Going Digital at an SME

Hey, welcome to another episode of Fashion Made. Today I've got the pleasure to be sitting down with Florian Rusch.

Hey David, how are you?

I'm very well, thank you. How are you?

Thank you so much for having me here.

It's a pleasure. It's an absolute pleasure. Florian is the Chief Digital Officer at a company called Drykorn.

Yes.

So, I know that at Dricon you guys have this plan to go digital by 2021. What does that really mean? Where have you come from in this journey? Is it across the entire company or are you focusing on one place first? So, explain a little bit to me.

Yeah, pretty good question. So, from my perspective, we have been a company that had been focusing on the product. So, product is king, you can say, and we have a really beautiful collection, and this is what we are known for in the market. This is what the consumers love about that we have really nice designs and high-value fabrics and trims. So we are a product-driven company or a design-driven company, and with the time, I think it just happens that you might lose the track for, I would say, a strong backbone, and you also might miss to discover new trends in terms of technology. So, yeah, where did I start? As I said, I was working in product management and/or in product development, and at that time I realized that, for example, when it comes to order management, that we had like too many Excel spreadsheets and too many PDFs and by email, and this with every single supplier, and I thought about how could we improve this. And it was the same with the communication when it comes to technical data for our products. So sending out bill of materials, sending out sketches, requesting a proto, everything was just done outside of a system. And from our ERP landscape, some of the most important processes are just not supported, and this is where I just try to, you know, get the improvement in.

Yeah.

Thinking about platforms where we can collaborate with suppliers or with customers. And yeah, so this was basically what I had done in the past years. It had been project management, and after, I don't know, 2 or 3 years, we also thought about putting somebody into a hierarchy level that can really execute the strategy and also work on a strategy. So this is maybe also one of my main tasks, that we have to think about where we want to be in 2021. And together with our CFO and CEO, we tried to figure out that digital strategy and came along with several projects. And 2021 By now, I think, will just be the moment where we have to sit down and check if this strategy is still the right one, and then we have to look out for new technologies. I mean, we're talking about body scanning and artificial intelligence, about VR, AR, all of those things. They are just out of scope nowadays, and they are not included in our digital roadmap. Now we're talking about PLM, and we're talking about supply chain tools, and we are talking about improving the internal processes through technology and automation. But as I said, there are so many trends out there.

Yeah.

2021, I hope that we're going to be some kind of agile and also, yeah, prepared for the upcoming task.

It's really interesting to get this perspective from an SME like yourselves. We have a lot of big companies that are continuously talking about wholesale kind of Mount Everest digital transformation, let's call it, where everything in this huge company is going to change. For you guys, obviously you need to focus on what can we actually do in this roadmap, you know, and because I guess as an SME you have the opportunity to do any of these digital technologies, AR, VR, PLM, you know, 3D design, 3D prototyping, all of these different things. You can't do it all at once, I guess.

Of course not.

So, how do you choose which one to focus on first?

It's funny. So, I think it's the question of what technology or trend creates the most value. And I think that most of the decisions had exactly based on this question. So, I think that we had the biggest need first of all in streamlining our product development processes. So we decided to start with PLM in the first instance. And yeah, sure, I think 3D is an amazing technology, and if I hear other people talking about 4D in the meantime, I say, oh my God, we didn't even start with 3D. But everything needs to come at the right time, I would say. So we break down the strategy in projects that create value and have also, I would say, the quickest wins. So when we talk about 3D, I think it's a process that might last, I don't know, 3 years, 4 years. I know companies that had been buying licenses back in 2010 and they are still not where they want to be because also technology is changing and getting better and evolving. But yeah, it's a very long process. And with these projects and new technologies, you also have to think about the changes within the organization. And since we are also small and have limited resources, it's also a matter of what can the organization handle. And if you have a very demanding daily business, you have to decide what you want to do. And we said, let's have maybe 2, at least 3 big-scale projects a year, and that's it. So for us it was First creating a supplier platform and then it is PLM. And we are talking about EDI onboarding of suppliers and then about digital sales. And what would be the foundation of a digital sales environment? I think it would be 3D, clear. So then we have to put in 3D first. So yeah, I think the roadmap is also changing by time. And you have to be, or you have to stay flexible all the time. That's it, I would say.

Which technology did you go for first? What was the first thing that you wanted to bring in when you had this big change, if I can ask that?

It was the supply chain platform.

Yeah, that was where you thought that's going to be the biggest and best and quickest win?

Back at that time, I think we had two tough seasons when it came to delivery tracking. And also delivering the right product into the market. And we just realized that we haven't had the transparency we needed.

Yeah.

