November 15, 2018
By Paul Magel, President, Business Applications and Technology Outsourcing Division, CGS
Ask apparel wholesalers, manufacturers, retailers and distributors what success looks like in 2019 and the answer is simple: Increase productivity while decreasing costs. But, the path to achieving this goal is a complicated web. Regulations introduced in 2018, including the EU General Data Protection Regulation, made compliance and security equal concerns for the apparel industry. Meanwhile, the proposed tariffs have added another layer of complication, pausing potential factory expansion efforts in new territories as they evaluate the sourcing woes in their supply chains.
While the regulatory landscape and the fallout from tariffs are still uncertain, we can look at the effects technology will have on the supply chain overall. As you prepare for the year ahead, here are some trends to keep in mind as apparel companies look to mitigate risk in the 2019:
Power Your Supply Chain with AI and Technology
According to a report from McKinsey, companies will “derive between $1.3trn and $2trn this year in economic value from using AI in supply chains and manufacturing.” While many industries have achieved results with AI and automation in their supply chains, apparel brands have yet to fully realize the benefits because they have traditionally relied on human labor versus technology. In 2018, we started to see the apparel supply chain adopt robotics, AI and other intelligent technology to scale and meet market demands. For example, global sewing machine manufacturer Juki is using smart devices on its factory floors to track and analyze data from sewing operators and sewing machines throughout the production process. The resulting value has been better information management communicating delivery time frames and the ability to fulfill orders. Given the ever-increasing complexity of the regulatory landscape, the ongoing pressure to increase time to market and consumer demands, we expect more apparel brands to embrace automation and next-gen technology in 2019.
Prepare for VR/AR
Goodbye physical samples – Say hello to virtual equipment and 3D design. In 2019, virtual and augmented reality technology will allow manufacturers to move quicker to market, sharing designs from across the world in a matter of moments. Companies including Nike started this trend, using a 3D design to translate athletic data into textile development. With these technologies becoming more accessible in 2019, apparel manufacturers will use them to streamline collaboration and production throughout the supply chain.
Wearables Will Become the Must-Have Item
Wearable technology has proven to be valuable to many industries, including manufacturing and distribution. With data being collected from a variety of sources –assembly lines, forklifts and smart gloves – and delivered to a central system, companies are making data-driven decisions about how to improve overall operations. The adoption of sensor-enabled equipment and systems that connect back to wearable devices will only increase as more manufacturers transition to smart factories this year.
Use Predictive Analytics to Reach New Heights
Predictive analytics has already proven its worth to apparel manufacturers. It’s allowed them to make their data more actionable, optimizing demand, delivery and forecast. In 2019, we can expect predictive analytics to reach even greater heights.
Don’t Bet Everything on Blockchain
While Bitcoin may have popularized blockchain, the concept of a digital ledger can be utilized for any type of exchange. Blockchain touts the benefits of being transparent, scalable and highly efficient, making it a seemingly ideal for tracking purposes throughout the supply chain. However, we aren’t at the point of full scale industry adoption in the apparel market. For blockchain to be successful, all partners within the supply chain must be in it and on the blockchain ledger. Today, factories in emerging countries, for example, lack the technical infrastructure resources to support blockchain technology. Also, the technology itself can be cost prohibitive and not energy efficient. In fact, Morgan Stanley estimates that “the original blockchain, which underlies Bitcoin, runs on an algorithm that could eat up more energy than Argentina this year.” Until blockchain is more accessible, utilized and energy efficient, this technology won’t affect the apparel supply chain.
The apparel wholesale, manufacturing, retail and distribution is at a tipping point, and many brands are rethinking traditional supply chain management. By embracing new technology instead of chasing cheap labor in new markets, brands can be ahead of the competition. And, technology doesn’t mean the end of human jobs. The adoption of new solutions will actually lead to new career paths, with more data scientists and robotic managers joining the apparel workforce in 2019 and beyond.
About the author:
Paul Magel, who joined CGS in 1997, has over 25 years of experience in the information technology space. Leading the Application Solutions group at CGS, Mr. Magel oversees the company’s flagship BlueCherry® Enterprise Suite of solutions for the fashion, apparel and consumer lifestyle products industry as well as the Technology and Infrastructure practice overseeing sales, delivery, support and development. Mr. Magel is also responsible for the CGS Global Software Development Centers in Europe and India. To learn more, visit https://www.cgsinc.com/.