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Posted Date: 10/21/2009

THE EXTENSION OF PRODUCT LIFECYCLE MANAGEMENT INTO SOURCING

contributed by Peter Bambridge, Research Director, Gartner, (Peter.Bambridge@gartner.com)

In the current challenging economic climate, many organizations have chosen to limit their investments in new systems and in moving away from large scale platform approaches, are focusing more on shorter projects which will deliver tangible ROI in months rather than years. But despite tighter budgets, one area which has seen recent increased investment is solutions that are designed to help drive profitable growth through product innovation and cost effective sourcing.

Business pressures to deliver more new product designs on a regular basis to consumers at ever decreasing price points, in an attempt to retain customer loyalty, have lead to an increased focus upon time to market, reducing design and sourcing costs and increasing flexibility to respond to changing opportunities. This has led many apparel retailers and manufacturers to look again at their sourcing and product lifecycle management (PLM) solutions.

Other current trends, such as the move to globalization, also have impacted this strategy. This has driven a need to standardize processes and information exchange across the supply network, and driven increased adoption of collaborative platforms supporting broad communities of users. By providing increased visibility throughout the supply chain and driving supply chain execution/logistics, this broader community of users can all benefit. The more advanced approach aligns these capabilities with the PLM and sourcing solutions identified above, to deliver an end-to-end enterprise solution that combines accelerating time to market with responsive global trade management and the desired cost efficiencies.

The scope of PLM and Sourcing

The scope of functionality traditionally covered by PLM and sourcing solutions in apparel footwear and accessories (AFA) has as many definitions as there are solution vendors addressing the market. Recent Gartner research identified more than 70 vendors with solutions in this and related areas, and studied in detail 21 leading solutions which broadly addressed the key business needs.

Part of the reason for this variety of approach is the differences between owned label and branded merchandise requirements, and how the solutions are positioned to address the needs of both retailers and manufacturers. In a large part, it also reflects the type of vendors and their own history.

The main modules identified by this research as being required to provide a complete PLM solution covered the following functional areas:
  • Product management
  • Material management
  • Concept management
  • Storyboarding
  • Line and commercial planning
  • Sourcing
  • Vendor management
  • Quality assurance management
  • Collaboration
  • Critical path management/workflow
  • PLM & sourcing analytics
The end-to-end business processes required to successfully manage AFA product innovation from idea to shelf require more than just the traditional PDM type of solution, or even PLM; they also require extensive sourcing capabilities. Sourcing, like PLM, is a loose term which is interpreted differently by vendor organizations with their own perspectives and products to sell. However, only selected existing PLM vendors address the needs of sourcing within their solution footprint. A few vendors have partnered to address these requirements, rather than extend their own solutions. Tight integration between the business processes of sourcing and PLM are required to ensure reduced time to market.

The following diagram shows the high level business processes that the modules in PLM and sourcing solutions address and how they relate to strategic levels and the high level phases of the product life cycle:


 
The sourcing and vendor management aspects of the PLM solution set is often less mature than some other modules. Organizations in the AFA sector must consider sourcing requirements, as well as traditional product development requirements, when selecting potential PLM solutions. When deciding to combine sourcing solutions and PLM solutions from different vendors, organizations need to bear in mind the time and complexity required to ensure effective integration. Selecting a single vendor for both PLM and sourcing can significantly reduce project risk, and implementation timescales, as well as ensuring a consistent user interface and as a result user experience.

Sourcing and PLM Solution Providers

Some of the PLM solution vendors are also providers of sourcing solutions for the AFA industry. Recent research identified that an increasing number of PLM solutions now include sourcing modules within the scope of their AFA PLM solutions, however, these typically limit sourcing functionality to early stage vendor capability and selection, rather than full scope including global order management. Some PLM vendors offer similar capabilities through partnerships with free-standing sourcing solutions that integrate to their PLM platform. In addition, there are a group of sourcing vendors who have extended their solutions to also provide PLM capabilities.

The main types of PLM/Sourcing approaches and a few example vendors are a follows:
  • Sourcing vendors with PLM modules (such as ecVision, Core Solutions and TradeStone)
  • PLM vendors with sourcing modules (such as PTC and Siemens PLM)
  • PLM vendors with sourcing partnerships (such as Dassault Systemes ENOVIA working with Zymmetry)
  • ERP vendors with PLM/Sourcing solutions (such as Lawson, New Generation Computing and SAP)

The selection of which type of sourcing solution is most appropriate for a given organization will depend upon many factors. The key factors include: the degree of fit to the business requirements, the need for tight integration between PLM and sourcing to speed time to market, the PLM/ERP system currently in use/planned for adoption, the integration requirements to other operational systems, and the balance of best of breed vs. a single vendor policy.

Business Benefits of combining PLM and Sourcing

The key business drivers of tighter integration between PLM and Sourcing solutions are enabling faster time to market, enhancing visibility across the entire supply chain, gaining tighter control on costs throughout the process and improving the agility of the business to respond to changes in consumer demand.

The end-to-end business process gets a product from the initial idea stage through to delivery to the retail environment. By combining all aspects of the PLM design, innovation and sourcing processes, this encompasses the entire trading network that enables the enterprise. As a result, efficiency gains can have a real impact on the financial performance at each stage in the chain.

This end-to-end systems integration is essential to delivering the shorter cycle times of fast fashion and to being agile and responsive enough to market changes to take advantage of opportunities as they develop, while providing the visibility across the entire trading network.

Organizations looking to thrive in these increasingly challenging trading conditions are adopting this sort of approach by combining the strengths of integrated PLM with the cost effectiveness of global sourcing. Those organizations looking to focus on one area alone cannot realize the maximum potential benefits and synergies available.

Organizations looking to optimize their performance need to ensure that their PLM and sourcing strategy is tightly integrated, and enabled by a consistent platform that can realize these potential benefits.

Gartner is continuing its program of research on this and related themes, and looks forward to continuing to work with retailers, manufacturers and vendors in this developing field. For further information please refer to Gartner.com, or directly to Peter Bambridge at: peter.bambridge@gartrner.com

About Peter Bambridge

Peter Bambridge is a Director of Research in Gartner Industry Advisory Services, focused on the consumer goods industries in the manufacturing vertical. He is responsible for analyzing the business and technology market, as well as identifying growth and opportunity areas. Key topics that he covers include product life cycle management (PLM), sales and marketing, merchandising and supply chain issues.

Mr. Bambridge has more than 25 years of experience in the IT industry. Before joining Gartner, he ran the European business for Freeborders, driving the growth of both the PLM business in the apparel sector and the offshore application development business. Prior to this, Mr. Bambridge drove business development in the retail and consumer goods industry with a variety of leading technology and service vendors, including Novell, G4 Analytics, Deloitte Consulting, i2 Technologies, Oracle, Intactix and Comshare. Mr. Bambridge also worked in retail for Marks and Spencer, in stores and at head office in the IT group.

Mr Bambridge is a Fellow of the Institute of Sales and Marketing Management and is a Professional member of the British Computer Society. He holds a B.Sc. (Honours), Nuclear Engineering, from Queen Mary College, London University.

About Gartner

Gartner, Inc. is the world's leading information technology research and advisory company. We deliver the technology-related insights necessary for our clients to make the right decisions, every day. From CIOs and senior IT 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 to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, CT, and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries.

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