cross-channel

SC Enabling

PLM

Merchandising

Core Supply Chain

Note: Customs & Global Trade Management, Lifecycle Pricing and Logistics & Transportation were available answer options but not chosen.

Figure 6: IT software application areas of greatest concern, grouped by business function

Q. Of the major application areas mentioned, which ONE category are you most concerned about?

8%

5%

5%

6%

3%

3%

3%

8%

5%

5%

8%

5%

16%

5%

5%

3%

8%

E-Commerce


RFID

Financials

CRM

Bl, Analytics & Performance Management


Product Development

Product Design

Quality Assurance




Warehouse Management Systems (WMS)

Supply Chain Collaboration

Sourcing

None of the above

Note: Customs & Global Trade Management,Lifecycle Pricing and Logistics & Transportation were available answer options but not chosen.



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from software that is not yet enabled for mobile devices to fearsof security related to use of smart phones and tablet computers.Currently, apparel companies are investigating mobile tech-nologies to share information efficiently, such as supplyingreports on supply chain statuses, or where collaboration is a

natural part of the process, such as presenting a retail buyerwith a customized assortment of products from which they canchoose. While its possible to imagine a time when core prod-uct design, manufacturing, logistics and store operations appli-cations may be deployed to mobile technology, it will be some

years before apparel companies pursue this kind of mobiledeployment strategy in meaningful numbers.

Supply Chain Technology and Lead Time Reduction

One of the most important shifts in the apparel industry isthe shift away from a cost-cutting focus to an emphasis onimproving new product launch and commercialization

processes and reducing lead times for bringing new products to

Figure 7: Use of mobile technologies by business area

Evaluating Fully deployed No plans to deploy in the next 18 months Piloting/testing or deploying Plan to deploy in the next 18 months

Q. Please indicate how, if at all, your company is engaged with mobile technology (such as tablet computers or smartphones, but not includingbarcode scanners) in the following areas:

Product Design

Product Development

CRM

SC Collaboration

Sourcing

Quality Assurance

Customs & Global Trade Management

Warehouse Management Systems




Lifecycle Pricing

E-Commerce


Logistics & Transportation

FinancialsBI, Analytics & Performance

Management


RFID

12% 4% 72%

8% 10% 67%

16% 8% 6% 8% 62%

10% 4% 6% 78%

10% 6% 8% 74%

12% 8% 10% 68%

8% 4% 4% 82%

22% 20% 55%

16% 10% 4% 6% 64%

6%

8%8%

2%

2%2%

6%

2%

2%

2%

20% 8% 6% 64%

10% 8% 10% 6% 65%

8% 8% 80%

16% 24% 18% 12% 30%

6% 4% 6% 6% 77%

12% 10% 73%

12% 4% 12% 4% 67%

16% 12% 12% 6% 55%

12% 8% 76%

2%

2% 2%

2% 2%

2% 2%

14% 8% 76%2%

Figure 8: Changes in budgets for mobile technologiesand usage in 2012 over 2011, by industry sector

Increase Remain the same Decrease

Total

33%

67%

All Retailers

29%

71%

Manufacturers

39%

61%


11/13

market.Apparel companies have trimmed time out of the prod-uct design, sourcing and development processes in the past few

years, and are now turning their attention to improving coordi-nation and decision-making in supply chain processes.

We ask survey participants for information about the length

of time spent on typical processes for new product develop-ment and launch. While recognizing that each apparel compa-ny is unique in its lead time requirements, it is useful for com-panies to get a snapshot of the typical lead times experiencedby peers in the industry. To smooth out year-to-year fluctua-tions in the data, we have averaged together three years of dataabout how long it takes apparel companies to conduct each ofseven typical processes in the new product development launchprocess. Figure 9 provides the results.

