How s.Oliver has Future-Proofed their Operations | s.Oliver, Centric Software | PI Apparel

We have an exciting or very unique journey ahead of us the next 30-40 minutes. And with that, I would just, in a few words, to myself. My name is Lukas Fischer, work for Centric Software. I've been with Centric now for a few years now, and I have the, the honor to work with some of the leading brands here in the region. And there's one specific brand that we're going to talk a bit more about today, being S. Oliver. And S. Oliver in, in way of working and the process they cover digitally as well in depth and what they do have been, I'd say, a very strong partner for Centric, both on the roadmap and how they influence us and how they work with us. And I'm quite excited to have them tell a bit more about their story. And with that, I want to welcome on stage from S. Oliver, COO Oliver Hein and Head of Quality Assurance Tobias Killer.

Yeah, a warm welcome to all of you. So we have the honor to give you some information regarding our digital process, our digital journey. And at the end, you have also the room for questions. So how was our experience along the entire end-to-end process? So let us start with some information regarding the S. Oliver Group, only to give you some, let me say, specific information. So you can see here we have a lot of brands. Brands under the umbrella, as Oliver is, let me say, in the mainstream business based. And we are doing all the product groups along all the genders and each age, from baby to teens to kids to female wear and so on. Beside this, we have the brand QS. QS is, let me say, focusing on the Gen Z generation, so how to catch them. And to see what kind of taste do they have and what can we do for them. Beside this, we have Comma, Comma and Comma CI. This is a women's wear brand, and next year we have 50 years anniversary. So it's also with a long tradition, long experience. Beside this, we have Liebeskind. Liebeskind is a brand which is focusing on accessory and bags. Specialized in leather bags and established the business in Berlin, also very successful. And the newest brand what we have in our group is Copenhagen. So this is a footwear brand and still increasing. And you can also read the numbers. So they achieved now €70 million turnover within 3 years, which is a great success and very profitable. So this is in a nutshell a little bit our group. When we come to the topic— so people are coming in— then again, our business is after Corona less than before, to be very honest. We have €1.2 billion business now. This is €300 million less. And this is very serious for us. We have to keep in mind this. So what is now necessary to do? One of our target is clear. We want to digitalize the process because we have to bring the cost our structure cost and the business in line. We know the top line is under pressure in Germany, in Europe. We know the inflation is still 7.5% or 7.6% at the moment. The customer demand is shrinking, and we have to keep in mind how to bring the business back. What kind of possibilities do we have? But one point is very clear— efficiency and productivity. We will also give you some information later on how we will do that. And beside the $1.2 billion is approximately 12,000 styles, which is also important because then you know what does it mean for all the systems in terms of how to develop the products and how can we do that in the most efficient way. We are still 5,100 employees worldwide. So we have a lot of people who are looking for sourcing, for design, for sales. Along the process. And we have 7,000, approximately 7,000 points of sales. Our business is structured 50%, you can say, is wholesale business. So we need the salesman samples, what we heard also this morning, the physical salesman samples. We give you some information how much digital salesman samples we are doing now. So 50% is wholesale and franchise. And the other one is concession. And then the vertical part means retail and e-commerce, our own e-shop, and also the marketplaces. Yeah, and 54 million pieces do we bring into the market. This is, to be very frank, too much because we have a lot of overstocks at the end of the season. And we have also to look how to solve this. With a precise process to bring the right goods at the right timing to the point of sales to the end consumer. This is our target. We know 54 million is at the moment not precise enough, so because at the end of the seasons, we have to handle the overstock situation. And I guess also the brands which are here, they have similar, maybe similar topics and problems how to solve it. Good. With this, let us step into the process and into the business.

Exactly. So I mean, of course, let's take a bit of a step back. So where we started in this process, so maybe a few years back and when the project started, and maybe Toby would be interesting to hear because we started this under very unique conditions, I think, with the pandemic starting. And we as Centric, we've spoken about it, it was really a unique project. One that set new standards even at Centric internally. Maybe you can share a few thoughts about how it ran from Oliver's perspective.

