8 tips to go digital in the apparel sector
Since the first industrial revolution, machines, electronics and digital computers have made apparel production ever more efficient. Now we are in the middle of the ‘fourth industrial revolution’. This means self-monitoring and self-learning software and machines exchange data to integrate and optimise the entire production process. The aim is a value chain that is more transparent, efficient, flexible and cost-effective than ever. This report will help you understand what digitalisation means for the apparel industry and how you can benefit from it.
Contents of this page
- Familiarise yourself with the most common forms of digitalisation
- Use Europe’s growing e-commerce industry to your advantage
- Start by gathering data within your factory
- Grow your business with the help of new technologies
- Know the jargon
- Let market data drive your sales strategy
- Use digitalisation for a better response to the COVID-19 pandemic
- Maximise your flexibility using digital tools
1. Familiarise yourself with the most common forms of digitalisation
Automation of manual labour and digitalisation of analogue data is nothing new in the apparel industry. The reason experts now speak of ‘smart’ factories operating in an ‘Industry 4.0’ is the large-scale use of digital data to integrate different steps in the production process. These steps include purchasing, inventory management, design, tech pack creation, costing, manufacturing, and sales. The tracking and exchange of data between the software and machines that are used for these processes is what makes a supply chain truly digitalised.
Companies invest in digitalisation for different reasons. They may want to optimise production flow, flexibility, and speed to market, to reduce costs and to increase profitability. They can also use digital integration to monitor and improve working conditions and to measure and reduce environmental impact. Finally, they can use digitalisation to report about supply chain impacts and profitability to stakeholders, such as governments, social and environmental standards, buyers and consumers.
COVID-19 and digitalisation
The COVID-19 pandemic has made adopting digitalisation even more urgent. Due to travel restrictions and lockdowns, European consumers have moved away from physical retail to e-commerce. Trade fairs have gone online and buyers have been unable to visit factories. The result has been a greater need to digitalise the approval process of anything from lab dips to fit samples. Moreover, the growing demand for small orders and flexible service has accelerated the already ongoing automation and digitalisation of apparel production.
Digital innovations are used in every part of the apparel value chain, from the production of raw materials to sales of ready-made products.
Table 1: Digital innovations in every step of the apparel value chain
Value chain tier
Overview of digital innovations
Raw material production
For the production of raw materials, manufacturers use precision farm management systems such as CropIn or AgroCares to optimise cotton growth. These systems use weather and soil nutrient data and satellite imagery. For synthetic materials, they use digitalised input and waste management systems to reduce environmental impact and optimise efficiency. Adding marking techniques to raw materials, such as Haelixa or FibreTrace, enables factories to trace materials back to their origins digitally, enabling compliance with buyer’s sourcing policies.
In weaving, knitting, dyeing, washing, and finishing, digitalisation and machine learning is primarily used to control and reduce inputs (raw materials, energy, water, chemicals); to recycle solid and liquid waste; to measure and predict fabric performance; to control quality; and to plan fabric and accessory ordering. Automation can also increase worker safety. A fully automated and closed dyeing and laundry system puts employees less at risk of potentially dangerous chemicals and machinery.
An important development in manufacturing is 3D design and prototyping. Designing garments in 3D software makes designers understand fit better, reduces quality issues, and eliminates the need to send samples back and forth for approval, saving time and money. In cutting, sewing and finishing, handling takes 80% of production time and cost. In these tiers, AI-controlled CNC/CAD/CAM pattern and cutting machines, overhead conveyors, and tracking terminals at the workstation improve productivity and reduce energy use and wastage.
Digitalising logistics can reduce cost and improve speed and flexibility. The newest tracking solutions, such as barcodes, RFID chips and online platforms, enable manufacturers to track incoming and outgoing shipments in real time and to track material flow through the factory. Brands and retailers use AI to predict sales of specific products in certain locations, adjusting their inventory in nearby warehouses accordingly. Digitalisation can also be used to measure and report on the environmental impacts of different modes of transportation.
