Here we have the next in the WhichPLM series of articles on end-to-end solutions and we open the floor to yet another vendor who offer both ERP and PLM systems and ask them for their assessment on how the two systems can function together.
This week, Rob Smith meets with Sue Welch, CEO of TradeStone Software. Headquartered in Gloucester, Mass., TradeStone Software has been providing full end-to-end Merchandise Lifecycle Management solutions to retailers, brand manufacturers and suppliers since 2003. TradeStone’s solutions include, PLM for Retail, Collaborative Sourcing, Order Management, Global Trade Management and Supplier Community Management.
WhichPLM: With the recent downturn in global economies, are you finding that your customers have recovered quicker than some other industries with less resilient products portfolios and what do you believe are your customer’s key business drivers now moving forward?
Sue: We absolutely feel that our customers have been able to recover more quickly and we attribute a lot of that to the added visibility and risk mitigation TradeStone’s Merchandise Lifecycle Management solutions have been able to provide. Product cost inflation remains a key theme among retailers as cotton prices continue to appreciate and follow a volatile path. Retailers have been pulling a number of levers to offset these costs, with technology helping to drive efficiencies in the organization. Merchandise Lifecycle Management is one of the top technologies being used to increase private label penetration and build upon sourcing initiatives. We’re also finding that a lot of our customers are focused on gaining market share and they’re going on the offense in these difficult times. They are using TradeStone to expand their private label and brands to help them have the right balance between private label and national brands so they can in turn see better sales, more foot traffic, gain market share and competitive advantage.
WhichPLM: As a rule of thumb, we would look to lifecycle of around 3-5 useful years from an enterprise system (whether it be ERP, PLM, EPOS etc..), do you think we are going to see this “value window” being forcibly extended by consumers from their implementations? Do you think enterprise systems can still deliver a beneficial value over 5 years from go-live in the current market?
Sue: We pride ourselves on the ability to create software that retailers love because it is reliable and continues to provide benefits. We have retailers that have been using iterations of TradeStone’s MLM suite well beyond 5 years, but as with any software company we continue to deliver value by extending our solution footprint and staying on top of our customers to make sure they have the latest version downloaded to get as much functionality as they can from our solution. Our customers in general are able to upgrade relatively easily from version to version and we provide detailed support and notes to help them do so. We’ve found that other systems are more difficult to upgrade due to lack of configuration capabilities.
WhichPLM: What regions/areas are TradeStone themselves forecasting or experiencing strong demand for PLM and other enterprise level IT solutions? Why do you suspect the market is buoyant here ahead of other regions?
Sue: TradeStone has found demand for MLM has remained fairly strong though we are seeing a surge in the mid-market ($250- $1 billion) area in the U.S. Abroad we’re also experiencing some exciting growth not only in Europe but especially in South Africa, the Middle East and are exploring opportunities in Asia and Latin America. The market is hungry for a technology approach that enables true cross-functional visibility, interaction, and collaboration, resulting in a more agile retail supply chain.
WhichPLM: …so how are you helping to deliver these customers better value from an enterprise system now against the market pre-2007?
Sue: While a lot has changed for retail since 2007 the end goal remains the same – improving margins and enabling growth. The biggest difference we’ve seen is that retailers are moving from a defense to an offense approach when it comes to technology. Retailers on all fronts are facing rising product costs in 2011, driven by commodities, labor, transportation, and currency. MLM has been recognized by Wall Street as critical to mitigating cost pressures, and TradeStone Software is a leader in MLM technology and implementation. Merchandise Lifecycle Management unifies the design, sourcing, ordering, and delivery of product for retailers to drive sales and margins. TradeStone has identified five process changes that retailers can make to reduce cycle times and lower costs, including 1) prepositioning fabric, 2) color management, 3) sample management, 4) fit evaluations, and 5) shifting production. Retailers that implement MLM see a significant bump in basis points to their bottom line, cut production lead times by more than 50 percent, and save six weeks in design cycles.
WhichPLM: The media is rife with case studies of catastrophically failed ERP and PLM projects, (albeit 1st generation projects) do you think running a full end-to-end system implementation project is a better value proposition than running separate projects independent of each other?