Yes, thank you, Lukas. So the journey was really quite interesting. So we had the big, let's say, hurdle that during COVID lockdown, we implemented Centric within 4 months, fully remote. So there were no sessions in person. So we needed to divide all the different product development stages into different work streams. So we worked in smaller groups. Also, Centric was split in small groups. So we defined short sprints, had always then after 2, 3 weeks sprint reviews, went for rectification, et cetera. So this was also for us quite challenging. And at the end of the day, we had after 4 months a big bang. So it was not that we just implemented one brand at a time and then came with the other. So we had a full big bang. Full scope, end to end. So this was then, I think, for both of us unique at the time. Knock on wood, everything went quite well. Huge thank you. Thanks to Centric. The support was great. And yeah, what were the targets? So we had to replace our previous PLM system. So therefore, we considered different PLM solutions. But we saw that Centric is one of those PLM providers giving us the best, let's say, package also in terms of 3D and digitalization and let's say one source, the one source thought. That's why we chose Centric at the end of the day. We had the big challenge that you can imagine 6 brands, 6 ways of working, 6 different perspectives, how we want to do this, how we don't want to do that. So that was also then one target to have harmonized process across all brands, one common workflow. And at the end of the day, our big target was no customization at all. For sure, not possible because, you know, people, they have a PLM system, button is on the top right. Now it's on the top left and they say, okay, it's taking us more time, it's more complicated. So approximately with those kind of small amendments right now, we have maybe a 10% customizing. But the big approach was having out of the box using centric as it is.

Yeah.

And just looking into 3 years into it now, I mean, we just sort of extended it. And there's, of course, a few things when you go live with the project, when you start working with the system, then there's, of course, certain things that you change right now. Or maybe you can give a quick in-view into what the status is right now or how it's looking like in the future.

Yeah.

So now what we have is beginning of this year, we implemented 7.5. This was the latest release without any, I think, hotfix or how you call it. So there was not any fix yet. So we decided to take full risk and implement 7.5 successfully. So we can also then benefit here from all those features. What came with the 7.5 release is 2 modules, product presentation, we will go into detail later on, and quality testing. So also here, our target is that in this year, we will implement physical testing fully in PLM, also try to connect vendors as well as physical labs. Chemical testing is in a separate database, but this within the next 1 to 2 years will also be integrated in PLM so that we have full transparency in one system and really cut off subsystems. Causing additional workload. And yeah, target for this year is to integrate our top 100 vendors onto the system. So right now we have 80 out of 100. So I will in detail then explain what they're doing already. But definitely this is for us a must so that we want to give those people access rights who have the information in place rather than sending Excel charts asking us updating the quotes or sending us material information, creating the material in the system. So ideally, if the vendor has the information, he will put the data. For sure, there must be some kind of data verification, but at the end of the day, we have then a simplified workflow. In 2023, we will have extended vendor rights. In next slide, I will tell you more. In 2022, we had 1,000 styles in full 3D, and the target for '23 will be 1,000 1,500 sites. So, and I think this will then for sure increase year by year also that we have the workflow beginning with the vendor providing us the development samples also in 3D, then our design teams taking up this input and then further developing this ideally without any physical sampling till bulk production.

I think you already mentioned it around suppliers. I think what S. Oliver did was quite unique or quite much when we talk about maturity and digitalization, how deep they allow their vendors to access the system and really enter data here as well. Maybe you want to share a bit more information on how you work here.

Yes. Yeah, you can imagine that our IT department is not very amused if we talk about extended vendor rights. So maybe quickly, let's come to that one. So you can see that from downloading worksheets, uploading or downloading 3D, downloading the patterns, updating size and stitching charts. So they already have multiple Right, I think for us, for me, for quality, I think one important aspect is they do the final inspections in the system, so then already they feed the system, we can control the quality already in the country. Based on this, we do vendor assessment, we can do also the rechecking in our incoming goods department. So I think this is also one big pillar where we can benefit from when they're feeding our system. And for this year, we definitely also plan that they, as said, They update the BOM, they know where do the materials come from, from which source are they from, not only the consumption, but also to have a complete BOM, update the 3D simulation, and ideally also maintain the production follow-up so that they can feed the system, okay, where's the product at, is it in cutting, is the material already in-house, are we already due, so what is the detailed situation, and we can then just monitor it from a, let's say, central perspective to see if everything is running, yes or no.

Okay. And I think from the last point, just looking at the implementation, how this all progressed, I think it's always fairly simple if you go into a conversation with a vendor on what the cost related to the solution is. I think the more challenging part is to really understand, okay, what value is generated through the different process that they're digitalizing and what is that value? How can you monetize that in time? Or commercially as well. And maybe you can share some of the points that have impacted S. Oliver in digitalizing certain processes or what your plans are here.

