Prologic has developed a distinctive approach to the delivery of IT solutions for the fashion & lifestyle sector. The evidence strongly suggests that this approach helps fashion companies deliver higher profit margins and grow faster than their peers.

Since Prologic first started work with Paul Smith in 1990, more than 30 fashion & lifestyle companies have adopted and helped refine this unique approach. On average, they are growing twice as fast and enjoying 50% higher operating profit margins than their peers*.

These companies credit a significant part of this relative success to their ability to manage change by quickly adjusting business processes and operations. Specifically, they keep operational processes and IT systems aligned with business needs, and they have the in-built agility to modify processes more easily than their peers as the organisation evolves and changes.

This paper describes the thinking behind the development of the Prologic approach, how it works and why it delivers clear and measurable results. It sets out to answer the following questions:

• What are the business objectives?
• What are the business challenges?
• How does the Prologic approach overcome the challenges?
• How does it make such a significant difference to company performance?

Approach objectives

When a fashion company is small, good products and committed staff are usually the critical success factors. However, as the business grows it has to manage an increasing numbers of products, customers, distribution channels and transactions. It becomes ever harder to run the organisation effectively by simply adding more employees.

If business processes and systems can't develop and respond quickly to change, then inefficiency, errors, bottlenecks and a general lack of visibility and control will inevitably start to affect profitability and customer satisfaction.

The objective is to ensure that business processes and associated IT systems can deliver rapid change and growth, supporting business agility at the lowest cost. Costs include not only payments to external suppliers and internal support staff, but also the lost productivity associated with employees working on non value-adding tasks such as maintaining spreadsheets, fixing errors, consolidating reports and reconciling numbers created by different systems.

The objective of achieving business practice alignment and agility while controlling cost is of course shared by all industry sectors. However, fashion & lifestyle businesses have characteristics that make some approaches to delivering process and software changes ineffective, and may actually constrain growth and profitability. Prologic’s approach has evolved to address the sector’s combined challenges of rapid business change, operational complexity and limited resource.

Business challenges

Fashion companies have to deal with a complex combination of characteristics including multiple sales channels, seasonality, a deep awareness of consumer trends, and a rapidly evolving supply chain. These issues alone present a number of business challenges not always associated with other retail or distribution sectors.

All successful companies grow, but a fashion & lifestyle company with a winning formula can grow remarkably quickly, often doubling in size every three or four years. The sector is unusual in that rapid growth is the norm.

In addition, the strategies of most fast growing fashion businesses go further than simple expansion. They will usually involve rapid change to the business model itself.

For example:

• Moving into new overseas sales territories
• Developing or strengthening multiple sales channels
• Extending the product offering
• Introducing new fascias, brands or sub-brands

Managing and implementing regular changes to the business model on top of underlying growth increases the pressure on operations and systems.

These are "good problems to have", however, failure to address them effectively will inevitably stifle the underlying growth potential of the business. Companies in any business sector will face many of these problems at some time during their development, but the special characteristics of fashion & lifestyle mean such problems are typical for most businesses in the sector for most of the time.

The challenges of business change and complexity are often compounded by the relatively limited resources made available to support process and systems change. This may be because of the size of a business relative to its complexity - it is common in the fashion & lifestyle sector for small organisations to have as much complexity as much larger businesses - or because of a business culture that tends to undervalue the importance of business operations and investment in processes and systems. 

Reluctance to devote sufficient resource to improving business practice often arises because design excellence, entrepreneurial flair, or a well-positioned brand has historically delivered business success despite poor processes and systems. A few   supply chain problems, missed sales, product markdowns and customer disappointment may be perceived as "normal" in an environment characterised by newness, exceptions and uncertain supply and demand. It is often hard to recognise that processes and systems have become a significant liability until it is too late.

Prologic Approach

The Prologic approach to the delivery of consulting, software and services allows customers to achieve the objectives of business practice alignment, agility and cost control in the particularly challenging environment that characterises the fashion & lifestyle sector. The approach comprises four key principles.

Fashion specialist

Prologic is exclusively focussed on delivering software and services to fashion & lifestyle companies.  Two decades of specialist experience clearly helps in developing products that are appropriate for the sector. This focus has enabled Prologic to deliver systems that are robust, capable and highly functional allowing many fashion & lifestyle companies to avoid the complexity and cost that has bedevilled implementations of less specific point applications.

Additionally, and perhaps of most importance, this focus on fashion & lifestyle is the linchpin of the Prologic approach. Without a fashion focus, the other key principles discussed below would be mere good intentions.

Application and infrastructure standardisation

Standardisation is commonly accepted as the most effective way of ensuring that IT systems are robust and easy to manage. It is also widely accepted that IT - like all technologies that have come before - is moving away from in-house complexity toward outsourced simplicity. The challenge has always been in striking the appropriate balance between meeting evolving business needs while at the same time maintaining the standardisation benefits of robustness, simplicity and low cost.

