This article was originally published in our PLM Report 2023 – the definitive instalment in fashion’s longest-running dedicated PLM market analysis. To read other opinion pieces, exclusive editorials, and detailed profiles and interviews with key vendors, download the full PLM Report 2023 completely free of charge and ungated.
- Digital transformation without process innovation can lead to failure in technology implementations.
- Process innovation is critical to success in enterprise tech implementations, and should be prioritized over chasing trends.
- In order to successfully implement PLM solutions, teams must move in sync with one another and prioritize a unified go-to-market process.
- Retailers must reflect inwards and examine their internal processes before embarking on a digital strategy, and PLM vendors and consultants must view themselves as true partners and drivers of digital transformation.
Digital transformation without process innovation is a recipe for failure.
Consider this. A recent report from PwC reveals that only 17% of supply chain executives say that tech implementations have delivered on expectations.
Tech vendors might recoil upon reading that, until they get to the underlying reasons. This is not an indictment of the technology. Rather, this shortfall is about companies not changing how they work before implementation. Much of this change is due to processes, internal culture and upskilling employees – the absence of change in these areas is a direct contributor to low success rates of enterprise tech implementations.
This trend is not exclusive to other industries: retail and fashion executives feel the same way. At a recent retailer round table where technology implementation was the focus of the discussion, we observed as the group identified their top three challenges. Process innovation topped the list. In talking to retailers in attendance, many pointed out that they fall victim to shiny object syndrome. Chasing what is “on trend” while neglecting the fundamentals of their business. The current sandstorm of hype surrounding the metaverse and AI does not help, but it does provide a very potent example of fashion’s tendency to rush toward new possibility spaces without laying the proper foundations first.
What results from this is a recurrence of issues that are too fresh in many executives’ recent memory. Last year’s headlines of excess inventory is a demonstrative example of what can happen when racing to fresh opportunities and losing focus on key metrics and outcomes.. That’s just one example of many. It’s no surprise that investments in digital transformation can fail to deliver the expected returns when unaccompanied by process innovation.
PLM vendors and consultants would be wise to take note as this impacts them directly – not just in obvious ways, but in more insidious ones – the kind that, over time, compound to reduce the likelihood that a technology-enabled or tech-adjacent project will succeed.
So let’s consider this concerning trend through a direct PLM-focused lens. PLM proponents – and technology vendors – say that the tech drives smarter decision-making, improves efficiencies, consolidates product data, and delivers faster product development, amongst other benefits. Put these together and they lead to an acceleration in speed to market. In turn, retailers preserve gross margins, increase full-price sales and prevent excess inventory. All of these are excellent drivers of value for any retail organization …provided they’re given the right support to be realized.
But, there is an inherent problem with the idea of “speed to market.” One that technology cannot solve on its own, and it is a perfect case study for why technology adoption and process evolution must occur in tandem.
Speed to market, as we refer to it, is a result of cultural issues rooted in different functions having different, and often, competing priorities. These must be reconciled for a product to move efficiently along the line from inception to point of sale.
This is not a concept that’s restricted to specific industries. A Wall Street Journal article from early April describes the development of a weight-loss drug by Eli Lilly. To quickly introduce the drug in a competitive space, the company needed to overhaul existing but failing processes. This was necessary as the company made development decisions based on sales potential and not patient outcomes. Specifically, business leaders focus on sales forecasting, while scientific leaders focus on patient outcomes. This is akin to a rowing team moving out of sync with one another.
In our work with brands and retailers, we see the same thing. The main difference in fashion is that the timelines are shorter, and the product mix is more varied. Nonetheless, competing priorities of different functions slow the pace of getting products to market. Each function moves in a different direction. Simply accelerating steps is not helpful as teams end up nowhere, faster. This is shown in Figure 1.
When working in this way, brands find themselves pushing out deadlines, have data/insights sitting isolated from the functions that need them and employees become stressed. Clearly, digitization in this scenario is destined to fail; the root causes of issues are not being addressed. Giving people a new, digital place to work and put information does not align their priorities automatically. As we’ve said: technology implementation must be accompanied by process and cultural evolution.
While that sounds like a complicated, org-wide transformation, what is actually needed here is a slight change in thinking about how teams work. This change is found in the distinction between speed and velocity. Speed is a numerical value expressing distance moved over a period of time. Velocity expresses distance moved over time with a specific, defined direction.
Figure 2 exemplifies the power of velocity; all teams move in a singular direction. This is in stark contrast to the scenario in Figure 1.
The difference in momentum gained by teams moving in sync with one another is significant. Think of the rowing team that now moves in harmony; it’s an impressive feat. With this setup, a PLM solution can be introduced to further elevate the performance of a unified go-to-market process. This way, real-time insights from customers can inform product creation decisions, deadlines are adhered to, and employee productivity is increased. This is exactly how brands can see the dividends of their PLM investment.
To be clear: it is encouraging to note that retailers continue to invest in new technology. Digitization is necessary to stay competitive. But it is also critical that retailers reflect inwards first, and examine their internal processes before embarking on a digital strategy.
And for PLM vendors and consultants, they need to view themselves as a true partner of a retailer and a driver of digital transformation – not just a vendor of a solution that can deployed in isolation. An understanding of process innovation is essential for that to happen. Because only when internal culture and processes change does it make sense to introduce technology on the scale of PLM.
This way, more retailers will see a return on their investment. And that’s good news for retailers, vendors, and consultants alike.