Randy Harward (R) of Under Armour speaks during the Fireside Chat as moderator Lynn Sprugel and AAPN Managing Director Mike Todaro look on.
AAPN Fireside Chat
UA’s Harward: Constraints can be liberating for retail, fast fashion
Attend the next AAPN Fireside Chat featuring Ron Roach, president of Contempora Fabrics, on August 13. His presentation is, “We Didn’t Need Harvard to Tell Us to Collaborate – Our Case Study.”
Posted August 6, 2020
By Devin Steele (DSteele@eTextileCommunications.com)
In a sweeping, thought-provoking discussion of fast fashion and retailing, Randy Harward of Under Armour posited that limitations we think may be hindrances can be turned into core strengths if leveraged properly.
Harward’s talk came recently as he keynoted the Atlanta-based Americas Apparel Producers Network‘s (AAPN’s) second online “Fireside Chat,” part of the network’s new American Ingenuity Series. Under the title, "Hey, Einstein, We All Live in the Same Universe," he called constraints the “mother of invention.”
“This idea that somehow planning in advance or aligning your manufacturing capacity with your partners and your color point of view and your material point of view somehow constrains your ability to respond to what consumers want is a really strange notion that has evolved,” said Harward, UA’s senior vice president of Material and Manufacturing Innovation. “And even at many design schools – and I interview a lot of young folks who come to work at Under Armour – students are taught to work without those constraints and not to consider those things. And I think that’s a real shame. There is opportunity conversely to use those constraints to be more relevant. It helps you create the most valuable thing a business can have and that's a point of view in the marketplace. It's a sea of sameness without it.”
During his opening remarks that he termed a “provocative poke,” he asserted that no absolutes exist, “but I am poking at the notion that ‘all we need to do is shorten supply lead times and everything will be better.’ ”
He explained: “I’ve been at this long time, some 47 years in some form of either retailing or supporting retail,” he said, “and something has emerged that is really troubling to me. That is that retailing has become in my view wholesaling, and that we've forgotten as an industry how to retail for the most part. And it's even taken on another term – fast fashion. There are reasons for that – global communication, digital tools, faster manufacturing processes and improved global logistics and all of that. It sort of fooled us into thinking that we can do everything really fast. But I don't know if I would call it retailing.”
From haute couture to fast fashion
To better elucidate this assertion, he took a step back to quickly review the origins of apparel retailing. Much of what we think of as retailing emerged in France around the turn of the 20th century, after that country had established itself as the fashion center many years before, he said.
“And in order to work, it formed what I would call the basis of the fashion industry,” said Harward, a recognized textile, hardware and technology R&D expert, having developed countless products, new construction techniques, factory equipment, technologies and materials. “It's very different from what we experience today, and that is that securing materials took forever. It would take over a year to secure the materials you would need to produce a collection. You had to color that material, so often you would work on design houses selecting their material stories and their color stories first and guarding that like trade secrets. That was sort of gold in the bank.”
That model worked for years, until after World War II, when the “ready-to-wear” phenomenon emerged out of that same point of view, he added. A fashion house secured raw materials, developed a theory of color for the season or the year and designed collections that provided a tremendous capability to be cost effective and to drive a ready-to-wear version of what consumers wanted, he noted. And that drove retailing, he added.
That gave large-volume brands a clear point of view and an advantage in the marketplace, Harward pointed out. “And it had nothing to do with what we think of retailing today, which is all about speed,” he said. “And it’s this difference that I think we’ve forgotten.”
Fast forward to today, and the current ERP systems that we know are just now becoming real “enterprise data,” he said.
“So what happens here is that they ended up responding to velocity and sales driving against their material positions and their color positions,” Harward said. “It wasn’t an ERP system based on POs (purchase orders), which is what has emerged today for the rest of us – and selling.”
The kernels of that knowledge are now what people are competing on internationally, he said. Yes, speed, communication digital tools and faster manufacturing processes exist, but being smart with those resources allows one to compete more effectively, he said.
