Digital Transformation applied to the Fashion and Textile Industry
Transforming systems, culture, business processes, and strategies within a company through digital means. What is digital transformation in today's world?
Article by Bsamply Project Manager, Nefeli Bompoki
Digital transformation is the process of transforming systems, cultures, business processes, and strategies within a company through digital means. It can be as simple as switching from paper to digital or launching an online shop. Unfortunately, the application of digital technologies in the fashion industry has long remained in an exploratory stage due to several inhibitors and barriers that affect the pace of adoption (e.g., financial constraints, insufficient expertise, resistance to adoption) but today more than ever, the need for fashion brands to implement technology and digitalization to track processes, collect data and report performance in relation to CSR and ESG is fundamental.
From SaaS and ERPs to CRMs and agile operations, companies are seeking to not stay behind in an increasingly competitive environment that demands a shift from manual practices and a focus on strategic thinking investing money in digital transformation. Manufacturers, garment makers, raw material suppliers and brands are trying to take advantage of every technological solution they can adapt, investing in digitalization to reduce costs and optimize production flow, flexibility, and times.
However, the current situation of the fashion industry regarding digital transformation can be very chaotic albeit digitalization does not necessarily require large investments in complicated software or machinery. Its basic principle is using data to optimize factory processes, to track and monitor every cost item, preferably in a live cash flow overview, while focusing on information such as: the effective working time of the employees, the lead time and value of stock, energy consumption, and purchasing conditions.
But how is digital transformation evolving?
Even though Google Trends shows an important increase in search interest regarding digitalization over the past five years, digital transformation, which isn’t just about adding technology into the mix but also about a change in mentality and manner of working, is a concept that has existed for more than 50 years.
The goal of digital transformation is to:
- adapt online and in-person shopping to the modern consumer, UX reference
- improve steps along the value chain -including the supply chain-,
- transform and align teams,
- render existing processes more sustainable and
- address new consumer values such as transparency and inclusivity.
It offers new solutions to long-time challenges. According to the IDC, the investment into digital transformation is set to grow at a compound rate of 17,1% globally by 2023. The biggest spenders in the digital transformation space will be the United States, followed by Europe and then China. “Every job will be impacted by AI,” said Pieter den Hamer, vice president of research who covers artificial intelligence at market research firm Gartner. “Most of that will be more augmentation rather than replacing workers.”
Over the course of these past years, businesses in nearly every industry have had to accelerate their digital transformation to accommodate new challenges such as: Shift to online channels, improvement of steps along the value chain, and alignment of teams
These digital transformations were bound to happen, but the COVID-19 pandemic accelerated this shift of the fashion industry toward the virtual dimension with a promise to enhance innovation and sustainability in all phases of the system (Brydges, Retamal, and Hanlon Citation2020; Gonzalo et al. Citation2020).
What are the different tools available and how do they work?
From e-commerce, which is the fundamental and most simple digital tool for companies, to the most elaborate digital implements regarding the supply chain, the fashion industry looks for solutions to respond to an increasingly digitalized environment.
If we take a deeper look at some of the aspects brands are placing more and more emphasis on today, those that are most pivotal include:
Today, e-commerce has become a crucial tool of the industry responding to the modern consumer’s needs. In fact, a growing number of brands have no physical store at all. This tendency, of course, has much to do with the widespread store closings because of the Covid-19 pandemic lockdowns.
A2021 report affirms that 43% of consumers who had never purchased clothing online began doing so during the years of the Covid 19 pandemic, while a report from Kibo found that 30% of Gen Zens and 36% of Millennial consumers expect to purchase less at physical stores than before. While it’s difficult to predict such behavior, it is safe to say that there has been an objective digital transformation in e-commerce during the pandemic lockdowns. Its rapid growth has pushed fashion brands to seek out new data, and new forms of collecting data.
The supply chain is a famously complex process, and often contains the most moving parts for any fashion brand, but also the most room for change. Some of the processes that will be protagonists in the fight to change and digitize correctly the supply chain are:
A process that is widely getting adopted and more companies are investing in is the process of employing statistical algorithms and machine learning techniques in order to use the past to make predictions on the future. It is one of the leading solutions against disorganized processes and guesswork in the supply chain.
