With the apparel market several years into its profit-crippling period of disruption, some of the biggest names in the business are finding that digital technology, the explosion of which led to the near-destruction of traditional retailers and brands, may now hold the key to their salvation. Brands like Tommy Hilfiger, Ralph Lauren, Kohl\’s, Lululemon and Ann Taylor are rapidly transforming their design and product development processes to keep up with consumer expectations of getting exactly what they want when they want it.
Leading the charge in this effort is Li & Fung. In recent years, the $13 billion company, under the leadership of Spencer Fung, great-grandson of the founder, has increasingly focused on using its sourcing, production, importing and logistics platforms to become the \”supply chain of the future,\” a multidimensional world in which brands, retailers and suppliers can seamlessly connect to an ecosystem of digital services and data insight never before possible.
The Inevitability of 3D Development
Li & Fung President of Supply Chain Solutions Sean Coxall remembers the exact moment several years ago when the lightbulb went off for him: \”We were making physical samples and then photographing them. One day I came into a room and saw all these people sitting at the computer, touching up the photos, and asked what they were doing, and they said \’We\’re trying to make them look more digital, to put them in the digital showroom.\’ And I wondered \’Why on earth did we just waste 16 weeks and all this money to make samples? Why don\’t we just make the 3D renderings?\’ That was the aha moment, and I started putting desks in and started hiring people.\”
[callout]Spence Fung knew that in the future, the successful players in the apparel supply chain would use technology to speed up and optimize all phases of design, development, production, procurement and distribution.[/callout]
Sean also had a strong hunch that one of Li & Fung\’s longtime, visionary brand partners would be perfect for this new approach. \”Daniel Grieder at Tommy [Hilfiger] is probably one of the most inspirational CEOs out there, along with Tommy himself. They really think differently. But using 3D digital samples to sell to wholesale customers? Daniel knew buyers would resist, that they\’d want to come in and see the physical samples. But he went ahead and did it anyway. It was then that I realized it was the only way forward. This would be the thing.\”
At the beginning, Sean\’s focus was the cost saving of using 3D, but then quickly realized that was only a small part of it, that the time savings all the way downstream, taking months out of the calendar, was the real game-changer.
What sets digital creation of apparel apart from other 3D design simulations, according to Idy Lee, Senior Vice President of Digital Product Development, is patternmaking and production know-how. \”To make a design manufacturable, you must start with a 2D pattern and then create the 3D simulations from that. The creation and production of a garment require the block pattern knowledge behind it. We aren\’t waiting around for the technology, but are using existing systems instead. We have the best analog platform in the world and are now digitizing it.\”
Lee, who joined Li & Fung 15 years ago as a newly minted MBA, leads a staff of 120 professionals in seven locations around the world including Hong Kong, Shanghai, Delhi and New York. Her team does 3D design, product development, e-commerce and marketing work for the company\’s clients in apparel, hardgoods, accessories, footwear and more.
Walking through her Hong Kong group\’s expansive workspace, she indicates computer monitors displaying products of major global brands being created by members of her team, many of whom are designers in their own right. On one, we saw a beautifully detailed woven houndstooth plaid. \”Fabric of course has to be digitized first, to get it to real life. There are a few ways to do this. You scan it through some high-resolution scanners, and then do what we call testing, which captures the physical characteristics like draping, and creates an algorithm that can simulate the properties into a garment.\”
In the future, according to Idy, fabrics could actually be created digitally, a more inspirational way of developing products. \”You can do digital creation from a very core base fabric and apply textures, prints, finishes very quickly. For example, if you want to create different finishes, like a shimmering layer on a cotton fabric, you can create that digitally. You can create 3D models of the trims to put on the garment. The cost and time savings are enormous, and the product ends up even better.\”
Reducing Creative Risk
Brands love the increased creative possibilities. \”Designers and technical designers are saying it\’s giving them more white space in a framed-up direction. They can spend more time being creative while knowing it will sell. Everyone can work more like the luxury brands with strong brand DNAs to frame up their themes and their iconic models.\”
Could this mean that one day we will be being able to walk into a traditional department store and not see floor after floor of the same 40 percent-off khaki pants and golf shirts? Sean Coxall feels that the days of the \”sea of sameness\” at retail are numbered. \”If you walk into the new Zara in the IFC Mall here in Hong Kong, you think you\’re in a high-end specialty store. It looks really good, very clean, very sleek, everything displayed more exclusively. This fast fashion stacked-to-the-rafters thing is finished. Nobody wants to see a sea of cheap clothes.\”
Speeding Toward the Future
When he became CEO of his family\’s company in 2014, Spencer Fung started to reflect on where the company needed to go, and how to \”skate to where the puck is going to be.\” He knew that in the future, the successful players in the apparel supply chain would use technology to speed up and optimize all phases of design, development, production, procurement and distribution.