Yeah, so we try to at least everyone, I think in the previous session it was also meant that you need to convince people, also the management, by figures, by price tickets. So that's why now we try to give some price tickets also to you. So what we have identified that using product presentation, so we get rid of Illustrator, Excel, and all those separate spreadsheets and systems. We, I would say, roughly calculated now savings per year around $200K where we can say if we then bring this into 100% centric, then with quality testing, we expect so rough calculation about around $150K. So we can get rid of licenses fees for our chemical testing database as well as optimize testing costs because we have all data in one place. I think simple example is you have one material used over different vendors, over different countries, and each vendor may be testing this for any restricted substances. So here we can definitely also optimize our test scope. With 3D, getting rid of physical samples, saving parcel costs, also get rid of manual work. With 1,500 styles, we have approximately $1 million savings. But this is also then related to no photo shoots, also really get rid of all those physical processes. Vendor integration, having not this email communication back and forward, sending us spreadsheets asking us, entering data in the system. We estimate about $300K of savings. So if we just sum it up, we expect $1.6M as just a first start. At the end, for sure, this must be recalculated and considered.

But we are tracking the cost because it's very business-related. So it's a business case. We can measure very precisely the styles what we are doing in 3D. Everybody of us knows, so the FOB is 2 times normally for Salzmann samples. And there's also a portion into the production cost included, so we have to keep this in mind. We know the freight cost, we knew the custom cost, so it's easy to calculate it. And I would also recommend to do that also when you are measuring later on such kind of cost to do it very precise and to force the organization to make it happen. Yeah, so this was the PLM. So how does it look like in our end-to-end process? So, and you can see here what is our journey and what is our plan. Our plan is from created kickoff, so means when the designers are starting, then the entire design process, then the B2B process because we, as I mentioned, we are 50% wholesale and franchise driven, so means We have B2B business and we are selling via a B2B system and we are using all the information from PLM and we use this also for our B2B system. So there is no second data entrance into the system. So everything is running lean. And last but not least, we are using also the information which we feed in the first system. So in the Centric PLM system, also later on for our e-commerce business. So again, the materials and all these things, the prices are then in one process. And we will give you some examples. So how does it look like? So this is a design kickoff. So this is only for, let me say, for internal purposes. So all the designers educated in 3D software. We are using CLO. We are using Browzware. We are using Optitex. So we have several systems what we are using at the moment. We are looking precisely for which product category is this the right software. But it's very important that all of our designers are familiar with this and that we are starting to do this on a digital way instead of to put the mood boards in a physical way. This was the first process. The second process is now very focusing on the Centric system, on the PLM system. And we have also some examples.

So exactly, so this is more like sort of an end-to-end process on what we've worked on with many, many of the brands that have shaped sort of this model that was released last year. And I think the general question that we always receive is that if we have all this data and information in one platform, all centralized, then how can we make best use of it to save time, money, reduce errors in any way, and ensure that efficiency is high as possible? So in this case, as you can see, is that we had the request from many of the brands that were— had to create product presentations or collection presentations in PowerPoint or different other tools. And this took them quite a significant amount of time. Let's say sometimes up to 2 or 3 days depending on how much information or what the content was, especially around all the information that had to be changed along the way whenever a style or a certain product had to be changed or information had to be changed or color, et cetera. Now, as you can see here in this example, we have a fully integrated product presentation model that allows you to simply create different templates that can be reused again and again, that allows you to create a template for lookbooks or a template for colorways on one slide, and that can be easily drag and dropped from the information that you have in the system. Now you can even allow certain admin users to give a reduction on what can be used, certain seasons only, styles on certain seasons, certain colorways in certain seasons, etc. Whatever information you have in the system, if it's 3D or 2D, it can be used in this part and updated again and again. And maybe, Tobi, you just want to add on some use cases that you're thinking of already.

Yeah, as said, right now we are in progress of implementing. So right now we're creating the templates in cooperation with the different brands. So also here we can, because right now the color card creation process also then for Illustrator or in Photoshop, So we can get rid of that. We have all the color data, our own colors we have in PLM. So we can create the color cards here. And as Luca said, with this approach, we get rid of full Illustrator because we have huge Illustrator files displaying the collection. Then we have to manually add the information on what is the composition, what is the target price. If there is any change, then we have to update all those files. In addition, we have spreadsheets which are used then for the sourcing guys. So I think here the huge advantage, I think what we also can see here that when we finalize the presentation or the lookbook at the end of the day, once we have, for instance, based on our collection review meeting, the update of the purchase price, we simply change it on the style in PLM and then we just pass it on to our presentation which gets Here you can see, okay, you want to take over the amended price and we can say apply and all changes are automatically applied. So I think this is then also now for us a huge saving, as Lucas said, in creation of presentation as well as cutting of subsystems.