And this tool helps us now, or should help us to reach this transparency. And it also is about decreasing workloads for sure, getting faster, having more control, having more, yeah, visual help in doing your daily business. And yeah, this supply chain tool is quite nice. It has a dashboard, what is basically filter on the order list, and it shows me amended orders, delayed orders, cancelled orders. And there's a workflow behind that is just calculating delivery dates, and if something might be late, then it's going to turn red. So I said, back at that time, we decided that this is going to be the first project because it would be something that we can enroll in a very short time. And then it was PLM, what is in my eyes one of the most important projects, but also a very complex one, because design is a very complex world. And to bring this into, let's say, 3 or 4 different departments is not an easy task, I would say. So PLM will take us a year at least. In the first stage of our vision, because first we want to talk about working on a PLM, and second it would be working also mobile, because nowadays those web-based platforms give you the chance to work on your iPhone when you are on a ferry and doing some fabric sourcing, or they help you to work remote if you are maybe at the production facility and you want to Yeah, do a comment, for example. And the third stage, I think, in PLM will again be some kind of supplier collaboration, so that our supplier will get data access on PLM and that we don't send all those data packs by email any longer.

Do you think it's easier for you as an SME, or do you think some of the challenges that you talked about, like less resources, let's say, make it more challenging in your opinion?

I think answer is yes and no, both. So on the one hand, I think it's easier because we have less hierarchies, and if I really believe strongly in, in a project or in a certain topic, then I can talk to the CEO directly and we can make a decision. On the other hand, I think, yeah, due to limited time and resources, you can't— at least it's my impression, and this could be because I'm sometimes a little bit impatient, but I think that due to limited resources, especially in my team and also in the functional departments that are part of the projects, we can't handle too many things at once. But this could also be a good thing. I mean, it keeps you honest. It's, yeah, for sure, it keeps you honest. And I think it helps you to start, yeah, little and then growing. I think that's it mainly about. Because on the other hand, just imagine, so our team is like 3 or 4 people mainly trying to execute all those projects. Just imagine we would have a team with 10 people, so we're talking about more resources, then it would be not 2 projects a year but maybe 4 or 5. But how could the organization deal with it? That's a question you have to ask too, right? I'm not sure what would be the best way. And I tend to compare ourselves often with the bigger companies, and then I got the impression that we might be a little bit behind. But I think if you have an a very objective perspective and you compare yourself to other SMEs, we are in a pretty good shape.

Yeah, absolutely. Well, I think you're doing well already by having someone in your position.

Thank you, I agree, I agree. I think that was a smart, it was a smart decision from our CEO and CFO to put me in there, and I think it was not unnormal at that time, but it happened 2017, and so when we had been communicating this into the organization during one of our management meetings, I think that some people asked themselves, so what is a CDO doing, especially in a fashion company? So I think it might be well known when you think about, I don't know, telecommunication or automotive or whatsoever, but maybe not in the fashion industry and not in an SME.

Yeah, well, as I say, I think it's I think it's a good thing that you've already done this. You clearly have a lot of passion putting towards this side of the business. How do you find it convincing other people in a company that has been going since 1969 to go digital?

It's challenging for sure. I mean, I think this is a— I don't want to call it problem. I would say it's a just a human issue, right? Change management is difficult, and this is why I do understand that people that have been working in the company, let's say, for the past 10 years, and they are used to the same processes, they wouldn't be ready for a complete redesign. I do understand it, but on the other hand, I think that we will not stop digital transformation. It's, I think, it's a global thing and all this technology is just coming and this is why I'm so passionate about it that we should take the train now and be ready. And yeah, this is why I'm also fighting for those projects and for that, I would say, higher level of perspective. It's a global thing. It's not a thing of, I don't know, of a back office or buying department, they say, but we have done this since ever like this. It is challenging for sure, and, but we are in a lucky position, I would say, because we don't push too hard into the organization. So when we decided for PLM, I would say it was a decision made by designers as well and by management, at least what PLM, which one had the biggest impact. So where did they think this might be the right partner for us? And I can imagine as a designer working in PLM, for sure we gave the direction and we said this is going to be a big thing for us and very important. But in the end, we tried to have buy-in from the departments So I think that most people are really, how do you say, they are on board. They are on board and they also embrace the new topics and the new tasks, I would say so.

Does it help having a CEO that is sort of standing shoulder to shoulder with you?

Absolutely. So this is really important. I mean, even a CEO and CEO could have different opinions in some topics, but I think when we really had critical decisions to be done, or when there had been critical decisions, we had been very close, and I have the support from him. And this is really important. You need the backup from CEO.

Cool, I'm gonna ask you a pretty hard question now. Are you on track?

Um, no. That was easy to answer. No, we are not.

Okay, how do you measure that?

Yeah, good question. So hard question, then good question. So we are a little behind, I would say, in some of the projects, but you always have to Yeah, be in detail. For example, when we talk about PLM, PLM is live since end of August, and this was only 2 weeks behind the plan. But it's not only about working in PLM, you need to consider everything around it. You also need an interface to your ERP to exchange data, what is very important to make purchase orders. And yeah, true story, today we are still working pretty hard on on the interface. So it depends on, I need to say, and there are other projects where we could have done better work and where we are, I would say, a little bit more far behind. But this is also reality, right? This is daily business. Not everything works as you wish. And your second question, how do I measure it? I had been thinking about it because there's a university in Berlin And one of the professors, he actually studied together with me, and he had been sending me a questionnaire about the digital transformation and what ACDO is doing. And then there was a list of KPIs, and there was exactly the same question: how do you measure digital transformation? But there was not a single KPI that I could use, I think. Or maybe there was one, and that was the number of improve processes through technology, and that's what we do.