Getting the ball rolling with digital design and product development made a lot of sense because the biggest pain points for their retail and brand partners were the excess inventories and markdowns resulting from trying, and failing, to guess what consumers would want 18 months ahead of time. Using existing tools to digitize product development and design, Li & Fung was able to convince forward-thinking clients to shorten lead times from months down to days and, in some cases, hours. The larger the company, the faster those savings would accrue to the bottom line.
Said Spencer: \”We work with between 1,000 – 2,000 retailers. In terms of adopting a more digital approach, there\’s a normal bell curve distribution with 5-10% moving ahead very quickly to embrace new ways of working, then another small percentage that is very slow to adapt to using digital tools like 3D-design. For us, the opportunity is with the middle portion, getting them to change.\”
Playing Consumer Catch-Up
Rick Darling, a longtime Li & Fung executive who now runs Global Brands Group (GBG), owner of Juicy Couture, Frye Boots and others, feels that the shift to digital on the back end is fully in line with what\’s happening downstream.
\”There\’s a lot of innovation at the retail consumer level, with digital connections with the consumer, DTC (Direct-to-Consumer), social media. It requires faster, broader assortments, but the industry infrastructure wasn\’t built for all that. The use of technology is woefully underdeveloped in the back end. Li & Fung is at the forefront of unlocking the value of a what a digitalized supply chain can offer the industry,\” says Rick.
Rick has fast-tracked the shift to digital product development at GBG for many reasons. \”I would say now 30 percent of our apparel is fully digital. Not just digital samples, I\’m talking about digital design, fit, sales samples, digital photo samples, and in some cases uploaded to the web for selling so that nobody has to take a photograph. In footwear we\’re a little higher than 30 percent because we had a head start there.\”
Regarding the potential penetration of digital, and its impact on speed and sustainability, Rick is unequivocal: \”I think 100 percent is possible in the foreseeable future. It goes beyond a cost impact; it gives you tremendous flexibility. You\’re no longer inhibited by the number of SKUs, adoption rates, because you can design them quickly. You\’re no longer creating waste, and shipping samples back and forth and cutting out the backs to get through customs, and throwing samples away. When you think about the waste and the impact on the environment of our industry in the product development cycle alone, it\’s horrendous. And 3D capabilities allow you to jump start and go past all that stuff.\”
Necessity Breeds Transformation
Often the mindset change begins with a lightning bolt of inspiration. Sean Coxall recalls a designer who \”suddenly saw snake print:\” \”On the plane from New York, she sketched some designs and when she landed, she said, \”Quick, I need these styles.\” We found the fabric, knew there was yardage available, scanned it in, and by the next morning the buy was made. The styles were in the stores within six weeks, compared to four months previously. There was six-hour turnaround from Idy\’s team, all helped by the fact that we had existing blocks [block patterns].\”
Another brand had a striped fabric in stock that was outperforming others, and realized they needed to use it for more styles. They quickly sketched up the styles, and Idy\’s team managed another six-week turnaround for production for the chase-collection.
Coxall, whose been in the industry for more than four decades, shakes his head at the fact that there are people still doing things the same way as when he started at Marks & Spencer almost four decades ago. \”We\’re paving the way for a totally different way of working. The technology exists. It\’s just the mindset that needs to change, and it\’s starting. We have the intelligence; we know how to get the data. We know how to make a 3D sample. We can digitize the fabric. We can communicate with factories and mills. We can connect everything. The human beings are the biggest obstacle.
He adds, \”Spencer has an amazing vision, and we\’re here to help make it happen. It\’s hard, because we\’re disrupting ourselves. The vision, we have clear plans, we know what to do, and we\’re ready to bring people on this journey with us.\”