ERP offers competitive edge to textile & apparel sector Intelligence

WTiN Textile 4.0 examines ERP systems, latest developments, cost and roll-out practices and security risks – and pays close attention to those that target or are useful to the textile & apparel sector.

1. Introduction

Textile & apparel manufacture and sales are all about leveraging resources, from creative talent to quality materials and sophisticated technology. Consequently, enterprise resource planning programmes (ERP) have been attractive for the past 20 years or more and have become an increasingly important tool of manufacturers and brands.

ERP developers seeking sales have created niche products that match the specific needs of building blocks within the textile & apparel supply chain. By doing so, they have developed tools that can be effective, but that also risk locking their customers into specific business practices, which may not match the shifting demands of this sector. For example, buying generalised ERP may offer fewer benefits than textile & apparel sector-focused programmes, hence the need, when choosing ERP, to try to combine flexibility with relevance – not an easy needle to thread. Cloud services can help, given that they can offer integrated add-ons to basic services and constant upgrades.

Here, WTiN Textile 4.0 looks at how ERP systems have been developing, especially those that target or are useful to the textile & apparel sector. These programmes are important investments and can change how a brand, manufacturer or supplier operates – so how should textile & apparel companies research, choose them and decide the best methods for installation, implementation and operation?

2. What is ERP?

But of course, just like the businesses ERP systems serve, these powerful computing tools are anything but simple. And with machine learning (ML) and artificial intelligence (AI) inevitably being key portions of ERP going forward, their strength and complexity will only grow.

Technology industry analysis service AIMultiple sees a range of abilities that AI will impart to ERP – such as predictive analytics (developing more accurate forecasts); root cause analyses; optimisation of output (such as yield rates by machines), and maybe conversational AI delivering easier user interfaces to ERP systems, which can be complex [3].

These advances will only increase the range of choices that companies must work through when choosing an ERP system and how to operate it. And for the textile & apparel sector – which is offered both specialist and general ERP products – these decisions can be particularly challenging. But to complete them correctly means the rewards in terms of efficiencies and wider profit margins can be substantial.

3. ERP in the textile & apparel industry

Keeping customers happy is, of course, important for every business and ERP systems can be a key part of achieving that goal. For wholesalers in major and busy outsourcing centres, such as India, for instance, when a regular buyer visits a shop floor who has lately been absent or has placed only smaller orders, effective ERP can flash an alert. Similar services are of great use to outsourced manufacturers tracking customer relations.

“The director may want to meet him personally to check as to why he has returned after a long time. Is he making purchases somewhere else? Is a competitor offering a better price or are there any problems with the firm’s own services?” says Vikash Verma, vertical head at Dataman Computer Systems Pvt, an ERP systems provider in the northern Indian town of Kanpur, in an interview with WTiN Textile 4.0.

Furthermore, before executives meet such a buyer, a well-configured ERP can inform managers about the customer’s average payment dates, transaction days, volumes and items purchased in the past year or in recent months, says Verma. Such features have proved their worth to manufacturers, wholesalers and retailers, he adds.

There are common ERP features that can be of use to companies across this distribution chain such as on inventory, highlighting old stock, promoting businesses to maybe sell on discount, explains Verma. Wholesalers can also monitor how much goods are in transit and what has just arrived at their warehouses, even what has been unboxed and barcoded. Similarly, while keeping supplier payment records, a useful ERP system will always deliver basic book-keeping functions such as telling management how much has been paid, how much is still pending and if there have been any discounts for early payments, says the Dataman executive.

Looking ahead, some newer ERP programmes in outsourcing centres such as India have improved client interfaces, for example by digitalising firms’ product catalogues – which aids efficient sales with overseas buyers: “If you click on a dress, not only do you come to know the fabric content, the pricing, costing, how many buyers have selected that style, but also the time the buyers have spent on looking at that particular style,” explains Rahul Mehta, president of the Clothing Manufacturers Association of India, in Mumbai.

4. Latest developments

“In the apparel industry, delivery schedules are shrinking while a just-in-time and close-to-the-market philosophy are coming in,” Mehta continues. “It makes ERP systems critical for the top management to be in total control of the everyday aspect of their operations.”

Indeed, Ritesh Gupta, vice president of Textile Association of India (Delhi unit), stresses that ERP systems are becoming increasingly versatile, with their integration with a wide range of business areas, including accounting, billing, costing, sourcing and dispatch, being especially effective. Gupta explains that he likes how systems tell the “raw material requirements for a given order, the present output and the running efficiency level of the unit”.

