SAP

So what exactly is an apparel and footwear company? These are companies that design, manufacture, market, and/or license brands for men's, women's, and/or children's clothing, footwear, and accessories. With increasing focus on cost reduction and the need for responding faster to the market needs, there has been a distinct split in the activities that companies perform in the apparel and footwear space. On one hand we have the brand leaders e.g. Nike, adidas etc.  who are involved in design, marketing, and/or licensing brands for men's, women's, and/or children's clothing, footwear, and accessories. On the other hand we have the companies who manufacture the products. Having said that there still are many apparel and footwear companies who perform all the activities themselves. However the trend is to shift the manufacturing operations to a low cost location

So what is so specific about the industry?

Global setup: The supply chain of an apparel and footwear industry is truly global in nature. Different partners involved in the supply chain e.g. designers, marketing team, manufacturers, raw material suppliers, customers etc. are spread across the globe.

Focus on Design: There is a constant focus on design as there is a need to come up with cheaper and innovative products which meet the customer taste and requirement, in order to stay above the competition

Lead Time: Lead time for product development is high. However there is a constant pressure to shrink the lead time and respond faster to changing market demands

High Volumes: The product volumes handled are high. This comes from the fact that one single product may have multiple dimensions like different colors, sizes and styles.

Complex Forecasting: Long lead times, global setup and high volume of products make the forecasting process complex and long drawn. On the other hand growing market pressure forces the companies to reduce the lead time for a new product introduction into the market. In addition forecasting has to be accurate to the SKU level

Complex Customer Demand: Customer demands are complex and varies based on various criteria like geography, culture, Pricing, period of the year etc.

Seasonal: Demand is seasonal

Multiple Distribution Channels: Multiple distribution channels exist in the product distribution. Shrinking margins has forced many of the companies to come up with own retail shops. Web based ordering is also catching up

Samples Handling: With customer demand becoming complex and with increasing competition companies are having to come up with more and more new products each season. As a result companies have to procure a high number of samples each season. Also the fact that the percentage of samples which end up on the shelf for sale is low does not help the companies.

Collaboration & Flexibility: The changing retail industry practices combined with the global nature of the supply chain necessitates high degree of shared information and systems integration, flexible manufacturing strategies, stronger planning systems and highly sophisticated order allocation capabilities to meet customer service requirements, both in terms of fill-rate and on-time delivery

Even with all these challenges and unique setup apparel and footwear industry is growing. Leading software companies like SAP have come up with industry specific solutions (SAP-AFS, SAP APO etc.) to cater to the specific needs of the industry.

Having said that the collaboration and flexibility requirements combined with the unique industry characteristics is putting pressure on apparel and footwear companies to move from their complex legacy applications based system architecture to a leaner and flexible system architecture which supports them in their growth. This in turn is putting pressure on software companies like SAP to constantly improve their products and also come up with new solutions.