Fashion companies are organized by seasons. And they have very long production cycles. Thanks to a clear, effective and collaborative tool, new uncertainties can also be addressed
Interview with Luigi Bianchi, CIO, and Sandro Ciechi, Controller of Sinv
Credit: Sara Polotti, Sistemi&Impresa, November 2021
The post-covid recovery is not something intangible. The data speak clearly and, despite the obvious difficulties represented by the shortage of raw materials recently highlighted by the President of the European Central Bank (ECB) Christine Lagarde, many product sectors have already restarted at great speed. This is the case, for example, of Fashion: according to data released by the Italian Fashion Federation (FMI), in June 2021 sales increased by 16.6% compared to those of the same period in 2020. Fashion, as is known, it does not follow the organizational times and production methods of most of the manufacturing sectors: the priorities of work organization are dictated first of all by the seasons (not the months) which impose a capillary distribution disconnected from solar annualities. This is why the fashion industries must take very long-term planning into account, responding to organizational models different from the more classic ones. Even more so in exceptional and uncertain times like those we are experiencing following the pandemic. Consider, in fact, that traditionally the production cycle of clothing requires starting a year in advance, with the samples, to then arrive in the shops and subsequently manage the disposal of the inventories. Sinv, a clothing production and distribution company with licensed and owned brands including Love Moschino, Bikkembergs and Piazza Sempione, knows this well. Founded in 1975 by Ambrogio Dalla Rovere, it initially produced and distributed its own Daily Blue brand; the turning point came in 1985 with the choice to focus on licenses starting from Krizia Jeans to arrive at Cavalli Jeans, Byblos Blu, DKNY, Red Valentino, JPG by Jean Paul Gaultier, See by Chloe, Dimensione Danza, MCQ by Alexander McQueen and Coming Soon by Yohji Yamamoto, sometimes purchasing shares in the companies that own the brands. The company takes care of all phases of the process: from the design to the production of the garments (also generating an external supply of partner laboratories), up to promotion in the showroom and distribution through an ad hoc logistics channel.
Forecast volumes to modulate increases and costs
A branched corporate structure and such a complex activity require precise and planned organization; especially for a company that needs effective forecasting of orders. “Understanding in advance what sales volumes will be is essential to predict price increases and costs. Being a fashion company, we are tied to the seasonality of fashion and the need to arrive early on the market, often with blind orders." Speaking is Luigi Bianchi, Chief Information Officer (CIO) of Sinv, who explains, in this sense, how it is essential for his company to focus on usable and efficient tools. “Forecasting” and “management” are even more fundamental buzzwords than in other sectors. It is necessary to collect data to read it best and understand which business units to act on with quick and effective decisions to obtain the best performance. The other critical issue is explained by Sandro Ciechi, Controller of Sinv, who is responsible for managing the Corporate Performance Management (CPM) project, developed with the resources of Proxima & Company: there are numerous data that the company must take into consideration and enter into the system to better organize both medium and long-term forecasts and daily operations. “To predict how many copies of a shirt will need to be made in a season based on future market demand, and avoid waste from excess production, it is necessary to analyze historical orders also considering the size and model variables. Working with around 100 countries and more than 1,300 customers, we have to manage an exponential amount of data,” says Ciechi. It is therefore necessary to use a forecasting tool capable of processing a large amount of information, the depth of which is usually difficult to manage. And which also allows each manager to enter and monitor their budget over the course of the year and at the same time carry out multi-year planning that takes into account the life of the collections. Precisely because of this long cycle of garment production (sample collection, production, distribution and management of inventories) the data must be stored and consultable for a period of three years.
The 'right' tool provides fast answers
Sinv has therefore decided to invest in a Budget & Forecasting solution suitable for the challenges to be faced. The software created is able to provide quick answers on business control, monitoring sales, production and economic positioning of the company as well as the collections with respect to the set objectives. It is a solution built on the IBM Planning Analytics platform according to sector specifications and the direct needs of Sinv. Thanks to the new tailor-made tool, says Bianchi, it is now possible to solicit all company positions by asking them to share the relevant data: "Once the controller certifies the accuracy of the data, quarterly meetings can be organized to examine the reports and the outcomes." The data, underlines Ciechi, are also simple to enter for the sales force, such as local agents, who can thus share the information clearly and quickly. “The system offers us historical averages that allow us to estimate sales,” continues Ciechi, who explains how thanks to them it is possible to hypothesize possible variations and cuts in production, discounts and distribution choices in a more thoughtful way than before. The solution, on the other hand, does not only look at the economic aspect, but also at the sustainability of production in terms of efficiencies and inefficiencies from a Lean production perspective.
SSolutions for economic and financial planning
Proxima & Company is a company made up of a group of professionals who have been active in consultancy in Italy for over 25 years. The mission is to act as a single partner with global expertise in management consultancy for the design of strategy and control systems and in the implementation and support of analysis, planning and reporting solutions. The experience on the most popular market solutions and the solid reputation allows us to design and implement solutions for economic and financial planning (budget, forecast, cashflow) also extending to areas of Sales & Operation planning and Supply chain planning.
A new corporate awareness
Among the benefits that a tool of this type can bring is also the change in corporate culture. The CIO is already realizing this: since it is not just the managers who enter the information, but all those responsible, the feeling is that decisions are not just made from above. “Those who saw data entry and budget definition as an obstacle are now more aware of thinking about processes in greater depth. In fact, each manager must spend time collecting data, making a proposal to the controller and entering information. This is important not only for the company, but also for the individual collaborator who is more aware of production critical issues. “Today, those who deal with samples also know the costs very well, while those who sell better understand the importance of discounts based on the distribution area,” argues Bianchi. The forecast is now much more precise and reliable and allows you to react to a changing market even during construction. With the tool, what is considered a cost from an operational point of view can turn out to be a useful investment - and vice versa - because when there is awareness of the data the interpretation becomes simpler and more effective.