Product design, development and approval processes con-tinue to take a substantial amount of time, with 48 percent ofsurvey respondents taking 30 days or more to complete this

process.To combat this, apparel companies are using intelligentsegmentation of products and developing processes to fast-track fashionable items that need to hit the market quickly togenerate maximum impact and margin, agile processes fordesigning seasonal products that may need tweaks to the fun-damental design as data comes in about consumer response tosimilar products, and cost-efficient but perhaps slower process-es for basic products that the apparel company always carriesbut refreshes from time to time.

Not surprisingly, the single longest process for most com-panies is the manufacturing of products. In this case, we areseeing apparel companies applying supplier segmentationstrategies to single out strategic supplier relationships to cut

production time for time-sensitive fashion products. In thesecases, apparel companies are making intelligent tradeoff deci-sions such as paying their invoices to these suppliers muchmore quickly than average to create and maintain a good

working relationship with the supplier. Creating these strate-

gic relationships provides apparel brand companies andretailers with additional leverage in sourcing manufacturingcapacity and fabric. So in exchange for accounts payable met-rics that may make a company look like it is too quick to payits bill, the apparel company is able to get priority for capaci-ty assignment and more timely information about where theproducts are in the in the manufacturing process valuablecurrencies in the world of fast-fashion products, but lessimportant for most seasonal and basic products.The end ben-efit to the apparel brand and retail company should be greaterfull-priced sell through and better margins that more thanoffset any added costs.

Many apparel enterprises are taking a broad-basedapproach to addressing lead time challenges. In this years sur-

vey, we added a question asking participants whether or notthey have any active initiatives in place to reduce lead times intheir companies, and if so, what initiatives they are pursuing.The results show a combination of technology and businessprocess initiatives that point to where apparel companies willbe spending supply chain IT dollars in the coming year. Seventy-one percent of all respondents have an active lead-time reduc-tion initiative in place, with 26 percent pursuing tighter integra-tion of product development, planning, and supply chain appli-cations and 15 percent upgrading product development andPLM technologies.


Figure 9: New product development and launch timelines, by process (2009-2012 average)

Number of daysthe process takes

Product designSourcing/

ordering mfg.capacity & fabric

Color & fitsampling and

approval

Production atmanufacturer(s)

Shipment toNorth America

(factory tocustoms)

Transit fromcustoms to

DC/warehouse

Transit fromDC to stores(incl. time toa retail DC)


12/13


Figure 10: Companies initiatives to reduce lead time to bring new products to market

Q. Does your company have an active initiative to reduce the lead time to bring new products to market?

Q. Please select the types of initiatives that are currently in place.

29%

26%

15%

12%

6%

3%

3%

6%

Improving internal process alignment

More tightly integrating product development, planning,and/or supply chain applications

Upgrading product development/PLM technology

Requiring shorter lead times from your suppliers

Re-designing your supply and/or distribution networks

Building relationships with third-party supply chain service providers

Bringing supply chain functions that are currently outsourcedunder corporate management (insource)

Other

71% Have an active initiative

For the 29 percent pursuing improved internal processalignment, Gartners work with apparel manufacturing andbrand companies is showing that an important part of theseinitiatives is driving better alignment between new productdevelopment and S&OP processes. For retailers, improvedalignment is being sought between the new product pipeline,both for private-label and branded products, and merchandise,inventory and operations execution (MIOE) processes.Technologies for supporting this improved alignment includeapplications specific to S&OP process data gathering and pres-

entation, internal and external collaboration tools, improveddemand forecasting, rapid merchandise allocation andre-allocation planning, product portfolio planning and analysis,and business intelligence and analytics. With new product fail-ure rates, defined as a new product failing to achieve one ormore target metrics set for it, hovering at 50 percent or greaterfor companies across all industries, the drive to improve align-ment has taken on new urgency. While apparel companies willnot abandon the pursuit of technologies to make their opera-tions more efficient, efficiency is no longer adequate for achiev-ing competitive advantage and for serving global, connected,cross-channel and fickle shoppers.

Closing ThoughtsAmong the 41 percent of survey respondents that plan to

increase their IT budgets in the coming year, its easy tounderstand why the average expected increase has grown to12 percent.

