Over the past 10 years, PLM (Product Lifecycle Management) software solutions for the apparel industry have matured significantly and have been proven to drive substantial benefits. However, the need to devote substantial time and resources, coupled with the financial investment required for successful implementations, have made it difficult to get a PLM initiative to the top of the priority list for all but the largest of companies, despite the ROI these initiatives can expect to generate.
To combat the inertia of companies unwilling or unable to pull the trigger on new PLM initiatives, software providers have sought to find ways to reduce the time and cost associated with PLM projects and speed up the realization of value. The result has been marketing campaigns centered on “Out-of-the-box” (OOTB) or “Preconfigured” PLM. In this article, Parker Avery sheds light on:
• What it truly means to implement an OOTB PLM solution
• Who OOTB PLM is most suited for (it’s not for everybody)
• How companies can best leverage these solutions to fit their unique needs
Historical PLM initiatives
Over the past decade, many apparel companies have taken advantage of the maturing nature of the PLM software market to replace their legacy systems with new solutions. The hope, or rather the expectation, has been that these new solutions would improve processes and efficiencies across the product development spectrum, driving results to the bottom line. Studies by industry research experts have documented that benefits such as a 5 percent to 10 percent reduction in direct materials spend; a 5 percent to 25 percent gross margin increase; and a 50 percent to 80 percent improvement in cycle times are possible.
Yet despite all of the potential benefits, companies that have yet to implement new PLM solutions are still cautious about taking on such an initiative. While not typical, implementation times can be as long as three years from project start to initial go-live for a single pilot group. A significant commitment of resources, both internal and external, is also required, and companies often do not have the internal IT resources with PLM system implementation experience or business resources with the time available to commit to a full-time project. Consequently, additional assistance from the software provider as well as a systems integrator or consulting partner is frequently necessary. The combination of the time and resource commitment required for a successful PLM implementation inevitably leads to high costs, typically in the multi-millions of dollars — thus the hesitancy to move forward.
“Out-of-the-box” (OOTB) or “Preconfigured” PLM is being hyped as the new cure for the nagging ailment of long and expensive implementations. Not surprisingly, there are different interpretations in the industry of what OOTB truly means. Some claim that any solution that does not require customization counts as OOTB, even if significant configuration is required. A more stringent definition of OOTB PLM, and the one we will use here, means that the software is ready to be utilized by a company upon purchase. While some very minimal adjustments may be required to match customer-specific terminology, the concept is that the software has been preconfigured to meet the needs of the typical apparel company based upon the software provider’s prior experiences with its customers. In theory, given how PLM software has matured over the past 10 years, the lessons learned by the vendors over that timeframe should enable apparel companies to purchase a PLM solution, “plug it in,” and start reaping the benefits.
Of course, it’s not quite that easy. While PLM software vendors are building these preconfigured models, not all vendors have experience in all types of soft goods. For example, a preconfigured footwear model would be very different from a model for traditional apparel or highly technical/engineered apparel. These models would include different product attributes, different complexity in terms of bills of materials, and different expectations of the level of collaboration with trading partners. In other words, not all preconfigured models are created equal, and it is important for companies to evaluate which OOTB model is most applicable to their business requirements.
With the appropriate starting point identified, following a fully preconfigured model and quickly realizing value is possible, but it requires an understanding of the caveats and compromises that inherently come with this approach. Adopting the OOTB software 100 percent “as-is” means that a company must change its business processes, tools and templates (e.g., cost sheets, tech packs or line-review materials) to map exactly to how the software has been configured. Any desired changes to make the software fit more closely to a company’s existing processes require further configuration and/or customization, which defeats the purpose of pursuing an OOTB approach in the first place and adds time and cost to the project.
Additionally, the extremely fast implementation times (i.e., six months or less) touted with OOTB solutions are generally achieved by limiting scope and integration. For example, the software may initially go live without vendor collaboration enabled and without being connected to or sharing data with any other systems. The value in this approach is that the system gets up and running quickly, users start getting accustomed to it, and the company begins to see some benefits from the best practices it has adopted in a short period of time. However, the downside of this approach is that it then requires subsequent releases of the remaining functionality to fully achieve the expected payback on the system.
New startups or smaller, less complex companies with minimal to no current systems are good candidates for a PLM implementation that is closest to the OOTB side of the spectrum. These organizations are best positioned to take advantage of the years of industry best practices that are incorporated into the preconfigured PLM solutions. They are less set in their ways and typically more willing to change their business processes to align with the software. Additionally, the staged approach to introducing functionality helps to improve adoption by users who are likely less accustomed to working with legacy enterprise systems.
While the processes that are built into a preconfigured PLM solution likely involve some changes that would be highly beneficial to any organization, few companies are truly prepared for the level of change required to follow a pure OOTB approach. Moreover, there are some aspects of every company’s processes or business model that are highly unique and are their primary drivers of competitive advantage. As a result, for most companies, some further configuration and/or customization of the PLM solution is needed and appropriate.
Yet too much customization can lead to a lengthier and more costly project, and it can inhibit future upgrades as well. Therefore, any project should incorporate a strict governance model to evaluate the projected ROI of each customization being considered. A delicate balance must be achieved: on one hand, companies cannot compromise their “secret sauce” for the sake of a cheaper and faster software implementation, but on the other hand, too much customization increases the maintenance burden and may limit the ability to benefit from future software enhancements.
Established companies with rigid processes or legacy systems in need of replacement will tend more toward the customization side of the PLM implementation spectrum. This approach enables them to maintain the key differentiating aspects of their business model and reduces the change management requirements of the initiative. Additionally, the longer implementation time can be more easily tolerated as there are already methods and tools in place that have enabled the company to be successful.
OOTB as a starting point
When it comes to PLM software for the apparel industry, there is really no one-size-fits-all solution. The suitability of an OOTB PLM solution is dependent upon the maturity level of a company’s processes and systems, as well as its tolerance for change. Regardless, preconfigured PLM solutions should always be considered as a starting point. They will likely meet 70 percent to 80 percent of a company’s needs and represent a far better alternative than starting from scratch.
A PLM initiative should begin by fully assessing the OOTB solution and identifying areas where processes can be changed to match the OOTB functionality. Even successful companies that are “set in their ways” can benefit from a process review and insight into the best practices of others within the industry. For the areas that are highly unique and cannot be met with the OOTB solution, configuration approaches should be pursued before customizing. Customization is expensive, can inhibit or make future upgrades much more painful, and should only be pursued when necessary to maintain competitive advantage.
With the maturation of the PLM software market for apparel companies during the past 10 years, organizations looking to invest in a new solution can take advantage of the many lessons learned by their predecessors. A fully OOTB approach may not be realistic for everyone, but any company can still leverage the work that software companies have done to develop these models and utilize them to jump start their own PLM initiative.
Scott Kern is an associate partner at Parker Avery. His insights come from his experience with PLM system selection and implementation, business process improvement, and organizational alignment initiatives. He has spent more than 15 years working with leading apparel companies in product development, inventory and supply chain management, merchandising and planning, store operations and e-commerce. He can be reached at firstname.lastname@example.org.
The Parker Avery Group
The Parker Avery Group is a boutique strategy and management consulting firm that is a trusted advisor to leading retail brands. The firm specializes in merchandising, supply chain and the omnichannel business model, integrating customer insights and the digital retail experience with strategy and operational improvements. Parker Avery helps clients develop enhanced business strategies, design improved processes and execute global business models by combining practical industry experience with proven consulting methodology to deliver measurable results. For more information visit: www.ParkerAvery.com; email@example.com; 770-882-2205.