Why Apparel Brands Should Implement a Next-Generation ERP Solution Today – and How to Achieve It, Part 1

Sometimes business presents challenges. Other times it gives you opportunities. Every so often, the stars align so that the opportunity comes along at the right time to address the challenge. Fashion brands have reached just such an inflection point.

First, the challenge: The list of existential threats has never been greater. Customer shopping preferences and buying behaviors have shifted radically. The competitive landscape has been turned upside down by powerful, nontraditional new business models.

In response, apparel companies must make fast, fundamental changes to their business. They need to better integrate with retailers, including the development of private brands. They have to sell direct to consumers and build lasting relationships. And they can no longer avoid true mastery of omnichannel commerce to achieve seamless customer insights and experiences.

Now, the opportunity: transforming your business by modernizing your ERP system. A new digital core can optimize your mission-critical processes, create new capabilities to better understand and anticipate customer needs, and provide a foundation that lets you take advantage of emerging technologies such as big data, artificial intelligence (AI), and machine learning (ML).

Many companies recognize the ERP imperative. Across industries, companies spent $389 billion on enterprise software, Gartner reports, a number that will grow 8.4% in 2019.¹ The industry investing the most? That would be retail (neck and neck with insurance), according to Research and Markets.² In fact, retail-industry spending on digital transformation was expected to leap 20% in 2018, IDC says.³

But exactly how have the stars aligned around apparel-industry challenges and the ERP opportunity? SAP has introduced an industry-specific variant of its SAP S/4HANA^® next-generation ERP software: SAP S/4HANA for fashion and vertical business and SAP S/4HANA Retail for merchandise management – or, as we refer to them collectively, SAP S/4HANA Fashion. This new ERP platform can propel fashion brands into the digital future.

Retail and wholesale, together at last

SAP has been a leader in enterprise software for four decades. For nearly as long, it has offered world-class software for the fashion industry. Today, 18 of the top 20 apparel and footwear brands run its solutions, SAP reports.⁴

In 2015, SAP released the latest evolution of its ERP software, SAP S/4HANA. The applications run on the SAP HANA^® platform, which can manage vast data volumes directly in memory for faster processing and near-real-time analytics. In some cases, data analysis that took a day or longer now runs in seconds. That can be transformative to retail, which manages millions of data points in the form of SKUs, locations, and customer records.

But for apparel brands, there were gaps in functionality. In particular, retail, wholesale, and manufacturing processes couldn’t be handled in a single, natively integrated solution suite. True, SAP offered a robust retail-industry solution, as well as the SAP Apparel and Footwear application. But they had to be implemented separately, they were hard to integrate, and their master-data structures were different. That became a limiting factor for apparel makers that wanted to sell their products in their own stores while expanding their wholesale business through other channels.

SAP S/4HANA Fashion addresses this issue and many others. The application suite combines retail, wholesale, and manufacturing processes in a single solution. It’s specifically designed to empower fashion companies that manufacture, trade, and sell fashion merchandise and other goods – and that need flexibility to handle multiple product dimensions (such as style, color, and size), new product introductions, and seasonal demand through multiple sales channels.

SAP S/4HANA Fashion is compelling because it’s the first and only application suite to achieve this integration for the fashion industry. Apparel companies that deploy this solution today can realize meaningful competitive advantage over their less forward-thinking rivals.

In Part 2, we’ll describe the features of SAP S/4HANA Fashion in detail.

[1] “IT Spending to Eclipse $3.7 Trillion in 2018: Gartner,” PC Magazine, January 2018

2 “Enterprise Software Market (By Country, Segment, Industry Verticals, Vendors, Recent Developments) – Global Forecast to 2024,” Research and Markets, September 2018

3 “Worldwide Spending on Digital Transformation Will Soar Past $1 Trillion in 2018, Led by the Manufacturing Industries, According to a New IDC Spending Guide,” IDC, June 2018

4 SAP data, accessed October 2018