# FashionDX, Process Innovation Using Digital Resources like AI and DTG
# Must have an ecological position that provides optimal supply at the time desired by consumers
Adidas’ Speed Factory
# In the offline era, fashion companies struggled to reach customers. Because customers were concentrated in specific department stores and commercial districts, they had no choice but to endure high sales commissions, store rents, interior design costs, and sales management expenses.
As distribution costs rose, fashion companies relocated their production bases to China and Southeast Asia starting in the 1990s to reduce manufacturing costs. Furthermore, the influence of fast fashion made mass production a virtue, and trends and brand identity lost their place.
The COVID-19 pandemic has boosted e-commerce, and platforms like Musinsa and W Concept, along with Naver, Kakao, and even major global platforms, are actively pursuing cross-border e-commerce (CBE), lowering the cost of reaching customers and expanding the range of options. In short, the rules of the game have changed in the B2C sector.
# Now, rather than impulsively buying products they don’t need, consumers are selectively purchasing content that resonates with them based on their high level of information and clear tastes.
# DX-based fashion companies are establishing their ecological position by introducing an Accurate Production System that can supply the necessary quantity in a timely manner according to market demand, from customer data analysis to design development, demand forecasting.
Hansae Industrial Vietnam’s self-developed smart factory system, ‘HAMS’
# B2C has already changed the landscape, and now we are in the ‘supply chain DX era’.
Most fashion companies grapple with the question, “How can we make our products more affordable and sell more?” However, with e-commerce dominating the market and environmental variables like COVID-19 and extreme weather impacting not only individuals’ daily lives but also the broader socioeconomic landscape, the existing paradigm has shifted significantly.
While consumers initially had vague standards when faced with a deluge of disorganized information, their preferences for brands and products are becoming clearer as their discretionary powers increase. Furthermore, with the recent rise in interest in the environment and sustainability, standards for fashion consumption are becoming clearer.
Against this backdrop, fashion companies’ internal systems and processes are also facing change. Beyond mass production and mass sales, they must innovate across the entire value chain, from accurate market demand forecasting to design, sample development, manufacturing and supply, inventory, and customer management.
In particular, companies agree that, as the cost of reaching consumers decreases, they must invest in supply chain innovation to create products that resonate with them and deliver them in a timely manner. However, they say implementing this approach presents significant challenges.
A mid-sized fashion company executive lamented the practical challenges, saying, “News and reports are flooding in every day about big data and AI-powered product planning, responsive manufacturing, smart factories, fulfillment, and other DX-related initiatives. However, we’re still unsure how and where to begin. Our design departments still plan in six-month increments, and our criteria for selecting partners is how cheap they can be produced.”
Nonetheless, corporate interest in supply chain innovation is clearly growing. Furthermore, as the economy bottomed out last year and continued to do so in the first half of this year, with accumulated bad inventory and negative profits, managers are rolling up their sleeves and embracing value chain DX.
# Starting from big data analysis, DTP response production is realistic
The “Data and AI-Based Trend Seminar,” hosted by the Korea Federation of Textile Industries (KFAI, Chairman Choi Byung-oh, hereinafter referred to as KFAI), attracted significant interest, attracting over 500 applicants. Participants expressed a keen interest in trend forecasting using big data and AI. Many were already actively utilizing the technology in their product planning, leading to growing calls for more advanced implementation strategies.
Kornit Digital and Ditto’s SFF Conference
Prior to this, about 150 people also attended the Smart Fashion Forum (SFF) on ‘Reactive Production’ held at the Textile Center on April 29th. The event was held under the theme of ‘Digital Printing Conference for Fashion Industry Supply Chain Innovation (co-hosted by Konit Digital and Ditto & Ditto)’, and executives from fashion companies such as Kim Moon-hwan, CEO of Hideaway (Lifework), Oh Seo-hee, CEO of Montemilano, as well as from brands and DTP manufacturers such as Tink Solution, the largest DTP manufacturer in Korea, attended the conference and had 1:1 consultations, and had specific collaboration time on near-shoring and on-shoring.
Kim Moon-hwan, CEO of Hideaway, expressed interest in building a supply chain innovation system centered on reactive production, saying, “Lifework mainly produces graphically intense T-shirts, so by utilizing DTP, we can establish a sourcing system that not only ensures excellent quality control but also ensures the timely supply of necessary inventory.”
Experts also emphasize that value chain innovation is key to enhancing not only the competitiveness of the fashion industry but also its sustainability.
One sourcing expert stated, “Along with the rapid growth of e-commerce, SCM innovation will lead to changes across the entire fashion industry, ultimately impacting its sustainability. This will lead to re-shoring and near-shoring, and ultimately to on-shoring. The future of fashion companies will hinge on how they integrate digital technology and IT solutions into their internal systems and processes.”
# Sustainability starts with ecological status
The digital ecosystem fueled by e-commerce signifies borderless, limitless competition. In other words, it signifies an era where brands can connect with consumers worldwide by leveraging already active cross-border e-commerce (CBE) platforms. In this era of limitless competition, brands must also excel to be chosen by consumers with sophisticated information and discerning tastes.
So, what content competitiveness do brands need in the CBE era? Fashion experts emphasize that a level of completion (materials, quality) that consumers can trust is fundamental, and that sustainability is enhanced when supported by a philosophy and story that resonates with consumers.
Kim Yeon-hee, a BCG Managing Partner, emphasized the importance of essence and empathy marketing at last year’s Korea Fashion Association Forum, saying, “K-beauty’s appeal to global consumers stems from its fundamental value. Like ‘Joseon Beauty,’ it leveraged both traditional and modern ingredients to secure its inherent value. Furthermore, its resonant marketing, centered on Instagram and TikTok, resonated with America’s MZ generation, was effective.”
In other words, to be recognized as sustainable content in the market, it is necessary to go beyond simple eco-friendly marketing and establish a sustainable business model and secure an ecological niche that fulfills social responsibility.
Mardi Mekrdi, which has secured its ecological position through independent content development
Kim Myo-hwan, CEO of CMG, emphasized, “In the era of fast fashion, fashion was dismissed as a commodity industry, even a potential waste industry. Generation Z, which is currently leading global consumer trends, is assertive through fashion, seeks out brands with like-minded individuals, values the creation and distribution processes, and actively shares content they trust. Meme+ing, which spreads through voluntary communication among consumers, is crucial. It is the fashion industry’s role to provide content that is recognized by consumers and possesses an ecological niche where consumers can freely engage with it.”
Accordingly, fashion companies must also develop smart solutions that leverage digital resources. CEO Kim added, “These smart solutions will become content that embodies each company’s competitive edge. They will emerge as accurate production systems, where suppliers produce the right quantity and time to meet consumer demands, leading to a process of occupying a new ecological position.”
For K-fashion to secure its ecological position, it must also have a stable revenue structure, and to achieve this, it must collaborate with manufacturing companies with competitive sourcing capabilities.
Another global business expert emphasized the importance of supply chain innovation and global networking, saying, “Recently, thanks to K-culture, fashion, following beauty, is gaining recognition in Asian markets like Japan, China, Taiwan, and Thailand, as well as in Europe and the Americas. However, there are still many challenges to overcome in terms of brand identity and pre-marketing. Above all, partnerships with competitive manufacturers are essential in the supply chain. Currently, wholesale prices of 40-50% of domestic sales prices and supply competitiveness of 3-4 times manufacturing costs are limiting global business.”
Editor Jeong In-gi [email protected]