Yeah, again, so after the design process, we are starting the wholesale process. During COVID time, we get also the experiences. So 70% or up to 80% of our wholesale and franchise customers, they ordered everything, so the entire collection, by the B2B system. And we are still a company which has 10 collections per year. So means almost every month there's a collection. And this was the first experience. And we will also now force our sales colleagues to do more with the system. So because everybody of you knows the salespeople, they want to sell from the rack. In the old method, but we have to learn and we have to work out the right process also for the future to sell digital. And this is different, this is a change. We heard this this morning from Otlo, from VF, and from Puma. This is a mindset change we have to keep in mind, and you need the right culture to bring these strategic goals into the reality. What does it mean for us B2B, and how do we use this? So we are still using all the information which are coming from Centrix. So there is no double entrance of information and numbers or material codes and so on. So we are using everything. And this is a pure 3D developing styles which we are using in the system, then also in our B2B system starting. In the PLM system and then integrated into the, the B2B system, and all the information is there, and the outcome is very good. So the only factor is, for instance, yeah, you have not the hand field, but you can also clarify and organize this. The material concept is very important for us, how to bring the right, the new innovative material and fabrics also into the showroom or to our business partners so that they get, let me say, also a touch and feel for the fabrics. But the outcome, when you look this and when you compare this to photo, is that there's only minor differences. And also the rendering is getting better and better. So this is the B2B. Last but not least, we are using also then all the information in our digital roadmap for B2C, so means for our own online shops. Here you can see these are our own avatars, Charlie and Emmy, for our childrenwear collection. And it's also integrated. And on the left-hand side, you can see there's— we have also Photoshop, so a photo studio. You can see, so this is one picture from the photo studio, and the other one is a 3D. Outcome. So we are also integrating them more and more, also to save the amount of photos, because it's also— there's also a price ticket. So, and if we have 12,000 styles per year, and we are also doing the pictures in each color and all these things, this is a very big cost driver. And we have also to focus on what is important, where should we spend more time for key outfits and all these things, and what can we do in the digital away. So this is also a process which we started, but we have to do something. We have not finalized everything so far. Good. So this is in a nutshell our process from end to end. So product development over all the systems. And again, one of our major systems is the PLM system. And we have a clear target. Only to use one entrance of data information and not to have redundant information in different systems. This is also outcome. On the right-hand side is our avatar for the women's wear. This is Liv. And on the left-hand side, you saw Instagram. So we are using also the content then for social media and all these things so that we are also bringing the content, what we prepared, then to marketing, sales, and to the end consumer.

All right.

We're basically at the end of our journey. I want to special thanks to Oliver Hain and Tobias Killer for the time and investment here, especially to the 3D team at S. Oliver under Rike Schneid. I think all the 3D images and realizations that you've seen there, they've all been done by themselves and their team, which is fantastic. Fantastic just to showcase what is possible and what can be done. We still have 10 minutes to go. So if there are any questions, feel free.

There's a microphone. Do you need— there's a question here. Thanks. I just have one question regarding samples because you wrote down that you saved 1,000 samples. So my question is, like, does that mean that you run without any single proto? So you went from 3D all the way to e-commerce? It could be different. It could be that we have one physical proto, but not the salesman sample. It could be that we have everything pure in a digital way. So, and that we get one, let me say, the first piece from the production. Yeah, the first production piece. This could be. So we have different steps and process. If the designers are not 100% sure, then they are sometimes asking for protos. But the main purpose is to use more and more digital salesman samples for the future. So this is very clear. OK, thanks. And what about the Noose product? Oh, sorry, one more question. What about the Noose product? The Never Out of Stock product is, for us, a little bit more easy because everybody knows the Never Out of Stock product. For instance, this one is a Never Out of Stock product. And we can easily do this in a digital way. And we can sell it also in a digital way. So Never Out of Stock is, for us, a little bit easier in comparison to main collection. And main collection is a little bit different, especially when we come to higher fashion degrees, where the designers have good ideas, or very fancy ideas, very innovative ideas. Then it's sometimes not as easy to prepare everything in 3D. Also, to be very honest, outdoor jacket in 3D cost us cost us, I don't know, 12 hours or something like that. A denim cost us also a couple of hours. But we are still working, especially with very good vendors together. Therefore, the question is at any time to integrate the vendors into the entire process. Thank you so much. You're welcome. Other questions? Hi. So my question is basically if you have done any A/B testing on how rendering cells compare to a photo sample. Is there any difference? Does it depend on the product? You mean between the physical sample and the 3D sample?

Yes.

