Doing things the old-fashioned way is a disconnect in a tech-crazed world. Yet many retailers still use a supply chain system that typically stretches out for months on end, leaving some product shipments out of date before they even arrive.
Li & Fung Limited, the world’s largest and oldest supply chain operator, is emerging as one of the most tech-forward. The Hong Kong-based company is pushing to lead the retail industry into a supply chain of the future that heavily relies on 3D product design to create exact, digital product prototypes. The digital image has three dimensions (height, width and depth) but can be instantly changed over and over without having to create an array of new physical products. That can cut months off the supply chain cycle.
With a global network covering more than 50 production countries, Li & Fung specializes in managing the supply chains of high-volume, time-sensitive goods for leading retailers and brands worldwide. The $12.7 billion company has tested its 3D design with clients ranging from Betabrand to Under Armour in its bid to upend the entire supply chain system.
How long will it take to turn the supply chain system on its head? And what’s the best way for an interested but nervous retailer to test the 3D design waters? For answers to these and other key questions, NRF spoke with Sean Coxall, president of supply chain solutions at Li & Fung.
What is Li & Fung?
We are a supply chain company that manages on the back end. We don’t own any factories or mills. For most successful partnerships, we allow customers to focus on the front end. We help on the back end to bring product to market in an efficient way. We are building the supply chain of the future.
Who is impacted by the supply chain?
Everyone. Everybody buys product, so every consumer is impacted. Every company is impacted. We are at a critical point in time where some people are still hanging on to old ways. But if companies are not prepared to change, they will become extinct.
How much money is spent annually on the supply chain?
About 2.3 percent of retail sales is spent on development of product. But the real savings is in the ability to reduce the number of your markdowns. I don’t think enough people think of that.
Why is 3D design better than the old supply chain method?
In the old way, which is still the norm for most people, you have an idea and then work for weeks on creating it physically. If it’s apparel, you collect fabric, you sew it and wash it and look at it and see if it’s what you imagined. But with 3D design, you create a visual image digitally. You can see it within 24 hours instead of two to three weeks.
What are other advantages of 3D product design?
Once you have the digital image, you can change anything you want. You can change the pocket position, for example, or the length of a skirt. Once you have your first digital effort you can make changes so easily. You can very quickly see if your idea is working.
Why is 3D design such a big deal?
Originally, we thought 3D design would mostly be a way to save time and money with sampling. But we since realized that it’s far more. You can use it to plan your whole line. You can put your designs into your website. You can use 3D design to get insights from your consumers. What you’re really doing is taking a lot of risk out of the process. Those using it will see huge benefits in speed and cost. If you take out risk and reduce markdowns, that’s a huge benefit.
Can you use a time sequence to explain its benefits?
If the designer has an idea, within 24 hours you can see a beautiful 3D sample and look at it from 360 degrees. Within 48 hours, you can find out if consumers like the product or not and within 72 hours you can find out if the consumer actually wants to order it. Keep in mind, this would have taken about 20 weeks in the old supply chain method.
So, instead of pushing product to consumers, you’re letting consumers pull it from you?
Exactly. We used to create all of this product in a very old-fashioned way — that took weeks or months — to see if people like it. But people know what they want. It’s gone from push to pull. Now, consumers pull it out and we give them what they want.
Can you detail how 3D product design can cut the supply chain time in half?
Take the average wholesale product. It typically takes about 40 weeks to develop a product before it hits stores. But of that 40 weeks, only 10 weeks is actual production time. The other 30 weeks is mostly messing around — with about 17 weeks for designing and 13 weeks for fabric approval. With 3D design, you can definitely look at halving that. You can design and develop the product within one week. Many retailers can’t imagine doing it that fast.
What’s the single best thing about 3D product design?
It gives you the ability to visualize your idea in a very fast period of time and make all the changes you want before you’re committed to any particular fabric. If you can dream it, you can make it in 3D. Some worry that it might restrict them, but it gives freedom to make anything that you can think of.
What’s the worst thing about 3D design?
Some people are hesitant to embrace it. The biggest problem is for companies to open their minds. We are trying to change the way people think. That’s hard. It’s a whole mindset change. It’s disrupting the way you’re used to working and a completely different way of thinking.
Besides clothing, what other products are logical for 3D design?
We can do anything. We see a lot of opportunity in footwear. Shoe prototypes are very difficult. We also see opportunities in accessories and handbags — even bedding and furniture. It’s really every category.
Will 3D marketing eliminate the need for models?
It will reduce the need for fitting on models. Our customers in New York could have an American model and different models for customers in Asia or India. This way, you make sure you get it right to match client shapes. With 3D avatars, you can create your own 3D supermodels. That is the future.
Without naming a specific client, can you give an example of how one client has been impacted?
A large fashion retailer wanted to inject new products and create new sales. We created the design that day. It was approved the next day and went into production and shipped five weeks later. That’s a total of six weeks. That same process would have taken at least 20 weeks the old way. So that saved more than 15 weeks.
How many retailers are using 3D design right now?
Only 2 percent of retailers are currently using it in this way. This will increase significantly in the next 18 months.
How far away are we from 25 percent adoption?
Within the next three years.
To what would you compare this phenomenon?
It’s a lot like the early adopters of selling products online. I still remember when people were deciding whether or not to sell online. However long it took online sales to take off would be an interesting comparison.
How will 3D design transform the retail industry?
I don’t believe that you’ll be able to work any other way over time. It will allow people to create products on demand and cut lead time. It will eliminate seasonal buying and continuous buying will become the norm.
What if I’m a very cautious retailer and just want to stick a toe into 3D design? How do I do that?
You could just do a pilot. I recommend taking a small program or collection and developing it in this brand-new way.
How might 3D product design relate to the latest elephant in the room: coronavirus?
With coronavirus, one of the biggest fears is moving things around physically. Some people are scared to receive samples and some services won’t deliver. But with 3D design you can create and send digitally. Even if you can’t work in the office, you can work on 3D designs. You’re not disrupted by physical things.
What do you say to skeptics who want nothing to do with this?
If you’d asked me if I thought I’d ever do my supermarket shopping online, I’d have laughed. Now, I even buy vegetables online and I can’t believe how convenient it is. I would never have dreamed this years ago. It’s the same with Uber and Airbnb. So now there’s 3D design. Why won’t it change our industry?
Any other advice for retailers pondering 3D product design?
This is not something you should initially try to do on your own. The barriers to entry are too big and the technology keeps changing and improving. We, for example, use 30 to 40 different software systems. You need to find a prepared partner with 3D experience. Many have tried on their own and given up.