THOUGHT LEADERSHIP REPORT
EVOLVING ERP: EXPECT MORE FOR YOUR MONEY
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nterprise resource planning (ERP) technology has evolved and transformed, covering more ground with a more simplified format than systems past. If you lined up a traditional apparel industry package alongside a new enterprise solution, it would be hard to tell they were from the same software species. From the underlying computing language they speak to their functional breadth, everything has changed. Yet it is still commonplace to find ERP from a former era throughout the fashion industry. For apparel executives ready to start exploring ERP alternatives, “they will absolutely benefit from doing a fresh assessment of the technology options,” says Gaurav Pant, senior vice president and principal analyst, EKN. “It could mean discovering not just advanced functionality but also reduced implementation effort, time and cost, especially if you’re looking at cloud deployment models. “It’s a great time to assess what technology works best — not just to replace what they have but also to solve critical problems and execute new strategies, whether that is how to go direct, how to manage different sources or how to handle global compliance,” he says.
The All-in-One Approach Next-generation ERP systems go far beyond “the basic plumbing” such systems traditionally have encompassed. Whereas ERP’s traditional footprint covered core financial transactions and order management, today’s enterprise solutions include expanded functionality to control processes from product development to warehousing and fulfillment. “Solutions are becoming more and more robust, managing more individual functions across the enterprise,” says Nick Castellina, research director, business planning and execution, Aberdeen Group. “That makes it easier for organizations to find one single integrated package rather than multiple point solutions they may have sought in the past.” The fewer the IT tools, the less system integration required to do business. Apparel businesses that want to upgrade multiple systems are often pleased to discover that a single ERP solution can cover functional ground from concept to consumer. To minimize the need for interfaces between software packages, more of them are choosing to invest in ERP that provides integrated functionality for product lifecycle management (PLM), supply chain management (SCM) and other mission-critical processes that previously required point solutions. Berry Jewelry, which specializes in products ranging from scarves to bags and belts, opted to employ a comprehensive technology strategy when it replaced its general industrial ERP 4
application with a fashion-focused solution. The private-label and brand wholesaler implemented the cloud-based Simparel Enterprise solution at its New York City headquarters and other global offices. “As a design-focused company, we needed much more business information than our Sage MAS 200 accounting/ERP system could provide,” says CEO Martha Berr y. “Most importantly, we wanted a system with PLM capabilities that could start at the design phase and carry us all the way through to sales and shipment.” When diverse but interrelated functionality is covered by fewer solutions, users benefit from reduced software training, greater data visibility and a shared understanding of enterprise information. “A fundamental challenge for many apparel companies continues to be getting a single version of the truth with respect to where you are as a business and at what stage your products are in the supply chain,” Pant says. “A lot of them are focusing on data visibility, given advances in analytics.”
“Cloud is a big differentiator when it comes to deployment of systems like ERP. It’s the speed. If you’re a U.S.- based company, you can get partners in other geographies onto the cloud quickly.”says Gaurav Pant, senior vice president and principal analyst, EKN. Next-Gen Architecture Matters Business analytics is just one of the many areas where technology has made huge strides in recent years. The very foundation of next-generation ERP — the code itself — has changed dramatically. Fresh new packages feature an easily configurable architecture, which makes implementation much fas ter. “The newer ERP platforms are built on a different technology architecture,” says Pant. “You can get things moving quickly. … Newer players also understand that we’re living in an omnichannel world, and their systems come equipped to handle those business processes.” In a blog post about its 2015 technology outlook, “Achieving Excellence in Retail Operations,” EKN highlights the importance of investing in technology to ensure “a robust shipping and omnichannel fulfillment infrastructure.” “Retailers should look to phasing out cross-channel order management systems older than five years and move to newage integrated order management and fulfillment systems that Copyright © Edgell Communications, Inc. and Apparel 2015
Q&A
EXECUTIVE INSIGHT
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How is the practical definition of ERP today different than it was 10 years ago? There has been a tremendous evolution in apparel industry ERP. Nextgeneration ERP technology now includes enterprise-wide, end-to-end functionality. Whereas legacy systems focused primarily on core financial and order management functions, today’s enterprise software natively integrates ERP, product lifecycle management (PLM), supply chain management (SCM), manufacturing resource planning (MRP), electronic data interchange (EDI), warehouse management (WMS) and mobile wholesale solutions (MWS). Users can manage almost every process, from concept to consumer, on a single platform. This includes e-commerce order management and fulfillment, which is critical for omnichannel success. In addition to keeping internal teams on the same page, next-generation ERP solutions enable much stronger supply chain collaboration. Advanced communication tools and vendor portals give trading partners visibility into real time information, whether they are sharing product development, production, shipping or other data. Likewise, newer ERP technology offers more comprehensive, flexible reporting. There is no need to spend hours generating reports, manipulating data manually in spreadsheets.