Running a profitable business means you constantly need to analyse how much you sell to your buyer and how the apparel items perform in the end market. Collecting and analysing sales data enables you to optimise product development and stock keeping, maximising sales and liquidity. Sales data include turnaround speed, colours, returns, fitting, quality, price vs sales, profitability, trends, and sizing. New developments such as digital showrooms and catwalk shows also reduce time and cost when engaging with current and potential buyers.
- Invest in Enterprise Resource Planning (ERP) software to integrate your planning, inventory, sales, marketing, finance, human resources, and more. Check the review platform SoftwareAdvice for an incomplete overview of available ERP systems for the apparel industry.
- For inspiration on how to digitalise your factory, check factories such as Sun Tekstil (Turkey, use of Artificial Intelligence in production), Hugo Boss (Turkey, use of AI and tablets for tracking production data) or Daehan (Indonesia, use of the Internet of Things to optimise the sewing process).
2. Use Europe’s growing e-commerce industry to your advantage
Online shopping is continuing to grow in Europe, stimulated by changing consumer preferences and COVID-19 restrictions. McKinsey found that 71 percent of fashion executives worldwide expected their online businesses to grow by more than 20 percent in 2021. The shift to online sales offers several opportunities for manufacturers. First, it opens a sales channel for direct B2C sales in Europe. Second, it offers a wealth of freely accessible data on market preferences and trends, applicable to both B2B and B2C sales.
If you want to build your own brand and target European end consumers directly, try selling on platforms such as Alibaba, Wish, Amazon, or niche platforms such as Depop or Wolf & Badger for independent brands. Most online consumers can be found in countries in Europe’s northwest, with apparel being the most popular category that people shop for online. You need to invest in a web shop, stock, order management, customer service, and a brand image. Return policies and a lack of brand awareness will be your biggest challenge.
Online multi-brand retailers, such as Zalando, Asos, Lyst, Yoox or About You, sell apparel brands and develop their own private collections. These are mostly value brands. Online retailers are data-driven companies, which means that they can detect new trends in the market very quickly and will immediately react upon sales data. Usually such companies will place a small test order first. If the item is selling well, they will place the actual production order. You must be able to deliver very quickly to service such buyers.
Thanks to the rise of e-commerce, the traditional practice of sending designers on a spy-shopping trip to several physical shops is no longer necessary. Having online retailers present their collections in a freely accessible, online public database (their web shop) enables you to do your market research remotely. If you need help, consultancies such as Edited track billions of stock-keeping units daily and give paid advice about trends in garment styles, colours, patterns, and descriptions. See also the section on data below.
- Check WGSN’s trend forecast and analytics reports for the fashion industry. The website has a blog section about the most important trends in apparel.
- Investigate the private brands by large European multi-brand platforms such as Zalando, Asos or Yoox to find brands that match your abilities.
- Follow Edited’s blog section for free information on the latest trends in the European apparel market. Trade media such as FashionUnited or Fibre2Fashion also give free market intelligence and trend data.
- Read McKinsey’s report ‘The six vectors of success in online fashion’. It has valuable data on trends in consumer spending on several apparel categories in European markets.
3. Start by gathering data within your factory
The first step on your journey towards digitalising your factory does not have to be a huge investment in state-of-the-art software or hardware. Highly digitalised apparel factories may use expensive machinery, materials and production lines equipped with QR codes, RFID chips, intelligent sensors and cameras connected to computer-controlled machinery using Artificial Intelligence. But remember, digitalisation is not an end. It is a means to reduce costs and increase efficiency, using data from the factory floor. That process can start simple.
The basic principle to cost reduction is to track and monitor every cost item in your factory. That can be done by hand by an employee with a clipboard and a pen.
To reduce costs, gather data on the following:
- Working hours. How many hours are your employees working for you?
- Effective working time. How long are they effectively at work?
- Purchasing. Can you get better conditions by consolidating relations with your supplier(s)?
- Stock management. What do you have in stock? What is the value and lead time of each item? Can you minimise stock? Ideally, try to have materials in your warehouse 3 days before production starts.
- Energy consumption. Consider investing in energy-saving machinery and lighting to save costs and reduce environmental impact.
To improve efficiency, gather data on the following:
- The production line balance. How is the flow? Are there hiccups in the production line?
- Employee motivation. What are their ambitions? What is the retention rate, sick leave, living wage level? What can you do to improve employee motivation?
