Abstract

This presentation outlines considerations for the successful application of 3-d scanning technology in the apparel industry in North America.

To provide a framework for the discussion of considerations, the current state of the industry will be reviewed with respect to manufacturing, distribution, marketing and supply chain issues – in both the bricks and mortar and on-line environments. A new way of looking at the industry will then be presented that integrates scanning technology and is defined along similar parameters.

Based on the above outline, key questions are posed and answered regarding how the industry will move towards the new paradigm, what will be required in order to do so, what will be the nature of the companies that will get us there and when this shift will occur.

The conclusion of this presentation is that the successful application of 3-d scanning technology in the apparel industry will require a shift in the business paradigm to which it currently ascribes.

Next spring, in New York City, Style Estate Inc. will launch CustomWoman. This is a major retail venture that fully integrates 3-d scanning technology in a multi-channel execution. This presentation discusses a point of view regarding what is required for the success of this business as well as the overall integration of 3-d scanning technology into the apparel industry in North America – a new business paradigm.

To provide a framework for the discussion of considerations, the current state of the industry will be reviewed generally with respect to manufacturing, distribution, marketing and supply chain issues – in both the bricks and mortar and on-line environments. A new way of looking at the industry will then be presented that integrates scanning technology and is defined along similar parameters.


Current State of the Apparel Industry in North America

In general, the apparel industry in North America today is predicated on the principles of mass production and mass marketing. The current production processes rely primarily on foreign labour and manual systems. The adoption of available technology in the industry is still lagging behind other industries.

The primary distribution channel today is still the bricks and mortar store, augmented by catalogues and direct selling. The incredible success realized by other industries in Internet e-commerce has not followed into apparel. Existing limitations from product licensing and distribution agreements to fit and trial issues have stunted the growth of the industry in the Internet space. The most successful players tend to be those with a ‘clicks and mortar’ strategy such as The Gap or those companies with a strong background in catalogues and direct selling such as Lands End. The fit and trial issues and difficulties with colour and texture perception on computer monitors, however, continue to be issues that keep Internet sales relatively low compared to the total market for companies. Another area to see some success is that of off-price and discount clearing houses like Bluefly. This is an example of how the inefficiencies of the existing industry model for apparel has spawned a whole new category of retail both on-line and off-line in factory outlets and clearing houses.

The existing supply chain involves long lead times on raw materials, limited predictive abilities and resulting inventory issues that lead to discounting that negatively impacts margins. In fact, much of the industry is currently configured around supply chain issues that hinder it from reacting to consumer needs.

The products produced by the apparel industry today are essentially either designer-centric or operations-centric. In the designer-centric world, the consumer is given a choice between various looks and price points and asked to identify with one of the existing design visions in totality. In the operations-centric world, the consumer is offered inexpensive goods of marginal quality and design is less of an issue than basic accessibility.

Promotionally, the designer-centric brands are differentiated almost completely based on lifestyle. Real product differentiation is minute and therefore customers are willing to pay for only major differences in brand prestige and fabric quality. This overall lack of value-based pricing therefore leads to the demand for rapid discounting of retail prices to encourage purchasing of parity brands. Operations-centric brands are differentiated primarily on a combination of price and selection and brand image is clearly secondary.

Given these existing preconditions, the integration of 3-d scanning technology has the potential to precipitate change in every aspect of the industry today.


Integrating 3-d Scanning Technology

There are three basic ways that 3-d scanning technology can be integrated into the apparel industry: in specific project-based applications of data, in made-to-measure ready-to-wear and in variations of full custom applications.

Project-based Applications

Project-based applications of data from 3-d scanners include the refinement of standard sizing norms and inventory control. To achieve the refinement of standard sizing norms, a statistically significant sample of people needs to be scanned. These data are then plotted against existing measurement data used for standard sizing to deduce the measurement clusters that are more reflective of the population. This exercise can be conducted in different countries and different regions of the country in order to have standard sizing metrics that are truly reflective of the population. The same process can be applied to specific designers who can refine their standard sizing chart to more closely reflect their clientele. Inventory control applications include the scanning of a particular customer base for a designer or vendor in order to determine the distribution of sizes among the core client base. This will allow more efficient predictive ordering of merchandise.

These project-based applications provide incremental benefits to industry and clients and will impact certain norms in the existing infrastructure however they are primarily an adjunct to the current way of doing business.

Made-to-Measure Ready-to-Wear

The application of 3-d scanning to the ready-to-wear market impacts the infrastructure of the industry on both the front end interaction with the consumer and the back end production of the final garment and fulfillment of orders. Within this area, there are two general approaches: refinement of the ‘after-market’ alteration process and development of the made-to-measure process for ready-to-wear collections.

The application of 3-d scanning to refine the process of altering ready-to-wear collections will provide some initial benefits in terms of convenience for the consumer. Electronic measurement data can be kept on file by the vendor or designer so that subsequent purchases by the same client can be altered with ease. Subjective fit issues must also be addressed in order to ensure a satisfactory final product. This is more of a challenge when the alteration process is commoditized and taken out of the context of the specific designer. Despite some added convenience, the end product to the consumer is the same as if they had alterations done manually by a tailor. In this application of 3-d scanning technology, customization remains an after-market commodity and one that will not capture a price in excess of the cost of manual alterations but will require the significant capital expenditure of purchasing a scanner and the accompanying computer hardware and software.

