The IT crowd

Fashion has moved from an almost parochial business to an international one. Certainly, any retailers in the sector with significant growth ambitions are having to spread their horizons and look well beyond their home markets. According to Verdict Research growth is flattening in big markets like Germany, France, the UK and Italy while all the really exciting growth is in East European countries like Estonia or Slovakia ''where fashion markets are less saturated and consumer appetites have yet to be sated.''

The big European retailers have become adept at stealing each others' customers. Leading Continental retailers have made major inroads into international markets and the top five non-UK clothing retailers in the EU have around half their EU stores outside their home countries, says Verdict.

The internet has added a further dimension to internationalization. While the demise of online clothing retailer boo.com a few years ago was one of the most notorious collapses of the post dot-com era, other online retailers have been working quietly away and are now beginning to reach a degree of maturity. Indeed, pure-play lingerie and ''intimate wear'' specialist Figleaves.com has been going so long that its late 1990s-vintage ERP systems will soon need replacing with a much more sophisticated SAP system, says chairman Daniel Nabarro.

As with many supply chains, it's the long ''tail'' of infrequently ordered items that cause the headaches. Care must also be taken with interpreting data, adds Nabarro. ''With some of our harder-to-obtain items, when customers do discover them, they are often so thrilled that they order five of them at once.'' That though could send completely the wrong signal to an automated ERP system.

Fashion has moved very quickly from a relatively unsophisticated approach to supply chain to one where IT is used to support decision making. Gone are the days in which systems integration used to take months or even years. One of the proudest boasts of TNT's Fashion Group is that it can set up an interface with a new customer in a maximum of eight days.

Philip Bracken, TNT Fashion Group's business development manager explains: ''We have special software that allows us to set up interfaces, usually within days. Because it can map from one system to another, we don't have to spend time reprogramming, which is what used to take the time.'' In fact, with smaller customers with relatively simple needs, the system can be up and running inside a single day, he adds.

Also, given the increasing internationalization of many retailers, along with the shortening lifecycle of many fashion ranges, many retailers are switching stocks between different countries.

The other big trend in fashion has been the movement of large parts of the manufacturing process offshore – usually to the low labor cost countries of Asia. But fashion companies have perhaps focused too much on manufacturing labor costs and not enough on total supply chain costs, says Alain Vix, marketing director at supply chain support specialist, Hughenden. Quite apart from the fact that basic material costs are increasing, many businesses don't fully appreciate the costs of holding inventory (while 10 per cent of the retail value is often quoted as a yardstick, the true figure could be nearer 40 per cent, he believes) nor do they always seem to appreciate that buying in stock from abroad brings many extra costs as well. Failure to appreciate this fact might explain many leading players'' poor financial performance in recent years.

That said, Hughenden's latest poll suggests that many companies in the sector are having a rethink, spurred on by the recent successful example of high street fashion chain, Zara, which buys a large proportion of its stock from Europe and other close-at-hand countries, and Wal-Mart-owned supermarket chain Asda, which recently announced that it is switching some of its sourcing for its George clothing range back to the UK. ''Distance is beginning to outweigh labor cost savings, and lead-time has also become absolutely crucial in fashion,'' says Vix.

Systems are everything in logistics too, says Philip Brown, international logistics director at NYK Logistics, which works across the world for many fashion retailers, but especially in the manufacturing regions of China and the Indian subcontinent, and at the point of consumption in Europe.

A major trend that he discerns is for companies like NYK Logistics to act as a lead logistics provider or 4PL in the fashion industry; the really clever part of what such companies do is to provide electronic purchase order management systems that allow users to drill down and find out exactly how many green size 12s are in a particular container and when they will arrive. ''The internet has really made this possible over the past 10-12 years,'' he explains.

A lot of the bigger retailers are also doing ''buyer consolidation'' in Asia – assembling the right mixes of hanging or boxed garments ready to go more-or-less straight onto the shop shelf in Europe.