At the close of September, Centric Software – a well-known provider of PLM solutions for the RFA marketplace – announced the launch of Centric Cloud, a new solution designed specifically for small businesses. In the second in a three-part series of blogs, Centric discusses here the advantages of PLM for smaller companies.
The first instalment in this series explained how scalable, subscription-based solutions offer the advantages of PLM – reduced costs, rapid time to market, seamless collaboration – available to a new generation of small businesses.
Evolution in the retail and consumer goods industry is constant, and as consumers have begun to exert more influence on the nature of goods and services (not to mention how, where and by whom they’re made) PLM has rapidly become a must-have tool for any retail business looking to keep pace in an increasingly competitive space. Until now, however, PLM has largely remained out of reach for smaller companies due to cost and the level of expertise necessary to put something of that complexity into place. Keeping it going is also no small feat.
But with the elimination of these barriers to entry, what kind of value can small businesses expect to obtain from a scalable, fashion-focused PLM platform as opposed to the off-the-shelf software they have typically been expected to settle for?
PRODUCT, MEET PROCESS
No matter their market, small businesses compete with more than just each other. In every industry, bold start-ups have challenged Goliaths – and some have even emerged victorious. We need only look at fallen giants like Kodak and Polaroid to realise just how quickly the status quo can change and how the tiny e-commerce-based brand of today can become the retail giant of tomorrow. Unheard of outside college football locker rooms until the late 1990s, Under Armour is a terrific example of the sheer pace at which small or niche businesses can begin squaring up to multinational household names.
Until recently, though, smaller brands have started that race on an uneven footing: unable to access the right tools to build the foundations that will allow them to compete. Their methods of product design, development and sourcing tend to be ad-hoc and, at times, fragmented. In many cases, the way small businesses work falls short of best practices – not for lack of trying, but because they began at a technological and organisational disadvantage.
While products can speak for themselves, the processes that bring them to market are opaque to the consumer, who only sees the end result. This means that while an upstart brand might produce a cooler, hipper pair of jeans designed to look good after a commute in awful weather conditions, or a new, fun take on a something as traditionally boring as men’s socks or underwear, winning on product is only part of the game. An awesome product stuck in the supply chain somewhere will always lose market share to an inferior product that’s in stock at the right time, in the right place, and at the right price.
Small businesses have typically been forced to compromise on one or more variables in this equation; either the design, quality or cost of the product takes a hit in order to secure an acceptable delivery date. Whichever undesirable outcome it is, small businesses have in plenty of cases simply accepted that delays, a lack of visibility and an insanely hectic workday are part a normal life. But this needn’t be the case.
To put this into context: with merchandising, planning, design, development, sourcing and QA all residing in different, disconnected systems, the average small brand might expect around a third of its products to miss their market windows. Sometimes it can feel as though getting the product you had in mind to market at all – without compromising what you felt made it worthwhile – is a victory.
With key design and development processes consolidated in PLM, on-time delivery can be vastly improved in all but the most unforeseen emergencies. Mobile applications put time-sensitive tasks a touchscreen tap away, anywhere in the world, at any crazy time of the day or night.
THE BOTTOM LINE
Off-the-shelf, disconnected tools keep many useful metrics hidden because the time and effort required to data-mine without dashboards, reports and other analytical tools is too high, or because those retail-specific metrics were never designed to be measured in the first place. The real cost of a product and its margin are essential to profitability, yet remain one of the hardest things for a small brand – working without PLM – to quantify.
Larger businesses have a safety net in the form of years’ or decades’ worth of operating costs in the bank, but season-to-season cashflow remains a pressing matter for smaller companies, who often have no buffer and rely on predicting the profitability of every single season.
Understanding the true cost of a product is more than just a luxury for a small business. Material prices, landed costs, quality test results, supplier capacity – all are critical pieces of information when a single season of low margins and markdowns can put the entire business at risk. This is information easily lost in the ether between disconnected tools, or obfuscated through error.
PLM supports a design-to-cost approach, allowing teams to more accurately estimate bills of material and labour at the earliest possible stage. With accurate, actionable information all in one place, it isn’t unheard of for a small business to see growth in profit margins of up to 30%.
CALL AND ANSWER
Where small businesses hold a unique advantage over their larger counterparts is proximity to consumers and to the market; small companies tend to stay close to their audience as a matter of policy in order to make deeply personal products that resonate with their target. These companies can also avoid the inertia that slows down big business, responding more rapidly when their finger on the consumers’ collective pulse reveals a change in market demands – provided, of course, that they can keep pace.
Working with PLM, the advantage of agility can become even more acute: time spent previously searching for information in disconnected spreadsheets, emails, calendars, post-it notes, and on the backs of envelopes can instead be spent productively. As enjoyable as that needle-in-a-haystack search can be, one small business was able to reclaim ten days per collection, and to transform that additional creative time into a 50% increase in revenue over two calendar years by eliminating administrative busywork – all without hiring anybody new.
More personal products also adhere to more personal morals. Small businesses place a great deal of emphasis on transparency and responsibility – metrics that matter a great deal to loyal, invested consumers for whom value is more than just a commercial consideration. By having supply chain partners exchange information via PLM, a small brand can gain greater confidence that its products fit the market ethically as well as literally.
For the small brand looking to level the playing field and challenge the competition, the third instalment in this blog series will reveal what a scalable PLM implementation looks like, and how heightened security, mobility and personalised deployment are being powered by the cloud. Stay tuned!