The application of 3-d scanning technology to facilitate made-to-measure ready-to-wear is the beginning of the true integration of the technology into the consumer product offering. A customer is scanned and then chooses from the available styles and materials in a given ready-to-wear collection. The garment is then made to order for the customer. This integrated process allows for the communication of subjective fit preferences by the customer to augment objective fit data from the scanner. In the context of the ‘collection’ fit, this can then further ensure a satisfactory end product.

Full-Custom Applications

The application of 3-d scanning technology to facilitate a full custom clothing experience takes the enabling ability of the technology to its fullest extent. A customer is scanned and then either designs their garment from a simple template or chooses from a variety of prototype collections as a starting point on which to build their custom garment.

The ultimate application of the electronic measurement data captured by a 3-d body scanner is in truly custom clothing. This entails the element of custom fit but also invites the customization of material, notions and design elements. This application makes apparent most clearly the impact of this technology on all aspects of the apparel industry and therefore will be used as the reference case when discussing the new business paradigm posited.


The New Business Paradigm

The use of 3-d scanning technology in the apparel industry as anything greater than an adjunct requires a new way of looking at the key components : manufacturing, distribution, supply chain and marketing. A fundamental shift is required from a designer-centric and operations-centric orientation to a customer-centric mentality that is consistent with the individualized nature of the final product offering.


Manufacturing

The integration of 3d scanning will have an impact on numerous aspects of the physical creation of a final garment. When the batch size is essentially reduced to units of one, the economies of scale of traditional production processes no longer apply. Manufacturing encompasses pattern generation, cutting practices, trafficking of batches and the sewing and finishing of garments. Each garment pattern will be one of a kind, taking the process even further than custom grading to the generation of unique patterns from the scanner data. It is no longer efficient to create physical patterns. An electronic pattern can be generated and sent via the Internet to the production facility. As only one of each garment is required, it is no longer possible to gain efficiencies by cutting many layers of fabric at the same time. A single-ply cutter needs to be brought into the process. Efficiencies then will surround the optimal batching of customer orders by material and the maximizing of the electronic marker. The physical assembly of the garment requires careful tracking of the customer order, as pieces are no longer interchangeable.

The sewing and finishing of the garments also differ significantly from a production mindset. The process is more akin to a couture or sample house. Each garment should be constructed by a single sewer and finished by the respective experts. This will ensure that varying calibrations of machines and hands will not undo the precise measuring achieved by the scanner.


Distribution

The ability to compile a reliable, accurate database of customer measurement data increases the viability of non-brick and mortar channels. There is still, however, a significant barrier to a pure Internet execution. The compilation of the measurement data requires a customer to physically be scanned, which cannot take place over the Internet and immediately impacts the scalability of the on-line opportunity. As we see the proliferation of 3-d scanners throughout the country however, the potential on-line market will grow as permission marketing of data takes place across scanner-enabled companies. In addition, depending upon the price point and desired customer brand experience, the optimal strategy may be two fully integrated, scanner-enabled channels, bridging the on-line and off-line customer communities.


Supply Chain

In a customized environment, the supply chain needs to be more reactive. It is more challenging to estimate raw material requirements in this environment as order specifics depend upon the measurement and material/notion profiles defined by clients. Current long lead times and high minimum volume orders are not conducive to a responsive production process. A move is required towards approximating a just-in-time system of delivery for the industry.


Marketing

The product selection in the custom environment is virtually limitless. This carries its own set of concerns as it creates serious issue of cost-efficient fulfillment given the existing supply chain. In addition, to a large portion of consumers the idea of designing a custom garment is onerous and can be overwhelming. The new category of custom clothing will require education of the consumer market as to how to shop and buy custom garments. The expert knowledge of designers, tailors and personal stylists must be institutionalized into the front end process so that customers feel involved in the customization of the product but also have peace of mind in the final product offering.

Current internal pricing norms will be subject to the same reexamination as standard sizing. While at one time these were valid norms based on general price/value relationships and consumer segmentation, consumers have become more sophisticated shoppers and are no longer as one-dimensional as these norms would suggest.

Customization introduces the opportunity for relevant pricing algorithms that are more transparent to consumers and consequently when a price/value relationship does exist, a great percentage of consumer surplus can be captured. For example, a basic algorithm could include: garment type + occasion +branding + material inputs.

Promotionally, there are strategic and messaging considerations. Strategically, customer interaction on the front end needs to reflect the personalized nature of the final product. However, loyalty programs and ‘relationship marketing’ advertising campaigns are not the answer. These efforts need to be substantiated and validated by a back-end one-to-one enterprise wherein the customer-centric mentality permeates the operational support systems of the company.

From the perspective of consumer messaging, there are three main objectives to be satisfied:

• Education of consumers regarding the safety of the scanning process and the accuracy and privacy of their measurement data;
• Education of consumers regarding shopping and buying in the custom category;
• Generation of brand awareness and initiation of customer relationships.
  

Conclusion

3-d scanning technology can be viewed as an interesting adjunct to the apparel industry or as an enabling technology that could change the way it does business in the future.

This document is meant to raise the point of view that the successful integration of 3-d scanning technology into the apparel industry will require a shift in the business paradigm to which it currently ascribes. That shift, fundamentally, is from a designer and operation-centric mentality to a customer-centric mindset.

This shift will be far easier to attain by smaller, more nimble companies as the propensity of larger companies is to fit new technology into the existing paradigm of the industry around which their organization has been built. Smaller companies will be able to build a prototype of a "new apparel company" from the ground up and create consumer demand for the customized product. Large players will then play a key role in institutionalizing the prototype processes and entrenching this new category of apparel in North American life.