An advanced database mechanism that allows transparent information sharing within a business network. Blockchain can resolve issues along the supply chain like unclear sourcing, untracked product postproduction, unknown manufacturing locations, authenticity of products, and consumer demands for transparency.
Transparency is great for the consumer, but also for the company itself. The blockchain is beneficial, but there must be a change in mentality and organization. Integrating blockchain technology into one’s value and supply chain requires a reworking of a brand’s existing business model both in back-end and front-end.
Truth is that suppliers and manufacturers often are accustomed to the traditional supply chain system creating issues like data that often live in silos, the organization being centralized, manufacturers don’t know where suppliers source their raw materials and suppliers on their end don’t always know the destination of the finished product.
With the blockchain, though, raw materials and finished goods can be tracked from their source to the factory, to the final product, and through the distribution network. This technology leads to a more synchronized, streamlined, and sustainable supply chain.
Sustainability. The main focus today.
Digital transformation is helping to make a reality out of what 52% of consumers -according to a survey conducted by Nosto in the US and the UK -have been asking for, for a long time: sustainability and transparency: The sustainable fashion movement has gained significant traction in the past years fighting against unethical sourcing, lack of transparency, overproduction, worker exploitation, water, air and land pollution
Through digital solutions, the industry is slowly becoming more eco-responsible, diverse, and inclusive, reversing the fact that it is the second-most environmentally-harmful industry. It is responsible for 10% of total carbon emissions and is the second largest consumer of water supply in the world.
The industry is finally adopting digital solutions to address fashion and textiles’s sustainability faults with evolving movements: resell, sustainable raw materials, and virtual fashion.
Textile leftovers and throwaways can be a major source of waste for many fashion brands and retailers. According to the EPA, 17 million tons of textile waste ended up in landfills in the US in 2018. From durable plant-based fabrics to recycling processes, companies are finding new digital solutions to create sustainable resources themselves and cut out the problems from the route.
What are the lacunes and challenges we are facing?
Despite the declared will of fashion industry to proceed to digital solutions and tools and despite the acceleration imposed by the pandemic, there’s a significant disparity between the ambitious planning about fashion’s digital transformation and execution: Even though 92% of senior manufacturing executives believe ‘Smart Factory’ digital technologies will enable them to increase productivity levels and empower staff to work smarter, only 12% of manufacturers are currently making significant use of AI.
According to Gartner, 64% of managers think their employees will be unable to keep pace with future skill needs. Subsequently, the skills shortage will prove to be one of the main barriers to digital transformation within large organizations. Even though the advantages of digital transformation are clear, different teams within the industry’s companies tend to think and function differently from one another. Indeed, DT isn’t reserved for tech or data teams — to reap the benefits, teams must evolve their jobs to work using digital solutions to their highest potential and align with one another via these digital solutions.
Companies will increasingly look to cloud-based, third-party applications and services to do the work for them, rather than upskilling current employees or hiring from a shrinking (and increasingly expensive) labor pool. The XaaS (Anything as a service) approach promises financial efficiency, improved productivity, more robust cyber-security, greater agility, and flexibility without the burden of building and managing on-prem solutions.
Digital transformation is crucial to shaping the industry consciously and with purpose, with the hopes of moving toward a sector that is collaborative, streamlined, and self-aware. Digitization even though it can seem at the beginning like an extra cost, and effort, it truly offers numerous benefits that are undeniable. At Deda Stealth we have been investing every day to grow and up-skill our Bsamply Lab located in Tunis, Tunisia, an internal team of UX/UI designers, frontend developers and backend developers improving and evolving the technology Stealth builds in order to keep up with changing market needs. With products like Bsamply, we will be able to help lead the way to digitize the industry and provide a system for brands to trace, collect and share all necessary data regarding a supplier and the products they manufacture. Through our constantly evolving technology brands can help to shape the industry consciously and with purpose, with the hopes of moving toward a sector that is collaborative, streamlined, and self-aware. Digitization even though it can seem at the beginning like an extra cost, and effort, it truly offers numerous benefits that are undeniable.