Following the publication of Kalypso’s 2023 Digital Product Creation In Retail Research – a multi-year initiative that The Interline has partnered on in the past, and which the practice ran with sponsorship from the Fashion Innovation Agency and London College of Fashion this year – we sat down with Sophia Lara, Digital Product Creation & Transformation Lead at Kalypso, to discuss some of the key findings. Some are predictable; some are genuine surprises. All are important for brands, retailers, and makers to consider when investing in an area that offers huge potential value, but one where there’s still real work to be done to connect the digital dots.
- The Kalypso DPC survey reveals a noticeable disconnect between the number of organisations that have embarked on DPC initiatives and the number that have successfully connected the digital thread between all their different capabilities.
- Most product leaders in retail, footwear, and apparel are engaged in a 3D/DPC strategy, indicating that the industry is moving towards making 3D working the rule rather than the exception.
- The challenges of enterprise-wide digital transformation have led to a significant increase in the number of organisations struggling with change management, with lack of change management support being the biggest barrier to success for DPC transformations.
- The ROI objective of DPC is to shorten the production calendar and get closer to the market, but only a small percentage of companies have made significant changes to their calendars after implementing DPC solutions. However, organisations have seen value in areas such as sample reduction and virtual validation of print and artwork ideas.
Later this year, The Interline will run its own DPC Report for the second year – a publication that Kalypso was featured in for 2022. While our objective is to chart the evolution, growth & diversification of the digital product creation technology ecosystem, Kalypso’s research examines how the users of 3D and DPC tools are progressing along their own transformation journeys, and rolls this data up into industry-wide indicators that demonstrate how close (or how far) fashion is from its 3D / DPC vision.
So, after surveying more than 100+ organisations in 2023, we at the Interline wanted to know whether the Kalypso team’s findings aligned with, or challenged, our conclusion that while the DPC ecosystem was a major part of the enterprise technology landscape for fashion, it remains a fragmented one with a long journey ahead.
“Across the board we continued to observe a noticeable disconnect between the volume of organisations that have embarked on DPC initiatives, and the number that have managed to successfully connect the digital thread between all their different capabilities,” Sophia told us. “That’s the reason we shifted the focus of our survey a little this year to concentrate on uncovering where those scaling challenges are coming from, as well as where – and why – isolated pockets of success are, and aren’t, turning into wider enterprise change.”
Kalypso’s research reveals what we found to be an interesting datapoint: the fact that “most product leaders in retail, footwear, and apparel” are now engaged in a 3D / DPC strategy of some kind. Although the sample size is obviously a subset of the entire industry, this would certainly align with the prevailing sentiment that the major players in each product category are using digital product creation as a foundation for their futures. Has the wider fashion industry really reached that tipping point where 3D working is no longer the exception, but the rule?
“Across most of the leading retailers and brands in both the US and EMEA, we’ve found that some investment in DPC is near-universal,” says Sophia. “Even in the cases where retailers themselves aren’t the ones spearheading DPC, many of their vendors and factory partners have made the transition and are pushing capabilities forward. We’ve definitely reached a maturity milestone –and the interesting part is that the next set of DPC capabilities are not necessarily coming from the brands that have led the charge in the past.”
In The Interline’s conversations with brands and their production partners, we’ve seen a similar explosion of interest, but in addition to 3D and DPC expertise becoming more widespread throughout the value chain, our team has also encountered wildly different definitions of what constitutes genuine digital product creation – from 3D design and simulation, to real-time immersive experiences and virtual try-on. As Kalypso makes clear in their analysis, all of these applications, at least in theory, should make use of the same assets and workflows, and should be the proving points for connected, whole-enterprise value of digital working.
But Kalypso’s research also shows that the organisational, cultural, and logistical challenges of realising this kind of enterprise-wide digital transformation have led to a pronounced jump in the number of organisations struggling with change management. Compared to the figures they found in 2022, lack of change management support jumped to the #1 spot, with 70% of respondents claiming this as their biggest barrier to success for DPC transformations
Is this simply a function of scale – more businesses new to investing in DPC meaning more people encountering problems aligning short-term success with long-term vision – or is something deeper happening?
“I think this is now a common issue,” Sophia affirms. “When you consider the amount of disruption companies have faced over the last few years, the retail industry is feeling change fatigued. And when you combine that with market pressures like the need to cut costs and prioritise efficiency, change management can quickly fall by the wayside – no matter whether you’re a business that’s new to DPC, or a pioneer that’s been working on it since 2011. When we speak to people across the industry, it’s obvious that everyone’s exhausted. There is an ongoing fear of recessions, lay-offs and continuous internal restructuring. Attempting to manage a multi-year, multi-stakeholder initiative on top of that – without the right investment in training and support, or the right executive direction – is going to work against adoption and success.”