Dataman’s Verma stresses how ERP systems can be connected to production monitoring systems, such as sensors installed in the ring frames of manufacturing equipment, reducing manual checks and logging: “It is very easy to track where a particular process is.”

Illustrating how ERP can optimise supply chains, access to the ERP systems of a manufacturing unit were being given to Indian manufacturers’ customers, providing live updates on their order status, says Gupta, who also heads the technical division of Kohinoor Ribbon Factory, in New Delhi: “With one click our customers can find out if the order is in weaving or post-weaving stage. It also allows customers to make any midway amendment to the order without first having to check the exact production process the order is going through.”

Such ERP transparency is still growing in India, however, according to Mehta, sharing codes with customers is uncommon in India and restricted to partners with whom they have mutual confidence: “It requires a very broadminded approach and is a great thing if it does happen.”

Ultimately, the utility of ERP systems is evident from their popularity. According to Mehta, almost 90% of Indian textile and apparel exporters and most of the larger domestic market manufacturers are using them. “Gradually everybody is updating their information systems, in which obviously ERP plays an important role,” he says.

Given the diversity of companies in outsourcing centres such as India, it is helpful the pricing of the ERP systems is also very wide. In India packages can be bought from as little as Indian Rupees INR100k (US$1.3k) to INR2m (US$27.3k) depending upon the features and services required, says Gupta. “Most companies get the software customised,” he adds.

5. Generalised versus specialist ERP

In terms of differentiating between a general ERP and an ERP that is specially designed for the textile & apparel sector, it is important to understand that a piece of clothing differs from many other products. Most goods are made in a significantly smaller range of styles and sizes, with textiles & apparel also differing in colours and sizes. These sizes, in turn, come in different sub-size parameters, such as different waist size and length of leg. The associated challenge for any ERP software is that the product cannot easily be handled with a simple purchase order number. An ERP that is specially designed for the textile & apparel sector addresses this issue by defining the product by recognising all its styles and variants.

Canada-based Timereaction has developed a system that is well suited to the textile and clothing sector through its automation of production workflows, identifying and avoiding redundant tasks [4]. Its goal is to allow participants in a supply chain to always see what other actors have done or are supposed to do to a product.

“It’s like Facebook that creates an automatic birthday post for a user. One Facebook friend after another sees it and types his own comments in, and may post his own animated birthday cakes, so that all comments are ‘nested’ to one conversation,” explains Allan Diamond, CEO of Montréal-based Timereaction, the maker of a collaborative workflow management system sold under the same name [5].

By contrast, companies using less comprehensive ERPs can find themselves looking “into a dark tunnel: there’s the order placement number and the delivery date but people along the chain never really know what happens in between”, Diamond argues.

One of Timereaction’s clothing clients, Montréal, Canada-based apparel manufacturing company UFO Group, in a testimonial on Timereaction, claims that it has allowed it to reduce the volume of emails by 50-70% based on 300 emails a day, with a two-hour per user/day savings. The production cycle was reduced by 21 days based on a 120-day turn. The company was able to increase sales by 15% using the same resources, it suggested.

6. New ERP programmes and new add-ons

Looking ahead, Ruschel sees great potential for the application of AI in textile and apparel ERPs to optimise transportation (thereby reducing CO2 footprints), quality control and sales. According to Ruschel, AI will help designers react quicker to any issues during sourcing, along the production chain and during distribution. For example, he explains, the currently common problem of delivery services committing a scanning mistake would no longer inevitably lead to a wrong invoice because the AI would be able to find the mistake before invoicing. “We will see the emergence of many start-ups that present AI solutions for specific issues the textile [& apparel] companies are facing,” Ruschel predicts.

He adds that IX FUSION ERP was ready for development as it can accommodate a large number of additional modules.

One of modules the IX FUSION ERP already accepts within its system is a third-party app Delogue PLM, developed by Denmark-based Delogue. This PLM organises product development from a design concept to the final product by connecting both internal and external teams and partners. Its goal is freeing clothing companies from using fragmented systems that rely on software that is not readily compatible, such as Excel, emails, WhatsApp, Dropbox and WeTransfer [7]. In terms of sample management, Delogue PLM allows its clients to manage milestones and deadlines, quantities per colour/size, status update, sample measures and comments and image upload. Delogue PLM gathers sizes and measurement charts and attaches them to each design. It gives the user a template for measurements to easily import data. The PLM also strengthens supplier relationships if suppliers are granted free access and are assigned tasks.