- Working procedures. Are there clear working procedures? Are they properly communicated? Does everybody understand them?
- The competition. What are they offering their employees? How are their wages, secondary benefits?
- First try to optimise your production efficiency with the means you already have available in your factory (expertise, machinery, factory setup, software).
- When gathering data on cost items, do not focus only on big cost items. Cost reduction can also be achieved by saving on many small ones.
- Kanban is a much applied and relatively easy reflexive management system focussed on optimising production flow on the factory floor. The basic principles are explained in this article on Apparel Resources.
- Read the CBI report ‘Which trends offer opportunities on the European apparel market’. It has a useful section on new technologies in apparel production. Further information is also available in the CBI study ‘Technology trends in the apparel industry’.
4. Grow your business with the help of new technologies
The concept of digitalisation goes beyond using software to handle your administration, emailing buyers and using computer-controlled cutting or sewing machines. Digitalisation is about real-time performance measurement, discovering patterns in the data and using interconnected software and machinery to optimise production. This minimises the need for human intervention. There are many technological solutions. Some are costly, others complicated. Sometimes they are both. Choose the ones that fit your business.
When it comes to software, there are many different systems available that can help optimise your factory management. These include integrated Enterprise Resource Planning (ERP) systems; Product Lifecycle Management (PLM) systems; and specific software programmes for anything from stock management, order management and HR management to Customer Relationship Management (CRM). New 3D designing solutions can seriously increase your efficiency and flexibility when communicating with buyers.
A truly digitalised apparel factory uses software to connect ‘smart machines’ between the material warehouse and the sampling room, cutting department, assembly line, finishing department and product warehouse. Companies such as Kuris or Zünd sell the latest technologies in digital cutting techniques, including 3D cutting. Companies such as Juki sell sewing machines that can be digitally linked to a smart factory software system, integrating the cutting and sewing department and optimising efficiency by balancing the line.
- When you are looking for a software solution for your factory, always make sure you choose a method that suits your needs and fits your business. Look at price and service level and find a product that matches your factory size. Most software is modular, so you can expand it when needed.
- When you consider purchasing a new software product or piece of machinery, always ask the supplier to what extent it can be adjusted to your specific needs.
- If you are not sure what software solutions to choose for your company, try to ask others in the industry what they are using.
- Check with 3D design software providers such as CLO, Gerber or Alvanon to learn about the latest techniques in 3D design and prototyping.
- When you are considering shifting to 3D sampling techniques, remember that many designers still prefer to draw by hand. Working digitally requires training.
- Watch this short video by sewing machine builder Juki about its smart factory system. It shows how different departments of an apparel factory can be connected to increase efficiency.
- Read this article on trade medium Drapers about the ongoing digitalisation of the fashion industry in Turkey, a country heavily investing in digitalisation, sustainability and innovation.
5. Know the jargon
When you read about digitalisation, you may come across different terms, such as ‘Artificial Intelligence’, ‘big data’ and the ‘Internet of Things’. These terms are used often interchangeably. What do they mean?
Table 2: Digitalisation jargon and its meaning
Intelligence demonstrated by machines that can sense their environment and perform actions autonomously.
The use of technologies that reduce the need for human intervention in factory processes.
The use of Artificial Intelligence to extract meaningful management data from sets of data that are too big for conventional software to manage.
The increasing use of digital data and automated machines to increase production efficiency and flow.
Internet of Things
A network of machines equipped with sensors and processing software that is connected to the internet.
The capability of computer algorithms to improve their output by learning from inputs (and the associated desired outputs).
6. Let market data drive your sales strategy
The recipe for success in the apparel industry has always been having the right product in store at the right price and the right moment. Traditionally, fashion professionals tried to achieve this by intuition, and sometimes pure speculation. Today, the industry relies ever more on big amounts of data. Fashion professionals track and analyse anything from inventory, material input, workflow and sales to online engagement via clicks, reviews and even likes and comments. The aim is to uncover patterns and optimise production and sales accordingly.