JOHN ROBINSON
Another important ERP advancement is cloud delivery. Customers can choose a web-based, hosted software delivery model, which makes robust ERP technology more accessible and affordable and easier to implement and maintain for more apparel manufacturers.
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How can an apparel business determine whether an ERP/ enterprise solution features the latest in computing technology? It’s important to “look under the hood” to evaluate the system’s underlying code and software architecture. Many ERP systems still run code written in the 198 0s. Back then, there were a lot of limitations on what software code could do. Once something was written into the code, it could take days or weeks to make changes. Each change required considerable customization, driving up IT expenses. It’s a burden legacy ERP users carry to this day, and they are not alone. By comparison, the latest ERP solutions like Simparel feature a modular architecture. This lends itself to simple configuration. When users want to make a change, it’s much easier and faster to make adjustments to meet new business requirements. Because the technology foundation is so flexible, next-generation ERP also can scale with the customer to accommodate more users, acquisitions and new business models. It also offers built-in capability to support omnichannel commerce.
Senior Vice President Sales and Marketing, Simparel
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What trends do you see in ERP system investment over the next 12 to 18 months? Apparel businesses are rethinking the best-of-breed approach in favor of all-inone enterprise software. They cannot afford the visibility and functional gaps of disparate systems. We also see growing demand for MRP functionality. Many ERP software vendors stopped developing MRP as full-package global sourcing became the industry norm. However, reshoring and near-shoring trends are prompting apparel businesses to take a more hands-on approach to manufacturing. Even if they are not cutting and sewing in-house, they want the control enabled by MRP. Rapid changes in the industry will compel companies to invest in new systems. For small- and medium-sized businesses, this might mean moving beyond starter software packages and spreadsheets. For larger companies, the driver is often a desire to reduce IT and business process complexity. Either way, when they invest in next-generation ERP, they can keep pace with market changes and outrun their competitors.
“Simparel, Inc. is the leader in next-generation business software for fashion and consumer goods brands, manufacturers and retailers. Simparel® solutions empowers apparel, footwear, accessories, home and other soft goods companies to reach their full potential by accelerating and improving performance across the entire business and global supply chain. The Simparel Enterprise Solution provides global process visibility, control and collaboration by combining traditionally independent Product Lifecycle Management (PLM), Sourcing & Supply Chain Management (SCM), Materials Requirements and Manufacturing Planning (MRP), Electronic Data Interchange (EDI), Warehouse Management (WMS), Mobile Wholesaling Solution (MWS) and other productivity tools into a single, fashion-focused business system.”
