COMPASS: Many fashion companies’ design and development processes are cumbersome. How did this challenge manifest itself at Fossil Group?
BRAD BOLLINGER: We had too many legacy tools, confusing processes and different ways of doing the same thing. In the past, as a smaller company, we’d been much quicker and nimbler, but now we found ourselves looking at development cycles of around 18 months, and that wasn’t acceptable. For example, we had no central library, so our designers were developing their own libraries on desktops and Excel spreadsheets that weren’t shared across the company. They were using different components across the same line and specifying new components that needed to be sourced, instead of using the ones we had on hand. It was costing us time, energy and money.
How did 33 years of expansion contribute to the challenge?
BB: Over the years, we’ve added new product categories, in-house brands and a portfolio of products we develop and manage for clients around the world. Each brand or category was managed as an individual business, and each had its own approach to the product development process. It wasn’t a sustainable path for growth.
How did you address these issues?
BB: It’s important to understand where you are and where you want to be, and then find the right software to help you achieve your objectives. We chose a flexible product lifecycle management (PLM) solution that could provide a single source of truth for everyone. It was important that it could provide all the capabilities we needed to support both the leather and accessories processes and watch manufacturing, which is a little more engineering-heavy. And it was important to start right from inspiration and innovation and have a clear flow through the lifecycle. We knew this was a significant transformation, so we also incorporated strong representation from executives in each category, each division, along with HR (human resources) and IT (information technology). We now have the transparency and collaboration we need to be more efficient. We do everything in the PLM system, from line planning to seasonal and global libraries.
Did you need to overcome any unique challenges?
BB: Designers are the creative force on many aspects of the business but, in other ways, they don’t like change. We needed to allow our designers to continue working in their preferred design software package, Adobe Illustrator. However, working in a system and transferring the information to another would be time-consuming, require that we train reluctant designers, and increase the potential for introducing human error. So the answer was to integrate the two. It was a complex project, and the Adobe portion was one of the last elements of the new system to go live in 2016.
Now our designers move their work seamlessly from Adobe Illustrator to the PLM system, where product development teams look at costing, material sourcing, availability and timelines – everything we need to do to bring the product to life. We can track materials to understand where they’re used, where else they could be used, and follow up on costing to achieve the best value.
Design-to-hit ratios and sample numbers are common challenges in the fashion industry. What potential did you see to improve these?
BB: We produce an average of three samples for each design, so reducing the number of designs we create before adopting one can also mean a significant reduction in sampling costs and time-to-market. For example, a 45% reduction in the number of designs per hit – from eight or nine to just five – has proved achievable for one of our watch brands. That scale of reduction could mean 300 fewer designs and close to 1,000 fewer samples per year for one of our larger brands. But to do that, we needed to be able to monitor the ratios for each brand, to see where improvements could be made and find the right ratio for each program.
How have your designers responded?
BB: Instead of creating a design and then figuring out how to make it, our designers are thinking a couple of moves ahead and drawing on centralized libraries of materials and components. They’re considering which basic components they need and looking at opportunities to use the materials we have on hand, or at how a legacy product might contribute to a future product. They’re also able to see their products and design ratios evolve in context of the broader line plan.
What longer-term opportunities can this type of project bring?
BB: This wasn’t just an implementation; it was a transformation. It was about the company and how we move forward. Having one tool, one process and one truth makes us much more efficient. Reducing our design-to-hit ratios has helped us decrease cycle times. Now we’re looking at pulling back our development calendars. This will take time because we have five development cycles per year and we’re working almost a year out now. But that’s already a major improvement over 18 months. We can now plan how to gradually roll those calendars back.
About Fossil Group, Inc. Fossil Group, Inc. is a global design, marketing, distribution and innovation company specializing in lifestyle accessories. Under a diverse portfolio of owned and licensed brands, our offerings include fashion watches, jewelry, handbags, small leather goods and wearables. With our newest owned brand, Misfit, we're bringing style and technology to the high-growth connected space. We're committed to delivering the best in design and innovation across our owned brands, Fossil, Michele, Misfit, Relic, Skagen and Zodiac, and licensed brands, Armani Exchange, Burberry, Chaps, Diesel, DKNY, Emporio Armani, Karl Lagerfeld, kate spade new york, Marc Jacobs, Michael Kors and Tory Burch. We bring each brand story to life through an extensive wholesale distribution network across 150 countries and over 550 retail locations. Certain press release and SEC filing information concerning the Company is also available at www.fossilgroup.com.