The force of social, mobile, cloud and information technolo-gies is being felt on apparel companies IT budgets even asapparel brands, manufacturers and retailers continue to grapple

with the very physical world of design, production, distributionand selling. The nexus of these forces is the apparel supplychain, and as a result, more apparel companies are prioritizingbusiness initiatives for new product commercialization andlaunch and lead-time management than are prioritizing prod-uct cost management. Supply chain planning technology isnow the single leading area about which apparel companies are

concerned, and core supply chain areas topped the list of fiveapplications categories in terms of concern. PLM dropped tosecond place, as many apparel companies completed majorPLM initiatives and turned their attention to bringing the newproducts designed in those PLM systems to market more effec-tively.Survey results hint that the next wave of apparel technol-ogy spending may be merchandising-focused, as companieslook to upgrade or replace technologies that were in manycases implemented before the start of the 2008 recession. Wesee 2013 shaping up to be another very active year in IT spend-ing and initiatives for the apparel industry as companies movefrom a cost-cutting focus to an optimized-operations focus andseek applications that can deliver much needed analytics, visi-

bility, and collaboration capabilities that help the people inapparel enterprises make the business decisions that lead tofresh, timely and innovative products reaching shoppers at theright times and in the right quantities.



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Janet Suleski, Research Director, Supply

Chain & Apparel, Gartner

Janet Suleski brings more than 16 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 for researching, analyzing and writing

about the technologies, best practices and trends in key

retail software segments, including retail ERP, product

lifecycle management and business intelligence

applications.

Prior to her current role at Gartner, Janets research and

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.

Lucie Draper, Researcher, Research Data

& Analytics, Gartner

Lucie Draper brings more than 17 years

of deep domain expertise to her role as a

senior researcher at Gartner. She is responsible forconducting quantitative market research, which includes

designing questionnaires and samples, conducting field

interviews and surveys, and performing statistical analysis

of research data and reports. Lucie works closely with

AMR Research clients on custom

primary research-based engagements that help those

clients with their product and marketing strategies.

Lucie has written extensively about trends in IT adoption

and IT budgets and worked with clients such as SAP, IBM,

Microsoft, Oracle, and EMC. Her research has been

quoted and published in many business and technology

ABOUT GARTNER INC.

Gartner, Inc. (NYSE: IT) is the worlds leading IT and supply

chain research and advisory company. We deliver the

technology and supply chainrelated insight necessary for

our clients to make the right decisions, every day. From

CIOs and senior IT and supply chain leaders in

corporations and government agencies, to business

leaders in high-tech and telecom enterprises and

professional services firms, to technology investors, we are

the indispensable partner to 60,000 clients in 10,000

distinct organizations. Through the resources of Gartner

Research, Gartner Executive Programs, Gartner Consulting

and Gartner Events, we work with every client within the

context of their individual role, to help them move their key

initiatives forward. Founded in 1979, Gartner is

headquartered in Stamford, Connecticut, U.S.A., and has4,000 associates, including 1,200 research analysts and

consultants serving clients in 80 countries.

ABOUT APPAREL MAGAZINE

Apparelmagazine has been the industrys leading

publication for more than 50 years. It offers technologyand business insight from concept to consumer, providing

competitive, actionable information to executives

representing the worlds most successful apparel brands,

retailers and manufacturers. Apparels targeted content

addresses Retail Intelligence, Supply Chain, Sourcing &

Logistics, Concept-to-Spec and Fiber-to-Fabric. An

Edgell Communications publication, Apparelalso produces

Apparels Sourcing Summit, the ApparelExecutive Forum,

Apparels Business & Technology Leadership Conference,

ApparelsTech Conference West, numerous web seminars,

research supplements and newsletters and

apparelmag.com.

TECHNOLOGY GROUP

www.edgellcommunications.com

ABOUT THE AUTHORS

Copyright 2013 by Edgell Communications Inc.All rights reserved.


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