“But the irony,” she adds, “is that a multi-year transformation could be one of the key levers that could help brands, retailers, and their partners to protect themselves against disruption – provided organisations are able to establish a clear vision and align different teams towards achieving it.”
Given that there is no real end in sight for disruption – even if economic indicators are improving in some markets – where is this kind of necessary leadership and support likely to come from? Will these widespread change management issues be overcome by new roles like “Head of DPC” rising through the ranks? Are these skillsets in demand to the extent that their importance in determining DPC project success would suggest?
“Those are roles that are very much sought-after, but also very much in transition,” Sophia says. “As an example, we might see a Head of DPC starting out as a department head for technical design, which then becomes a centre of excellence under the banner of production – because digital product creation is typically designated as being a production process. But the tricky thing for brands to reckon with is that DPC goes far beyond product creation and into a wide spectrum of consumer-facing scenarios, as well as into supply chain transformation. So should a DPC leader come from design, from marketing, or from sourcing? What’s the required expertise to effectively fulfil that role? Does it need to transcend all those different areas? I think the answer is going to depend very much on the type of business you are, but also on a growing awareness that leading in this area is an activity that has to happen under the banner of whole product and business transformation.”
In practice, this data mirrors what we’ve seen at The Interline. Where, in the past, most technology initiatives began with an executive sponsor, or an edict from IT, and were pushed down into implementation, DPC especially tends to rise up from the grassroots – from process champions and passionate departmental leaders who see the opportunity for serious change. The challenge, as both we and Kalypso see it, is not strictly who to elevate to DPC leadership positioning, but the critical importance of making sure that every relevant discipline is equally reflected in those conversations.
Outside of leadership, though, what does this year’s data reveal about the importance of talent in successful 3D and DPC initiatives? Has a dearth of DPC talent remained a major barrier to deeper and more comprehensive adoption? And if so, which roles are currently the most under-supplied?
“We’re seeing many roles evolve at the moment, requiring a change in skill set for many traditional responsibilities, Sophia explains. “One of the primary roles evolving is a tech designer. In today’s world, most of the garment creation process has been outsourced to vendors & factories, so having a technical design team that is efficient in patternmaking and can make those changes in 3D has changed the traditional job description and created a skillset that’s in high demand. Similarly with creative designers, working in 3D means no longer just sending a sketch or a tear but creating a full garment which often requires upskilling and can make people feel like they’ve gone back to school, brushing up on their draping or garment structure skills.”
But what does a solution for that talent shortfall look like? Earlier this year Safir Bellali, a longtime DPC executive for a major brand group, wrote in The Interline that the strongest mandate in digital product creation today is to grow the digital skills that will support fashion’s future, and this is an opinion the Kalypso retail DPC team shares.
“Generally we all know that the goal of designing in 3D is that, by the time you submit that design for a physical sample, it’s as close as it can be to the final result, and as true as it can be to the original design intent,” Sophia tells us. “And that’s something that a lot of educational institutions are recognising now: that it’s not a case of just teaching people how to bring ideas to life in 3D, but instead helping to create a new cohort of fashion professionals who see 3D as a critical component of a much more comprehensive redesign of how fashion brings products to market. From that point of view, it’s been encouraging to see major schools and universities participating in events like the most recent PI Apparel in New York, because it demonstrates that realisation that both education and industry need to evolve to remain relevant for the world as it is today.”
Raising a new generation of digital and hybrid talent, though, is fundamentally a long-term solution, whereas the brands and makers who have been betting on 3D and DPC for some time are now eager to realise value from their investments on a much shorter timeline. But while plenty of organisations have found that their DPC initiatives delivered value, Kalypso’s research identified some interesting discrepancies between where users expected DPC projects to deliver value, and where they actually did.
“Almost everyone agrees that the primary ROI objective with DPC is to shorten the production calendar and get closer to market – reducing shipping delays, improving margins, cutting costs, maximising sell-throughs and much more,” Sophia says. “But what we realised based on this year’s survey data is that only 4% of companies have actually made significant changes to their calendars after building 3D capabilities and implementing DPC solutions. Instead, they’ve measured results in proven areas like sample reduction, or validating print and artwork ideas virtually rather than on-body. These results are allowing organisations to realise isolated, progressive value but are not – at least not in 2023 – being used as a springboard to genuinely rethink the route to market.”