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Copyright © Edgell Communications, Inc. and Apparel 2015
THOUGHT LEADERSHIP REPORT
EVOLVING ERP: EXPECT MORE FOR YOUR MONEY provide end-to-end order-fulfillment and distributed order management capabilities within stores, e-commerce, call centers and stores/online distribution centers,” says the post by Sahir Anand, EKN vice president, research, and principal analyst. Attempting to retool legacy systems to support omnichannel demand is a daunting prospect and shor t-term bandage at best. Older ERP software often requires time-consuming manual coding to accommodate changes. Even then, revisions to one line of code can wreak havoc on other code deep within the software’s dated architecture. Mamiye Brothers Inc. encountered this problem before replacing its 15-year-old ERP system. A designer, manufacturer and marketer of children’s, tween and teen fashion brands, Mamiye was running software hard coded with a narrow view of the apparel supply chain. It was not designed to manage both front- and back-end functions such as PLM and vendor integration. In an attempt to accommodate business changes and growth, the ERP software underwent numerous customizations. “It was a ‘bolt-on’ strategy,” says Mamiye CIO David Cropper. “We managed to milk the original system for 15 years, but it became too costly and difficult to manage.” Knowing it needed much greater flexibility, Mamiye Brothers implemented the all-in-one Simparel Enterprise solution. Since implementing the system, Mamiye has successfully branched out into complementary verticals, adding juniors and missy lines and increasing market share. “Now we have a technology platform that allows us to move into the future rather than be constrained by the past,” Cropper says. Highly configurable code also equates to less customization. With the newest solutions, a modular architecture means changes are made much more quickly and automatically applied across the software. In addition, leading apparel ERP systems are built to accommodate modern apparel business processes — right out of the box in many cases. There are few if any functional or visibility gaps. It’s not unreasonable for software buyers to expect a tight fit between the technology and the way their businesses work right from the start, with plenty of room for growth and evolution. In fact, buyers should beware of complexities associated with some ERP vendors’ promises to meet functional needs through customization. Bonobos, the fast-growing and innovative men’s wear company, is a prime example of an apparel business that needed to leverage scalable ERP with minimal customization. The company implemented the Simparel Enterprise solution in June 2012 after realizing that off-the-shelf spreadsheet and accounting software couldn’t keep pace with its strong growth.
Copyright © Edgell Communications, Inc. and Apparel 2015
Since then, Simparel’s solution has scaled with the company’s expansion, and Bonobos has been able to manage its enterprise technology with limited internal IT resources.
The Cloud Opens Opportunities For apparel businesses in a growth mode or simply looking to minimize their overhead, hosted ERP can be an attractive option. Next-generation ERP can be delivered through a cloud computing model, alleviating the apparel firm’s need for extensive in-house IT assets to maintain servers and software. Despite all of the attention cloud computing has been receiving, it still can be confusing. Aberdeen Group offers a clear definition of cloud deployment in its September 2014 report “Improve Your Midmarket Business Operations with Cloud Applications,” which was written by Castellina. According to the report, “Software vendors are now offering deployment solutions delivered in the cloud (over the Internet, maintained and managed by the vendor itself) that may have traditionally been delivered solely on-premise (licensed for use and managed by the licensee on their own internal technology environment).” Of 127 midmarket organizations Aberdeen surveyed for the report, 61 percent said they chose a cloud solution because of lower total cost of ownership. Forty-six percent selected cloud technology for the ability to scale the solution as their organization grows, 41 percent for lower up-front costs and 39 percent for ease of use. Cloud delivery also makes it more feasible for remote apparel factories or business units to access corporate ERP solutions. “Organizations want to get those plants or new business units up and r unning as quickly as possible,” Castellina says. “With cloud technology, that is becoming a lot easier to do.” “Cloud is a big differentiator when it comes to deployment of systems like ERP,” says Pant. “It’s the speed. If you’re a U.S.based company, you can get partners in other geographies onto the cloud quickly.” Mamiye Brothers opted for a cloud implementation when it rolled out the Simparel enterprise solution. The cloud-based Simparel model empowered Mamiye to control implementation expenses and ongoing software management costs. The company achieved its goal to reduce the on-premise datacenter footprint and associated overhead. “When you look at the benefits of cloud-based ERP — the scalability, disaster recovery options and reduced costs — it makes sense,” says Cropper. “More importantly, it allows us to focus on what’s important: running our business.”
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