European buyers are primarily interested in big data and Artificial Intelligence because they offer an opportunity to better match supply and demand, to make more successful designs, and to give end consumers a hyper-personalised shopping experience. Analysing big amounts of data points on sales and consumer preference makes it easier for designers and buyers to predict what will be the right style, silhouette, shape/fit, sizing, retail price and even the right way to describe and present the items online or in-store and to whom.
The benefits of knowing your market
Manufacturers can use big data about market trends to determine which markets are growing, declining or getting more competitive, and which markets, segments and product categories match their own strengths. Big data offers an opportunity to not only focus on what happens in your own business, with your own clients, but also to learn from what competitors are doing. Gaining such insights before talking to current and potential buyers can give you an upper hand in negotiations and reduce the amount of issues during production and approval.
Free services such as Google Trends or paid alternatives such as Semrush or KWFinder let you track and analyse Google search data for every search term imaginable, including apparel items. You can narrow your search by geographic location or time period.
- Learn from this article on Medium how apparel companies use big data to curate products for their end consumers better, give product recommendations, and improve targeting, resulting in a hyper-personalised shopping experience.
- Consider taking paid advice from consultancies such as Edited, which track billions of stock-keeping units daily to analyse market trends.
- Read this article by McKinsey on the digital transformation of the international apparel business during the COVID-19 pandemic. It contains a useful overview of strategies to accelerate demand and manage your operations.
Figure 1: Online retail data offers a huge source of useful information for understanding market trends
Market intelligence consultancies such as Edited.com analyse billions of stock-keeping units daily to get real-time data on market trends. The results can be accessed through an online dashboard.
Use digitalisation to become more sustainable
Sustainability and digitalisation are related subjects. They belong closely together, because no supply chain can improve on sustainability without measuring impacts. This requires digitalisation. Digitalisation is used to measure, monitor and report on criteria in different stages of the value chain. These include soil depletion, use of herbicides and pesticides, animal well-being, forest maintenance, loss of biodiversity, water and energy use, carbon emissions, working hours, living wage, waste management, and circularity.
As Fashion Revolution wrote in its 2021 Fashion Transparency Index, the first step towards sustainability is transparency. Without knowledge of your value chain and the impacts that occur, you cannot improve. Digitalisation also enables professionals to measure impacts on workers, communities and the environment, and to analyse them, find patterns and implement improvements. The tips below mention some technologies that can trace raw materials back to their source.
The need for more transparency and sustainability in the apparel supply chain is obvious. The European Environment Agency (EEA) has reported that textiles are the fourth-largest cause of environmental pressure after food, housing and transport. A report by McKinsey (2020) on consumer sentiment towards sustainability in fashion revealed that 57% of UK and German consumers have made significant changes to their lifestyles. The result has been a 65% reduction in their environmental impact . They have achieved this by making a commitment to purchase more durable fashion items.
The trend in the consumer market for sustainability is so strong that the Austrian raw material manufacturer Lenzing Group has even decided to engage with end consumers directly through a web shop. This web shop showcases over 200 products made of Tencel-branded lyocell and modal fibre items online.
- Use tracing technology, such as Haelixa or FibreTrace, to trace raw materials back to their source both physically and digitally.
- Use digital labelling solutions such as Avery Dennison to trace ready-made products during and after use. This makes it easier to collect, sort and eventually recycle apparel items.
- Consider registering your CSR performance on online platforms such as ISEAL, SIM Supply Chain, GSES, Ecovadis or Ecochain. This makes monitoring and reporting on sustainability easy and transparent.
Figure 2: Digital 3D-modelling speeds up the sampling-process
3D modelling has become so sophisticated that it has become difficult to distinguish between digital and physical samples. Example by CLO3D.com.
7. Use digitalisation for a better response to the COVID-19 pandemic
The COVID-19 pandemic and the restrictions with which governments around the world have responded to it have accelerated the adoption of digitalisation in the apparel industry. In a very practical sense, buyers have been restricted from visiting factories to negotiate orders and approve production runs. Trade fairs have been cancelled or shifted to online events. This has prevented buyers and suppliers from meeting in person. Upheaval in European consumer markets has resulted in risk aversion and buyers requiring even more flexibility and speed from manufacturers.
