Digitalisation can make apparel manufacturers stronger in times of crisis
There is some proof that digitalisation in times of crisis has many benefits. Companies that develop their digital capabilities have a stronger position. They gain benefits in costs, product development speed, and time to market.
The COVID-19 pandemic has heavily affected the apparel industry. Worldwide orders were cancelled, stores closed, and quarterly sales dropped by 45% or more. The crisis resulted in significant losses and caused widespread job cuts. Still, there is evidence that apparel companies with digital knowledge were affected less than others. Companies that invest in their digital potential will come out of this crisis stronger.
The apparel industry is using a few important technologies. These include:
- Artificial Intelligence (AI);
- Virtual and augmented reality;
- Mobile commerce;
- 3D printing; and
- The Internet of Things.
Digital transformation involves several of these technologies. A digital transformation can take 18 to 24 months. The first step is to define the priorities based on the company’s business model and its starting point. The second step is to turn the priorities into action items and put them on a digitalisation road map. Ideally, the action items quickly result in improvements and benefit many parts of the company. A team coordinates the project and evaluates the road map based on the key performance indicators (KPIs). Digitalisation affects different business areas. These include product development, supply, distribution, and customer experience. Digital transformation usually results in benefits such as:
- Lower costs;
- Improved product development;
- Better management of inventories; and
- Faster time to market.
Digitalisation of product development
Companies with digital product development had an advantage during the COVID-19 pandemic. Using digital tools allowed teams to work together remotely. It also allowed them to respond faster to market trends and reduce sample costs. Examples of these tools include 3D product design, virtual sampling, digital material libraries, and AI-supported planning. Since 2017, Hugo Boss and Nike have been producing and presenting some of their collections through 3D imaging.
Some apparel companies have invested a lot in automating parts of their business. This has increased the speed of their production chain and made it possible to launch more than 2 collections per year. Tianyuan Garments Company, a Chinese supplier for adidas and Armani, uses an automated sewing system, a sewbot. Because of this, they were able to open a factory in the United States at a lower cost compared to the local labour model.
Digitalisation of the logistics and supply chain
The apparel industry can improve the cost, speed and flexibility of its supply chains by digitalising the warehouses and automating logistics. Solutions such as radio-frequency identification (RFID) can be used to track products better. Leading apparel companies use AI-models to predict sales of specific products in certain locations. This means they can stock the predicted inventory in nearby warehouses. Zalando, a fashion platform with its headquarters in Germany, operates in 17 European markets. The company uses AI-powered fashion designs. These are based on customers’ preferences for colour and texture.
Digitalisation of customer experience
E-commerce became necessary for companies during the worldwide lockdowns in 2020. But, the increase in e-commerce sales did not make up for the losses from the closed shops. Still, it did help brands stay engaged with their customers. The retail segment transformed the most by using e-commerce. Experts now expect a similar change in the wholesale industry. Establishing B2B e-commerce wholesale stores has many advantages for manufacturers.
These advantages include:
- Simplifying and speeding up the selling process;
- Selling more to current customers;
- Increasing the reach to new territories and customers; and
- Giving customers instant access to order information.
The apparel industry has taken its first steps towards digitalisation. But, a lot still needs to be done to digitalise all business areas. Still, digital transformation is becoming more widespread. If apparel companies want to be seen as competent and reliable, they need to invest in new technologies.
This news article was written for CBI by M-brain.
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