“In an Excel sheet, you never know the exact state of play because Excel does not track history,” explains Vilmer Ståhle, digital marketing manager at Delogue PLM. “That could become a real problem if someone makes a mistake in price calculations that then, for example, lead to you asking your client for inadequate minimum order quantities that endanger your margins.

“The PLM feeds the ERP with ‘hard’ SKU (stock-keeping unit) product data but can also provide downstream systems with ‘soft’ data, such as sketches, product descriptions or notes, measurement charts, care instructions, materials, and colours in multiple languages,” says Ståhle. Using a PLM, such as Delogue, within ERP, it is possible to keep track of the different manufacturers and enable product traceability, which is becoming 'ever more important for […] end consumers' concerned about sustainability, he adds.

Looking ahead, Ståhle predicts ERPs will deliver full transparency of clothing supply chain data, with a consumer’s mobile phone scanning a clothing’s QR code to check whether it has been made with social responsibility and whether its CO2 footprint is reasonable. This will help fashion brands, he says: “There must be greater transparency and control of each step of the product development process to deliver on the growing requirement from ecommerce and consumers.”

7. Assessing cost-benefits

While ERP investments can be significant, it is easy to make the argument that in the highly competitive business of textile & apparel using this software is imperative to improve productivity. That said, companies need to use them well, and utilise ERP systems to undertake root and branch reviews of their operations. A transformation of digital services involving serious analytics is typically an 18-24 month journey to implementation, according to a study by McKinsey & Co study released last May (2020) [8]. Such work requires an ambitious aspiration, a clear plan, and concrete milestones, it said.

Examples of how ERP makes a difference are widely available. Pratibha Syntex, a Western India-based sustainability-oriented vertically integrated manufacturer of knitted textile products serving apparel brands from more than 20 countries, is one. The company implemented ERP in 2000, within three years of its launch: “Since it is a vertically integrated company, ERP helps in end-to-end implementation of order, right from accessing, resource planning, to current status to financial gain,” Satish Sachdeva, general manager, IT & MIS (management information systems) at the company, tells WTiN Textile 4.0. “Costs can only be justified by value obtained by usage of ERP systems.”

While value judgements derived from intangible benefits are difficult to make, it is possible to estimate ERP-inspired productivity improvements in critical decision-making areas, Sachdeva adds – furthermore, the cost of “incorrect or delayed decisions may impact hugely on the bottom line”.

No doubt this is useful. The Gartner Global research and advisory group has found that leading companies take a proactive and strategic approach to cost optimisation — strategically cutting costs while funding new growth at the bottom of the business cycle. This equips them to manage uncertainty and disruption through crises like the Covid-19 pandemic [9].

Anupama Singal, co-founder at SLICeR Pte, a Singapore-based company for fashion and lifestyle business analytics, explains that a company should identify two or three indices on which the proposed ERP system should deliver, quantify expected financial savings, and set a timeframe to achieve them. This will help companies develop an effective cost-benefit ratio regarding ERP investments.

An ERP tailor-made for the textile & apparel industry is always better when industry experts have been involved in building the programme, explains Lukas Hartmann, CEO of Intex Consulting, a Germany-based consulting and software company: “With our software Intex ERP Business Suite or the Intex textile MES for SAP S/4HANA, it is possible to execute standard costing on the real article specific machine set-up data. Thereby the standard costing is performed on the most detailed level. As the production is 100% traceable by scanning and machine monitoring, we can deliver a very precise actual costing in the end.” He adds that, independent of size, Intex ERP programmes, on an average, take 12 months to amortise [10].

Combining ERP with cloud-based applications can help achieve flexibility with relevance. SLICeR’s Kanvas application, for instance, creates visual insights that the user can readily apply [11].

8. Roll-out and installation

Delivering clarity on deliverables from ERP tools, top management buy-in and change management planning are key factors that companies should be prepared for before installing ERP. Scalability of the tool and simplicity of use are other important aspects a company should look at prior to opting for an ERP [12].

Singhal, co-founder of SCILeR, listed definite steps for companies before they opt for ERP: “A request for proposal document is a must before installing an ERP programme. [The company must] list all the features it needs linked to the benefits it is seeking.” The textile company knows its own business best, hence knows what it wants as deliverables, she elaborates. “For instance if you are seeking speed in your operations then list down the features you think will bring speed. Specify your base minimum [expectation] in your proposal document – the must-haves, the good-to-haves, and the wish-list and on each of these parameters have a scoring mechanism. That is the simplest way to evaluate a solution.”

