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5 Apparel Industry Tactics Brands Use to Reduce Costs and Propel Growth
5 Apparel Industry Tactics Brands Use to Reduce Costs and Propel Growth
Aug 17, 2023Aptean Staff Writer
The fashion and apparel industry, after experiencing robust growth in recent years, is now faced with some challenging economic conditions. Rising inflation is a pressing concern for 56% of apparel manufacturers and is unquestionably impacting the 36% who note that rising costs are a barrier to growth, as reported in the Aptean 2023 Fashion and Apparel Manufacturing Report.
To thrive in a turbulent market, successful brands and manufacturers are turning to apparel-specific automation solutions to lower costs, optimize profitability and drive future growth.
In this blog, we will highlight five apparel industry tactics that brands are using to trim costs intelligently without compromising production capacity or product quality. For further insight, Aptean has released full guidance in our recent whitepaper, Running Lean: 5 Ways Apparel Brands are Lowering Costs to Propel Growth.
Tactic #1: Mitigate Mistakes and Delays with Automated Sales and Order Management Workflows of an Integrated ERP and EDI
Often human error, mistakes and delays in the sales and order management process can result in costly consequences for apparel brands. By automating this process, brands can eliminate manual data entry, avoid typographical errors and ensure orders flow smoothly through the organization without delays or disruptions.
An integrated EDI and ERP solution—purpose-built for your industry—enables customers to easily review products, request quotes and place orders. The seamless data transfer between manufacturers and customers through EDI improves visibility and communication, keeping customers well-informed throughout the process.
Moreover, ERP-driven order management helps optimize production, fulfillment, shipping and invoicing by eliminating the need for manual re-entry of data at each stage. Enhancing accuracy and efficiency helps apparel brands reduce costs associated with order errors and delays while simultaneously fostering a positive customer experience.
Tactic #2: Minimize Chargebacks Through Improved Vendor Compliance
Chargebacks, or retailer-imposed penalties for non-compliance, can be a significant expense for apparel brands. By leveraging automations in integrated shop floor control (SFC), EDI and ERP solutions, brands can enhance vendor compliance, streamline data transfer and improve visibility and tracking to identify and rectify potential issues before they lead to chargebacks.
The aforementioned benefits elucidate how a coupled EDI solution automates and speeds up communication and the exchange of transactional data between brands and their vendors, ensuring that order details, shipping information and labeling are accurate and aligned.
In conjunction with ERP, SFC helps ensure your production runs smoothly by maintaining real-time visibility into inventory, production and shipping; enabling proactive identification of potential issues before they escalate into chargebacks.
Brands using an apparel-specific ERP solution grew revenue by 7% last year, compared with only 1.4% growth for those using non-industry-specific ERP and a 4.5% decline for those not using ERP
Tactic #3: Make Better Sourcing Decisions with a Single Source of Truth
In an era marked by cost fluctuations and supply chain complexities, making optimal sourcing decisions is crucial for apparel brands seeking to improve profit margins. By employing an integrated approach with apparel ERP and apparel product lifecycle management (PLM) systems, brands can gain deeper insights and establish a single source of truth for sourcing and procurement decisions.
With real-time and historical PLM data at their disposal, product teams can optimize designs and materials based on quality, aesthetics and cost considerations. Centralizing supplier data in PLM allows brands to identify the best raw materials and manufacturing partners to build a flexible and cost-effective supply chain. This level of visibility ensures better control over costs while maintaining production schedules.
Furthermore, an apparel-specific ERP enhances vendor collaboration by streamlining communication between your product teams and vendors helping to simplify the design process. Internal teams benefit from a simplified design process with drag-and-drop material ordering and colorway pitching in the bill of materials (BOM); resulting in faster and more efficient product development.
By making informed sourcing decisions based on accurate and comprehensive data from integrated ERP and PLM software, apparel brands can secure better pricing and drive stronger profit margins.
Tactic #4: Reduce Inventory Waste with Better Forecasting and Inventory Control
The fashion and apparel industry grapples with excessive waste at various stages of the manufacturing process, impacting both sustainability goals and the bottom line. Brands are turning to apparel ERP solutions to improve demand forecasting and inventory control—ensuring optimal inventory levels while minimizing waste.
By leveraging an apparel ERP's demand forecasting capabilities, brands can make data-driven decisions on material procurement and production planning. Accurate forecasts allow manufacturers to purchase the right amount of materials to avoid overstocking, which leads to waste; or understocking, which results in lost sales opportunities. Additionally, improved inventory control features within ERP help manage safety stock more tightly, ensuring sufficient inventory levels without excessive holding costs.
Beyond reducing waste, precise inventory management enabled by an apparel-specific ERP improves order fulfillment and customer satisfaction allowing brands to optimize shorter lead times, enable faster order processing and shrink stockouts—ultimately reducing operational costs.
By addressing these inventory-related challenges through automation, apparel companies can achieve cost savings while maintaining high customer service levels.
Tactic #5: Optimize Warehouse Operations Through Real-Time Visibility into Stock
Warehouse and inventory costs represent a significant portion of operating expenses for apparel brands. To tackle these costs, forward-thinking fashion companies are investing in warehouse management system (WMS) capabilities within their ERP solutions.
Apparel-specific ERP with WMS functionality enables brands to optimize space and labor utilization within their warehouses. Intelligent putaway strategies ensure items frequently picked are conveniently located, while directed pick-and-pack guides workers on the most efficient routes within the facility. Furthermore, advanced picking and packing strategies, such as wave picking and cross-picking, streamline labor usage and save additional operational expenses.
Real-time stock information provided by ERP software enhances visibility, allowing warehouse employees to access accurate inventory data instantly. This ensures the right products are picked and packed, minimizing errors and reducing potential costs associated with inaccurate order fulfillment. Additionally, WMS functionality within an ERP helps maintain production schedules leading to on-time deliveries to customers.
By focusing on space and labor optimization, apparel companies can achieve significant savings from efficient warehouse operations and remain competitive in an ever-changing market.
Positioning for Growth: Offsetting Uncertainty with Automation
In the face of challenging economic conditions, apparel brands are proactively seeking ways to lower costs while sustaining growth. The integration of apparel-specific automation solutions, such as ERP, EDI, SFC, PLM and WMS, empowers brands to streamline business processes, reduce waste and enhance operational efficiency.
By adopting automation-driven strategies across various areas including sales and order management, vendor compliance, sourcing decisions, inventory control and warehouse operations, apparel brands can effectively navigate economic uncertainties and protect their profit margins.
To explore these apparel industry tactics in more detail and discover how leading brands are successfully lowering costs and propelling growth, download Aptean’s full whitepaper: Running Lean: 5 Ways Apparel Brands are Lowering Costs to Propel Growth.
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