Sue: TradeStone recognizes that every retailer is unique and while an end-to-end approach is something we’re currently working on with many of our customers, we also created a Best Practices approach that would help those looking for results more quickly. TradeStone’s Industry Models have been developed specifically for organizations wanting a low-risk approach and shorter time frame from purchase to production. Industry Models make it possible for retailers to more quickly realize the many financial and operational benefits of TradeStone MLM, taking advantage of years of in-field accumulated knowledge to significantly improve the way they currently design, source, order and deliver their private label and branded merchandise. These Industry Models have been built out by merchandise type (Apparel, Hardlines and Department Stores). The model is not only best practice workflow but integration of relevant content for example HTS codes, compliance data, etc.
WhichPLM: Do most consumers have the available capacity (both financially and at a resources level) to run dual projects? Do you think consumers are fully aware as to what their own capabilities are for running enterprise level projects?
Sue: It really depends on the retailer, their budget, number of employees, management team, etc and how much they’re willing to dedicate to each project. If you have flexible solution that integrates well with other applications, that will help on the business level so users don’t feel they have to go through a giant rip and replace effort.
What we’ve also seen work well is when we bring in our consultants, all who specialize in guiding retailers through best practices, private label development, global sourcing, merchandise planning, software deployment and technology integration, and project management and process integration to help with the implementation, support and training.
WhichPLM: …but surely not every consumer has the correctly aligned company strategy and board leadership to implement such widely encompassing changes?
Sue: Again this really depends on the retailer but we’ve found that not only does the Executive/Management team have to be on board but user adoption is key. At TradeStone some of the best feedback we’ve received has been from the Exec level at retailers talking about how we’ve gotten a higher adoption rate than any other application they’ve ever implemented and how much the users love the product.
WhichPLM: So what specific benefits can a consumer expect from integrating TradeStone PLM and ERP end-to-end ahead of the competitors in this space?
Sue: Retailers that implement TradeStone’s Merchandise Lifecycle Management solutions can expect to realize a 20-50% reduction in cycle times, greatly improving their flexibility to make decisions, driving sales, and increasing profitability. The gross margin advantage for a retailer with our Collaborative Sourcing capabilities can be 500 bps greater than a retailer with less advanced capabilities.
WhichPLM: …would it not be better for a consumer to look at the market and say “what’s the best ERP for my size, what’s the best PLM, what’s the best EPOS (or any other system segment) Etc…?” and plumb them together? Surely the database or data warehouse behind the scenes is equally accessible for all?
Sue: While a “best of breed” approach can certainly work for some, we’re finding that a lot of customers want to reduce the number of systems they use and love the idea of a unified merchandising approach. Being able to layer and leverage existing investments while adding important functionality is what will help speed implementation, manage risk, and reduce total cost of ownership (TCO).
WhichPLM: …but do you not think it’s risky for a consumer to be fully dependent on 1 supplier? Doesn’t familiarity breed contempt after all?
Sue: We don’t believe so, however retailers should be looking at vendors that have been proven experience in solving similar business issues, a reputation for deep-industry knowledge, a management team they can trust and a solid vision for the future. If you can find all of that in one vendor, all the better.
WhichPLM: At the technical level, is the end-to-end TradeStone system: one complete single system; separate systems seamlessly integrated or modular systems operating on a common platform? What influenced the design decision for this over the over options?
Sue: TradeStone’s Merchandise Lifecycle Management suite consists of 5 main solution sets (PLM for Retail, Collaborative Sourcing, Order Management, Global Trade Management and Supplier Community Management) that all sit on a common platform and can implemented as stand-alone applications as well as additional functional modules which are developed in Java. Our software is architected to easily integrate with any standards-based enterprise application, providing retailers with one view and infrastructure that supports the design to delivery of their retail goods. Our software is HTTP and SOAP compliant and currently support over 120 different web services, with more being added regularly.
WhichPLM: Finally (and perhaps crucially), if you had a very immature client who had neither PLM nor ERP, and only had the resources to run one system project, which would you advise to start with and why?
Sue: This would really depend on the strategic initiatives inside the organization, where their biggest pain points are and what are the benefits they expect to receive. What we will say is that MLM is more capable and broader than a point solution, and less paralysing than an ERP/CRM application. We tend to look for quick wins projects and for retailers managing business processes heavily with Excel and email. We also often find areas such as sourcing to have limited tools, yet responsible for significant margin decisions.
Read Rob Smith’s articles on this subject matter: