Increase Private-Label Profits with Integrated PLM and Sourcing

By Mark Burstein, vice president of retail, NGC

Retailers today are devoting more floor space than ever to private-label apparel -- and with good reason.

Private labels can help retailers improve profitability, increasing gross margins by as much as 20 percent, while also allowing retailers to gain a competitive advantage and establish a stronger brand identity. The challenge, however, is to maximize full-price sales and avoid "instant markdowns." To do this, retailers must ensure that apparel designs match fashion trends and that merchandise arrives in the stores on time, on budget and with the right quality.

For an increasing number of retailers, the key to maximizing private-label profits is Web-based, integrated PLM (Product Lifecycle Management) and global sourcing software. These systems allow retailers and apparel brands to seamlessly manage not only the upfront activities of design and product development but also the complex details of production and logistics, providing "end-to-end visibility" at every step in the supply chain.

Considering that many retailers still manage PLM and sourcing using manually produced spreadsheets, Web-based solutions can have an immediate impact on a retailer's organization. And when retailers implement both PLM and sourcing together as part of a seamless, fully integrated solution, the results are especially powerful.

For PLM, Web-based systems increase the efficiency of product development, improving speed to market and enabling fast, accurate collaboration with supply chain partners around the world. Retailers can enhance their creativity as they develop new ideas and define the concepts, costs and viability of proposed styles. Product specifications can be automatically created and delivered to vendors over the Internet for bids, and time and action calendars and alerts ensure that critical deadlines don't slip.

With global sourcing software, supply chain managers can track production at every step, with up-to the minute details of works in process. They can make schedule adjustments in real-time; receive updated information on product quality using user-defining sampling rules, inspection points and defect codes; and have inbound visibility through the shipping process.

Retailers and apparel brands that have implemented integrated PLM and global sourcing solutions report rapid ROI, with significant improvements in efficiency, margins and cycle times.

As an example, when Casual Male was named winner of a 2006 RIS News Fusion Award, the company noted that its PLM and sourcing solution would help the retailer continue to lower cost and improve the quality of private label merchandise, while responding quickly to consumer demand.

That kind of improvements in private label merchandise can have a dramatic impact on a retailer's efficiency and profitability. And the integration of PLM and sourcing, encompassing everything from initial design to receipt at the distribution center, makes it possible.

Mark Burstein is vice president of retail at NGC (New Generation Computing).