CSC is driving the expansion of Diesel and other companies in the Italian fashion industry. (Photo courtesy of Diesel)

The Italian fashion industry, celebrated for its creativity, innovation and impeccable style, has been through tough times of late, but CSC software and consulting are helping to make life easier.

Following a period of rapid growth in the ’90s, during which major Italian fashion companies acquired new brands and boutiques like they were going out of style, the current business climate is strictly focused on cost control and improving internal efficiency. Enter CSC, whose IT solutions are bringing parent companies and their acquisitions together, while helping coordinate procurement, production and sales.

"Up until 2001, the Italian fashion industry was growing rapidly, particularly the luxury brands, such as Gucci, Prada and Ferragamo," explains Angelo Calabrese, solution delivery manager for fashion at CSC Italy. "The priority was to follow demand and grow through acquisition, with less focus on the cost of doing business or process efficiency.

"However, as a result of September 11 and shrinking demand in the United States, Japan and other markets, companies are having to take stock and change internally to optimize their operations."

Owning the distribution channel

The challenge is to improve internal processes to gain tighter control of the entire production and distribution process, ensuring that each step is managed to maximum efficiency. One way in which companies are trying to do this is by buying and running their own retail shops.

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"Luxury companies increasingly want to own the whole distribution chain," says Calabrese. "If they have greater control over the final sale to the customer, they can better understand what they need to produce in the first place. And they can build customer loyalty through the service they provide in their outlets. They have more opportunities to build their brand in the customer’s imagination."

In IT terms, this trend requires companies to build tighter links between point-of-sale information about what the customer is buying and the processes further up the supply chain. Such information helps companies better anticipate consumer demand and organize production to meet that demand.

Diesel goes global

The trend also applies to brands offering upscale products at more affordable prices, such as Diesel. Diesel was selling its products in 80 countries through a network of distributors when it maneuvered to become a global company with its own operations.

"We decided to transform these distributors into subsidiaries that we would manage directly from the head office in Italy," said Giulio Tonin, information systems director at the Diesel Group. "But we also had to find software that would allow us to do this."

Diesel chose CSC’s Stealth software for all of the company’s locations, giving it access to financial, commercial and logistics information wherever it needs it.

Forecasting and planning tools are also becoming more sophisticated in order to maximize the efficiency of procurement and production. "One of the problems for fashion companies is that they often need to buy fabrics before they know what quantities of products they need to manufacture," says Calabrese. "The risk is that they produce too much and end up with a lot of unsold stock. They are trying to create simulation models, based on historical data of what they have sold in particular markets, to better understand their requirements for fabrics and other raw materials. Traditionally, this was an informal, paper-based process, based on the individual knowledge of buyers."

Outsourcing production while increasing control

Another factor affecting IT requirements is the increasingly global nature of the industry. Although luxury brands tend to keep production operations within Italy, because of the high value of the "made in Italy" hallmark, mainstream players like Diesel and Benetton are increasingly outsourcing production to low-cost economies in Eastern Europe and Asia. Their challenge is to build organizational processes to optimize a highly distributed and often complex value chain.

"Such companies need solutions that can manage intercompany processes and information flows," explains Calabrese. "For example, the production house in China might deliver its goods to a distribution house in Australia that is responsible for distribution to outlets in the entire Asia-Pacific region. The technology solutions that support this model are increasingly Web-based, because they allow companies to maintain centralized control of their distribution, while allowing systems access to entities all over the world."

This changing business climate has meant a shift in the services CSC Italy provides to its clients. CSC works with over 150 fashion customers, including the best-known Italian brands. Its Stealth software, specifically designed for fashion companies, has become the industry standard. With supply chain management, customer relationship management and business intelligence functionality, this Web-based solution helps fashion companies contain costs, meet customer expectations and plan their strategies across multiple locations.

CSC has adapted Stealth over the years to meet changing business needs, but has also witnessed growing demand for its consultancy and systems integration expertise over the last few years. "Two or three years ago, companies were asking us for specific tools to do a specific job," says Calabrese. "Now they need an integrated technology infrastructure on which to run the entire business. This has resulted in a greater demand for our systems integration, application vendor management and outsourcing expertise."

Fashion companies increasingly demand systems that are interoperable and can run uninterrupted 24 hours, seven days of the week — all over the world — and are looking to CSC to help them integrate, replace and maintain their applications and infrastructures.

What does the future hold for the Italian fashion industry? The worst of the negative business cycle since 2001 seems to be over, but companies will continue to exploit efficiency and cost-cutting opportunities offered by technology.

"Over the next two or three years, fashion companies will continue to migrate from the proprietary systems model of the ’80s and ’90s to a Web-based model, based on open architectures," says Calabrese. "And they will keep an eye on new technology developments, such as radio frequency identification tags, which will help them reduce logistical costs and tighten up supply chain management. Technology is the only glue they have to control and bring together operations around the world."

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