Yeah. And in the showrooms, for example. In the showrooms. So this is what I described before. So our sales team is still working in, let me say, in two processes, in the old process and in the new process. It's a change. And we believe in future, we will start to present the entire collection in a digital way first, before our wholesale customer, our franchise customers coming into the showroom, going direct to the rack, and then looking, oh, this is now nice styles. So we have to change this process. This is also a change where we still, let me say, on the journey. And how to convince the salespeople to sell differently in the future, because otherwise, we will be not successful. And to present the entire collection, first digital is our must-have. And if you have time, you can also visit our showrooms. Our showrooms are now hybrid. It's digital and physical. So we have all the systems in the showroom so that the customer can see the products digitally.

Maybe one addition to her question. And what we have done also, and this we posted also internally in our intranet, so we have had a comparison between 3D simulations as well as photographs. And we also did then a poll also with different stakeholders. And I would say none of them, even myself and also the other experts, they could really identify. It was a best guess if it was a 50-50 coin flip if this is the 3D or the physical sample. Some products for sure, I think, tailor-made. You can identify easier. But I think that gave us a pretty good feedback that at the end of the day, we are already quite close with both worlds.

So there are a couple of questions. So the avatar question is, we establish our own avatars. So we did everything in-house. We are still preparing the right avatars. So we are looking to our— who is the end customer? Who is the end customer for childrenwear, for the womenswear, for the menswear, and so on? And yeah, we are also focusing to prepare and to establish the avatar by ourselves. So we have a team, a 2D and 3D team. So you could see it at the end of the presentation. And they are still— so we bring them together. This was also a very good experience for us to bring them together in one team. And they are also working on these innovation topics. Then the biggest challenge regarding 3D is at any time, it was a long discussion with sales. So it was a long discussion with designers. Was supportive for us was also the COVID situation because there was no other possibilities to sell. So all the customers, the wholesale customers, franchise customers, they couldn't come into our showrooms. So this was a good opportunity to show up with our B2B software, and it was very successful. With design is also, let me say, a change, not that they have the feeling that we cut the creativity. So we will support this. We will get support from our vendors. So in future, we want to get the product development information from our vendor directly. So we can give some briefings upfront, but then we want to have one street which is coming from one direction, and then the designers will take it and then, let me say, work with this and then to bring it on the next level. And I would say, so far, the designers, they accepted this process. This is important. There is a strategy. There is a mindset. And there's a company culture. And everything you have to bring together. Without the right company culture, you will be not successful. And you have to keep in mind this. Yeah? So what else?

I think there was a question also regarding why didn't we bring the vendors earlier to the journey. I think also that was, let's say, a learning for us coming with a big— having a very big vendor base, also maybe not 100% stable in the different markets, and then also changing the way we are sourcing, seeking for strategic partnership. I think this is also now why we chose Centric. We are very close to having really open, transparent exchange on a frequent basis. And the same, I think, goes with the vendors because they are using PLM systems, different ones for other brands as well as other 3D programs. So first of all, we also needed to convince them why should you use our system, why should you feed the system, why at the end of the day maybe you should take over the license fee as well. So I think that's why here we could not bring them on board in the very beginning because also we had to change, let's say, our mindset of sourcing and vendor base first, then to bring now them on board quite quickly.

Yeah. And we also, we consolidate the number of vendors. So we started with 350 3 years or 4 years ago. We have now 160 vendors and we can say the top 100 vendors, they will work. And this was one of our targets. They will work in Centric, they will work with 3D, they will be integrated into the process. And on the other hand, they will get enough orders so that we have a win-win at the end. There's one question.

I had two questions actually. One question was, did you completely get rid of Illustrator and stuff like that for the designers? And the second question is, maybe also more towards Centric. How do you— do you have a specific process on how to upload the renders into the PLM system? Because right now, we, for example, use an Adobe connector where we can directly import the Illustrator sketches to PLM. Is there something like that also for 3D?

So two questions. It's a little bit integrated. So we are still using the system. So because it's also a question of efficiency, it doesn't make sense to create for every style, let me say, a 3D. You can also do it by sketch. And there's not only one possibility. But the major part is running via 3D. But we are using Illustrator. We are using sketches for sure. And you know that because maybe you are a designer, so you know that. So if you have a complicated style, maybe then it's better to use this 3D software. If you have an easy style, then you can also do it by sketch. Yeah.

Maybe quickly regarding Illustrator. So what I meant by that, not for the design. So for the designers, they still use for designing Illustrator. But they also used Illustrator for the collection reviews for all those milestone meetings and have huge files maintaining those huge files. But by product presentation, now we can really get rid of that and work purely PLM from the very beginning, having just the styles, putting them together, extracting the presentations, and then also bring all the amendments by publishing it automatically. Yeah. Thank you.

Thank you very much. Yeah.

Thank you. We've been asked to stop. Thanks for all the questions and have a great event. Bye-bye.