Okay.

It's not that I have a list where I just write down the third process, the fourth, but yeah, let's say count what you get. Yeah, processes, projects. You could also measure it in hires maybe, or you could measure it in your investments. I think these are indicators that you take this really serious, but how to measure it, I'm the wrong guy to ask, to be honest. Maybe I have to think about it. Maybe you can build some KPIs for your organization, but I haven't done this so far.

Yeah, I mean, I guess you can't really say, okay, by October 17th I want to have this perfect. Life doesn't really work like that.

No, it's not like this. But what I used for the roadmap was just some terms. That we had been some kind of a digital beginner. And I remember that one of my first presentations inside the company was also referring to that, to the term, and I said that we are digital beginner and said that maybe 30% of our process might be digitized. And then for sure I gave out the idea or the vision that by 2021 we should be at least a digital transformer that is really dealing with all of those matters. And this is what we are. I would say we are digital transformer. And this was maybe a little naive when I thought, okay, by '21 we want to be digital. I think this will not happen because, as I said earlier, there are too many trends out there and this is just a journey that will not stop by '21. It's just the next iteration or the next goal for other projects. It doesn't have dates, I would say. On the other hand, you need to set some because otherwise you will not get the pace you need and you might lose the trends or the momentum, I would say.

Exactly. I mean, I guess business reality is the case that your plan is to go digital.

Absolutely.

End of story. Yeah. But if you just say, "I want to go digital," then again, it's not having the milestones that you need to actually achieve it.

You need them.

Yeah, you need them from different perspectives, but you need to be flexible as well, right? Because nothing ever works out the way you plan it. And I've heard that a million times about PLM. It can be a very difficult thing to implement across different departments, you know. Um, but then again, I mean, you know, there might be some things that you guys have done really well. Do you feel like there are some things that actually you as a company are taking on board really well and are achieving right now?

Yeah, I think so, especially for the PLM, but this is also supported by the vendor because they have an idea how they want to implement it and it just aligns with the seasonal calendar. So when we talk about implementation for PLM, then you should always start with the beginning of a new development season because it wouldn't make sense to have a go-live for style management when you don't start with style management into a new season. I think this is what we're actually doing quite well.

Yeah, that makes sense.

And I also think that we put the right timings on it. So, we don't want too much, and if so, my CEO tells me, it's too fast. For example, with 3D, we had a proof of concept last year— not last year, actually this April— and I was so into 3D and I see there's so many opportunities and chances for more efficiency and leaner processes that I definitely wanted to continue right afterwards. But we had to realize that another big-scale project would be too much. So yeah, we put that a year later. But on the other hand, as I said, you need to have the dates because otherwise, yeah, it will be an even longer journey in some cases. And it's also important because if you never have a success in terms of project rollout, perfectly done, that's it, I think it would be hard to keep up the pace and also to be as ambitious as at the very beginning, because if it's just like one project after another, but you will never be successful in one, then I think the motivation of everybody involved will certainly go down.

Yeah, I guess communication is really important in this.

Yeah, I think communication and, let's say, the people management behind everything is very important. But it goes in any direction, so also into your departments. And to your CEO or CFO who wants to see results and he's asking, so why is this behind again? Why is the department so busy and why are they not, I don't know, as efficient as before? Because they are working on your project? Maybe, maybe.

Are you still feeling positive?

Absolutely, yeah. As I said, it's a global thing or it's Yeah, we won't stop that. And so I just want to take the momentum and, yeah, I want to create things and I want to be part of a certain dynamic in the company and help to get a little bit more efficient. So, when you, I mean, when you, especially the German market and when we talk about wholesale and retail and how strong e-commerce is getting, I think that potentials in the market are not endless. So, if you want to be and stay a very healthy company, you need to find your— or you need to find potentials where you can get better, and I think technology is one of the biggest potentials in any case. So, I'm very positive about it. I think there's— I mean, I think it needs to be a good combination. Product is most important, product is king, as I said. So, but technology should be an enabler. We want to have technology strengthen the company with a strong product. So, it should be the combination of both. That's some kind of my vision.

Yeah, yeah, good people, good product, using technology to do the best job.

There's, in Germany, is a pretty well-known company. They have a, I would say, good retail structure and shop-in-shop system, and their CEO, he's a technology guy, On the first hand, he says, "We are not a fashion company, we are a technology company." And then he says, "Every year I force ourselves to at least reduce or cut or redesign 20% of our processes." And first it was like, "Oh my God, he says he's not a fashion company, he's a technology company." But with the time, I thought, I mean, it's not that wrong. I mean, you can still have a great product but let technology drive it, right? That's what I'm about.

That's the future and it's happening now, so why not jump on it?

It's absolutely happening. So if you, I mean, this conference here, the PI Apparel in Milan, it's all about technology. It's about 3D, it's about platforms for sustainability, it's about platforms for, how you call, final inspections. Everything is just happening online, web-based, on your iPhone, on iPads, whatsoever. So technology is happening.

Yeah, yeah, absolutely. Well, Florian, I just want to thank you very much for coming and joining us on the show today.

Thank you so much for having me here.