The old, and still common approach, is for growing companies to make occasional bespoke changes to their business software and technical infrastructure. Systems gradually become less standard, less robust and more costly to support and maintain, however it will often be several years before this becomes a significant business problem. For a fast growing fashion & lifestyle company, systems can degrade much faster, often to a point where complete replacement is necessary even before the initial capital cost has been written off.

Prologic's approach is to use the fact of its specialisation to deliver both software and infrastructure standardisation across a customer base which by its nature has a great deal of commonality.

All software changes are rolled into a new standard release of the software that is issued bi-annually. Changes developed for a given customer are generalised, standardised and thoroughly tested before being incorporated into the next release. Companies are encouraged to upgrade their software frequently. A proven and automated low impact process for compatible upgrades of CIMS software means that customers are typically happy to move to a new software release annually. 

This process ensures that all Prologic customers have software that is tailored to their specific requirement and yet they continue to operate a standard, proven and robust software application at all times. The approach makes support, documentation, customer training and future improvements dramatically easier and less costly. This approach works in practice because of Prologic's focus on one industry sector. A software provider aiming more widely at say general retail and distribution, cannot easily adopt this approach because there will be too many conflicting demands (e.g. a petrol pump forecourt will have very different requirements from those of a garden centre).

This approach to software standardisation is proven and powerful, but it does not necessarily follow that robust software translates into robust IT systems.  Reliable and effective IT also depends on total system quality. For this reason, IT infrastructure standardisation is also included in the approach.

It surely does not matter to a fashion company which hardware firm manufactured the server, or which provider installed the store network. But configuring and supporting a database server for the first time, or implementing a new store network is complex and expensive and, at least for a while, is likely to be unreliable. If the identical task has been performed 30 times before, and if the vendor has standardised high volume relationships with its suppliers then design and development effort is massively reduced, problems and bugs will have long since been ironed out and the economies of scale result in costs savings that are passed directly to the end customer.

Single database

It is a perennial debate whether a company should run their business with one large, broadly functional, software package (often referred to as ERP software) or integrate a collection of specialist point solutions.

The major ERP software applications supplied by firms such as SAP and Oracle have by and large proven to be too unwieldy for most mid-market fashion & lifestyle businesses. The more common approach has been to use a core merchandise management package, surrounded by a number of point applications (or even spreadsheets) for managing planning, warehouse, tills, web, etc. Unfortunately, as a company grows and changes, the complexity and cost inherent in this approach increases exponentially.

Prologic customers use CIMS, a single proven sector specific software application to run their business. The software runs on top of a single Oracle database, no data is duplicated. Product data, customer information and stock are maintained once and in one place. All users in every department access an identical picture of the business, updated and accurately maintained moment-by-moment. There is always just "one version of the truth".

Teamwork

Prologic has long been aware that within its own customer base, the factor correlating most strongly with effective use of CIMS software and the implementation of good operational processes is teamwork. Not only between and within departments, but also between Prologic and the key operational stakeholders.

Expertise and knowledge within Prologic includes consultants and fashion specialists who have spend a significant part of their working lives in senior operational positions within fashion business, and have helped many well known fashion & lifestyle companies to implement business systems.

The Prologic approach is designed to pass this knowledge on and to incorporate strategies that are designed to build and support closer and more collaborative relationships. These include:

• Establishing a clear commitment to customer success. Prologic ensures that all of its employees understand and are dedicated to the company’s primary goal of increasing customer profitability and growth
• A senior account director is assigned to each customer to ensure all issues are captured and resolved quickly
• A governance structure is implemented that includes bringing together key senior representatives from Prologic and each of its customers on a regular basis
• A team of Business Consultants hired from the industry is mandated to work closely with customers to help them improve business processes
• A business practice improvement methodology has been specifically designed to deliver business and system improvement faster and more efficiently than traditional approaches
• The Prologic user group fosters closer partnerships between customers as well as with Prologic

This emphasis on teamwork and collaboration builds momentum where a virtuous circle of success, respect and trust encourages yet more commitment and enthusiasm.

Conclusion

Prologic, with its customers, has identified and perfected an approach to improving operational business practice that has proved successful in the particularly challenging environment of the fashion & lifestyle sector. Access to reliable information along with agile, robust and efficient processes has enabled these businesses to grow faster and achieve higher profit margins than their peers. All of the trends in the industry, and particularly the explosive growth in eCommerce, suggest that operational excellence can only become increasingly important

By focusing development effort exclusively on the needs of the fashion & lifestyle sector, Prologic has produced a solution that has all of the robustness of an ERP package, the functionality of the point solutions and more agility and flexibility than either alternative.