Needless to say, for both Kalypso and The Interline, this is an unexpected statistic. So many DPC strategies use speed to market as their guiding star, whereas the reality appears to be that most of these initiatives have delivered incremental improvements to velocity, and have seen their value being measured in other areas.
“I think calendar transformations are generally really complex,” Sophia adds. “And I don’t believe it’s helped that a lot of people think of DPC as a way to emulate the physical process digitally, rather than seeing it as an opportunity to challenge the things they take for granted in the way they operate. You might reduce the number of samples you need per style, for instance, but are you able to actually commit to production orders any more quickly? So plenty of organisations start with the vision to replace physical processes with digital ones, and for the entire lifecycle to run more quickly as a result, but the reality is a more complex process of aligning production, design, merchandising, inventory management and much more.”
It should not be too surprising, then, that the share of companies who are struggling to justify the continued investment needed to scale their DPC strategies increased between Kalypso’s 2022 survey and this year’s data – from 23% to around 40%. But the causes of this re-evaluation of ongoing budgets may not be as clear-cut as they might seem, as Sophia told us:
“There’s a lasting perception that DPC is expensive. Some of that originates from hardware costs that are well outside the bounds of spending on IT equipment in other areas, but more generally I think this idea that DPC strategies have high budget lines stems from the need to bring together different tools whose capabilities blur the lines between departments and cost centres. When DPC covers design, development, sourcing, and marketing, are the same departments that put up the investment going to be the ones that realise all the value? Our data suggests that leadership in fashion still views 3D and DPC as isolated projects with finite endpoints, when the reality is much more open-ended, with initial investment in 3D design tools soon leading to digital fabrics and realistic avatars, which have their own costs and require their own change management.”
In this context, and with Kalypso’s latest data to draw on, a logical approach to a scaling any DPC strategy would be to structure it as a long-term roadmap with progressive value to be realised at set milestones, even if those milestones fall outside the original department that was the catalyst for the initial adoption of 3D.
A roadmap like that, though, hinges on having the right foundations to underpin the realisation of value from digital representations of physical products in multiple business areas – upstream and down. And in practice, those foundations rely on digital asset management (DAM) which is an aspect of DPC that Kalypso’s research suggests continues to be neglected.
“DAM is one of the most challenging areas of DPC because people view these initiatives as being concerned with products that are works-in-progress, whereas DAM is generally positioned as being a way to centralise digital assets that are finished, and to use those in marketing campaigns and other downstream activities,” Sophia says. “This is why we see DAM falling out of scope during DPC projects on so many occasions, because brands assume they can rely on a 3D solution’s cloud collaboration tool or sharing files via SharePoint. But organisations that want to effectively scale their DPC strategies need to realise that DAM is not just a matter of sharing images or files, but making connected product data available to end users across the entire enterprise.”
We encourage our readers to explore Kalypso’s 2023 Digital Product Creation In Retail Research in full, since it contains a wide spectrum of different datapoints, analysis, and infographics that capture 3D and digital product creation at the latest, in a series of transitional moments between isolated applications and huge, industry-spanning transformation.
But ahead of The Interline’s own DPC Report for 2023 – which will stand as our perspective on this segment of the fashion technology market until late 2024 – we asked Sophia for her predictions for what the next twelve months have in store for digital product creation.
“Because everything is still emerging in this space, and because scaling DPC effectively requires investment in so many different products and processes that all connect, my feeling is that we’ll see some fundamental redesigns of how things work,” she says. “I also think some of those foundational changes could possibly come from AI, especially the generative creation of 3D objects from still images, helping to automate and rework the way we think about DPC. Perhaps the biggest thing, though, is that between the rise in new talent and the number of new brands, retailers, and manufacturers really getting a handle on what DPC means to them, we’ll see more alignment, a clearer vision for scale, and more people starting to use 3D and digital product creation tools and processes as a starting point for really thinking outside the box.”
About our partner:
Kalypso, a Rockwell Automation (NYSE:ROK) business, helps companies bring digital solutions to product problems. Whether it’s weaving a digital thread from product ideation all the way through manufacturing and service, or advancing operations from automation to autonomy, Kalypso specializes in improving what’s being made and how it’s made. Kalypso serves the largest names in the discrete, hybrid and process industries, around the world. For more information, visit kalypso.com. Follow @Kalypso on LinkedIn and @KalypsoROK on Twitter.