Next, she says the company must know what ERP-related deliverable it is seeking over a given timeframe: “Identify the benefits and the KPIs [key performance indicators] you are looking to improve.”

Equally important, according to Singhal, is planning for change management before you start a project or select an ERP tool.

The company must have a clear idea of the people who will be impacted by the system – who will be its champions within the organisation who push forward its implementation: “Without having this in place, you can buy the tool but it is not going to serve the purpose.”

According to Sachdeva, general manager (IT & MIS), at India’s Pratibha Syntex, prerequisites for the installation of ERP include the involvement, commitment and accountability of business process managers; cross-functional talent in a core team deployed for implementation; and effective change management by top and middle management. He adds: “Deliverables should be focused from a top management decision-making perspective and not from users’ perspective.”

In India and most of Asia, where many textile businesses are family owned, it is important to have top management sponsorship to the project to ensure smooth implementation and funding. Singhal stresses the need for testing or simulation before rollout of the actual tool. “The power of the tool lies in its usage. Unless the tool is tested the users do not know how the ERP works and easily lose faith in the system.”

9. Data management

Once an ERP tool is in place comes the challenge of data management. As Lukas Hartmann, CEO of Germany’s Intex Consulting puts it: “Data is king. After the software partner selection, project preparation and team formation is done, we start with the initial data migration strategy definition. If you want to turn big data into smart data, there is some strategy to be developed. After this is done the process analysis and system parametrisation phase starts.”

Certain milestones should be put in place and a periodic review undertaken after the deployment of the ERP tool, says Singhal. These should be stated upfront so that the user is sure a manager is monitoring them and ensuring the company will derive value from an ERP. “The champions must have it on their deliverables […] because the company has invested in this tool,” she adds.

Sachdeva, of Pratibha Syntex, says: “It is important to keep a focus on constant evolvement and maturing system penetration. Processes and data quality improves with the constant decision making on the systems information being served.”

Meanwhile, the digitisation of support functions is another key lever for improving efficiency from ERP. By automating repetitive tasks in back-office functions such as indirect purchasing, finance, legal, and HR, companies can simultaneously reduce costs and free up time and resources to reinvest in more valuable activities, said the McKinsey & Co report [8]. Companies that have automated their finance processes – such as claims collection and financial reconciliation – have found that they have also increased the agility and accuracy of these processes while capturing significant synergies. “Speed up the digitisation of all support functions through robotic process automation and other leading-edge technologies,” advised McKinsey.

10. Security risks and protection

The benefits of ERP are that it connects all business processes in one place “but from a cyber-crime point of view, it’s putting all your eggs in one basket”, says Sudhir Ethiraj, global head of cyber security at Munich, Germany-based TÜV SÜD AG, which advises on industrial safety, including data security, security standards and penetration testing.

Digitalisation moves designed to make businesses ‘nimbler’ also increase the attack surface by exposing sensitive business information ‘outside the four walls of their organisation’ [13]. Gert Thoonen, business leader, network security services with Rockwell Automation in Dubai, United Arab Emirates, explains that combining IT and OT (operational technology) systems involves ‘connecting two very different worlds together’ – exposing OT to viruses and weaknesses from legacy IT, ‘which is very dangerous’.

This is especially the case with complex ERP systems that spool into a company’s entire function – Thoonen added that for a textile company whose ERP system is compromised to recover, it takes around 15 days. “Translate that into a year and it’s 5-10% of annual production time lost, and then you have to think of the added costs of recovery,” he says.

“Attacks on ERP applications can cause serious financial impact to virtually all businesses,” said Mariano Nunez, CEO, of Boston, US-based application cybersecurity company Onapsis, in a 2019 interview [13].  And the biggest threat “is sitting in your company which can be accidental or not,” adds Thoonen. An employee might download the wrong thing or misconfigure something or it could be a disgruntled employee who wants to bring the company down because they do not feel valued, he tells WTiN Textile 4.0.

“Systems can be reconfigured to do things wrong or deliver bad quality,” he explains, citing the example of hackers being able to cause chemicals to be dropped into a main drain instead of being diluted into wastewater. “That affects the community and the company both in terms of reputation and financially if they are fined.”