These developments are likely here to stay, even with the reopening of stores in Europe and the easing of travel restrictions. One technology that has risen in popularity is 3D sampling. Even before the pandemic, 83% of respondents in a 2019 report by McKinsey believed physical samples will be used less often than virtual samples by 2025. During the pandemic, ever more factories and brands have started using Artificial Intelligence and 3D modelling technology. This has made it possible for suppliers to hand out digital samples and speed up the approval process.
Manufacturers use 3D avatars connected to online databases with big data on body types of European end consumers. This allows them not only to speed up the approval process, but also to reduce wrong fits to a minimum. CLO has a blog page on its website with user stories by companies such as Adidas, Dainese and Emilio Pucci. 3D solutions provider Browzwear has user stories by companies such as Fruit of the Loom and Superdry.
For in-depth information on the use of 3D technologies, you can also consider following one of Alvanon’s webinars on the subject.
Manufacturers can use 3D avatars not only in the brand approval process, but also to set up virtual showrooms. When applied in web shops, they even make it easier for end consumers to choose the right apparel item (fit, shape, appearance). This reduces the number of returned items significantly. A good example is H&M’s innovation lab in Berlin, Germany. It recently developed technology based on a 3D photogrammetry scanner. The virtual fitting solution will enable customers to try out clothing on their own individual avatars.
In October and November 2021, H&M customers have the opportunity to try on perfect-fit looks from the new collection virtually from home and outside of store opening hours. They can do this in digital fitting rooms in two stores in Berlin and one H&M store in Hamburg.
- Read this article on trade medium JustStyle about the adoption of new technologies in the apparel industry during and after the COVID-19 pandemic.
- Learn about the opportunities of using 3D sampling techniques by reading this article on Fibre2Fashion. Check with 3D design software providers such as CLO, Gerber or Alvanon to learn about the latest techniques in 3D design and prototyping.
- Visit the online virtual trade show ‘Innovate’ during the Textile Innovation Week, every year in October.
8. Maximise your flexibility using digital tools
A hyper-personalised product is the ultimate combination of the right product at the right price at the right time. Unsold stock and the associated risk will be history if brands and retailers can give end consumers the exact apparel items that they want, in every detail. European apparel buyers are already demanding ever more flexible service, smaller order quantities and higher speed to market. The application of digital tools increasingly gives manufacturers the capability to offer maximum flexibility and eventually even tailor-made apparel.
‘Mass customisation’ is not a new concept. In 1992, Joseph Pine already called it ‘the new frontier in business competition’. Its breakthrough has been predicted many times since. Finally, more companies are now experimenting with ‘mass customisation’. This is thanks to digital technologies such as 3D sampling, online fitting rooms and fully automated machinery. According to consultancy firm Deloitte, customised apparel could account for as much as 30% of the clothing market by 2030.
There are many examples of fashion brands and retailers that sell personalised clothing:
- Spreadshirt is an online platform that lets end consumers design their own T-shirts and hoodies.
- Nike was one of the first brands to popularise mass customisation. In 1999, it introduced NikeiD: a website that lets consumer design and order their own set of sneakers.
- Munroe Tailoring sells not only tailored suits and shirts, but also jeans.
- Unmade sells software solutions for demand-driven fashion. The idea is to design and sell before manufacturing, instead of designing, manufacturing and then selling.
- Machine builder Zünd and NGO Fashion-Enter opened a sustainable micro-factory in London in 2021. They use 3D cutting techniques that can cater to the demand for sustainable and on-demand production.
- Fashion brand Ralph Lauren sells custom, made-to-order polo shirts.
- Swedish fashion giant H&M has also started experimenting with made-to-order.
- Unspun sells customisable jeans to end consumers and advice to companies.
The benefit of mass customisation for factories and brands and retailers is the potentially significant reduction in waste and unsold stock.
The CBI report ‘Which trends offer opportunities on the European apparel market’ has a useful section on new technologies in apparel production.
The CBI report ‘10 tips for finding European buyers’ can help you with finding interesting prospects and how to approach them.
The CBI study ‘10 tips for doing business with European buyers’ gives tips on how to approach a potential buyer successfully and develop a long-lasting business relationship with them.
This study has been carried out on behalf of CBI by Frans Tilstra and Giovanni Beatrice for FT Journalistiek.
Please review our market information disclaimer.