Also, there is a supply chain risk from compromised ERP systems, he said, because if they are not secure, “it’s like a snowball effect and the knock-on effects can be quite extensive”.

As many elements in the global textile industry are ‘a one-man show in a village’ who might not buy from ‘top notch vendors’, some ERP systems could have vulnerabilities when they are built, warns Ethiraj. He says customer data and intellectual property for designs or inventory information could be stolen and sold on or become subject to ransomware attacks.

Attackers can access ERP systems via social engineering by posing as an employee or via a vendor through backdoor loopholes in a system, he says, adding that unpatched vulnerabilities can also leave systems open to attack.

“The risk depends on whose access ID a hacker gets,” he explains, as the more senior or specialised the role, the more likely they are to have more widespread access to different elements of the network.

Given that ERP systems hold a textile company’s most sensitive and valuable data [13] and combine multiple databases and operating systems within the network, it is no surprise that the inherent complexity and scale of these systems makes them extremely challenging to protect [14].

But several facets of security management are key to offering best practice solutions to the threat of attack.

Thoonen and Ethiraj agree that company managers should take time to familiarise themselves with the infrastructure of an ERP system from the outset is vital so that anomalies to normal operations can be quickly identified. “Slowing things down is better than the rush to digitise,” says Ethiraj.

IBM, in its advice, highlights the importance of asset tracking – an appreciation of where every device is physically located, vendor information and authorised connections between equipment items and protocols for their use.

And as important as connections are isolations, says Thoonen, who likens effective ERP security to the current Covid-19 pandemic measures to limit the spread of the virus. “You isolate infected groups, so the problem doesn’t spread. [In an attack], only the infected part of the system goes down but other parts are protected.”

Granting appropriate access to users is critical, explains Ethiraj, along with regular training – particularly on promotion when access to wider parts of the system is likely to be required. He urges regular monitoring to make sure logs are collected that can be audited and enable anomaly detection, and he recommends frequent penetration testing of the ERP system in its entirety and also individual applications and any additional items bolted on to the system once it is installed.

Where ERP is operated within a supply chain, Thoonen says “if you share data, you need to check your partner is doing at least the same as you” to avoid knock-on effects of any system compromise. Michael Baxter, head of security communications at SAP Global Security, based in Walldorf, western Germany, says his company continuously works on enabling “security by default” in SAP products. “But there is no such thing as flawless software,” he warns.

SAP discloses vulnerabilities on the second Tuesday of every month (‘Patch Day’), he says, providing customers with information about SAP software vulnerabilities from the company that can be integrated with their existing risk management processes and tools [15]. 

Baxter’s product security response team (PSRT) collaborates with external security researchers for responsible disclosure of vulnerabilities identified on SAP products, he explains.

Ethiraj supports this stance. “Be a part of the threat-sharing community – get information from each other about threats,” he advises textile companies, indicating that new vulnerabilities surface on a daily basis.

“Awareness is increasing but a lot more can and should be done because the textile industry isn’t just manufacturing, it’s smaller companies and retail companies too,” he concludes.

11. Choosing the best solution

Choosing the best ERP according to the business type is key. However, it can be cumbersome sorting through the myriad of ERP solutions available, hence there is help available from consultancies, advisors and cloud-based solutions. For example, Microsoft recruitment specialist Nigel Frank International offers a five-step guide including a free customisable checklist to help companies make the right ERP vendor match [16]. After all, making the right choice is crucial, argues Nigel Frank, because by “operating all of your core business processes from one solution, an ERP can make life significantly easier, but it also means added pressure to choose the right one”. Therefore, “when you’re putting all your eggs in one basket, you need to make sure that basket is up to the job” [17].

Ireland-based Lumenia Consulting – a company offering ERP solutions for the fashion industry – advises companies on matters like whether they need a new ERP system, or could they just add bolt-on solutions to an existing ERP system. It also advises on whether, in the event a company has more than one ERP system following an acquisition, it should continue with multiple systems or move to one [18].

When investing in new or replacement business systems, apparel companies need to consider their “supply chain position, organisation or group structure, geographical spread, brand offering (quality and price point) and whether the organisation owns and develops its own brands or markets others,” said Paul Muspratt and Ian O'Toole, principal consultants at Lumenia, in a white paper [19].

Similarly, US-based cloud ERP solution provider Acumatica is among vendors who offer companies a demonstration video of its solutions, designed to make the decision-making process for textile companies much easier [20].

12. Conclusion