“There's a difference between what a good mechanic with good tools can do versus a great mechanic with great tools,” he said. “And I think people have forgotten what retailing is.”
The barriers of retailing
Harward then delved into what he considers the barriers of retailing, and core to this issue is planning, he said.
“It seems like increasingly, the belief is if you shorten lead times for everything, then you don't have to plan your position,” he said. “It seems to become a strategy. They think, ‘all I need to do is shorten lead times and shorten my ability to respond and I don't need to set up positions or plan.’ This increasingly seems to have become the way to work rather than the idea of establishing a point of view and a material that then allows you to be fleet of foot in designing against that material and color palette.”
Another hurdle, he offered, is the “unfortunate emergence” of modern software during the race for low-cost software.
“It has occurred to me, and it's no joke, that right when we were all running to Asia for low-cost labor is when computer software and the ability to manage POs and ERP emerged,” he said. “And so it's all built on that model of creating a line, showing it, getting buys against it and positioning those POs, then positioning raw material and inventory and manufacturing after you have secured all the orders. So we have an embedded management system that’s really hard to break. So I would say that MRP and ERP development coincided with that rush to Asia. That was the MRP. And when we say ERP today – enterprise – most of that, let's be honest, is just really integrating PO management into it. It's not really enterprise data as much as it's expressed today.”
So each milestone in the go-to-market calendar now is geared around this process, he continued: design first, then position materials and manufacturing.
Another big barrier is a strong lack of executive understanding of basic finance, Harward said. The three critical items – balance sheets, income statements and cash flow statements – are not leveraged equally, he added.
“So let’s get back to basics,” he said. “Retailing is the business of buying merchandise at a certain price, selling it at a higher price and doing it fast enough to make a profit. So it's the relationship between gross margin and inventory turn rates that is important. But what's emerged is the need for margin management, and turns are being largely forgotten.
“You can go to Harvard today and get a full degree in accounting and you will be told that two to four turns are good, healthy turn rates for American retailers,” he continued. “And that is unbelievably low in my point of view. So we sort of began to rely on low-cost labor and low turns and high inventory risks and high inventory. So we're not really managing all the levers equally.”
The belief exists that you shouldn’t constrain yourself as a designer, Harward said. Likewise, being responsive to the market requires that you have no constraints. He called both of those notions “weird.”
He mentioned that he shared those insights during a speaking engagement at the Fashion Institute of Technology a couple of years back. He told the students that the best designers he knows are those who are familiar with the supply chain, the machinery and equipment, the materials, the assembly procedures, et al.
“A student raised his hand at the end and said he didn't agree,” Harward recalled. “He said, ‘if I have to consider all that stuff, then I can't work at my highest level of creativity.’ And I told him, ‘gosh, I think you have to be careful what you're suggesting because you're suggesting that knowledge is somehow limiting.’ And I don't buy that. Knowledge is never limiting. The best designers I've ever met are the ones who know more about the process, and they create designs that are inherently more elegant, that solve more problems. And it comes through in product design.”
He added that constraints are important in that way. Harkening to his opening remarks, he said that iconic fashion brands emerged from this idea of having a color point of view and a material point of view and designing into those constraints.
“Much of the creativity and the thoughtfulness and the planning came from saying, ‘hey, this is my point of view as a brand and I'm going to go to market this way,’ ” he said. “As a fast follower, you don’t have that opportunity.”
In his closing comments, he said that the core of supply chain management, people management and retailing all need to be relearned.
“It's about positioning points of view, colors, materials, manufacturing, capacity and then designing it as a last step, and being very responsive because you've set up that positioning,” Harward said.
A lively, thoughtful Q&A session, led by AAPN Vice President and moderator Lynn Sprugel, followed and rounded out the remaining 40 minutes of the event.
To watch the Fireside Chat featuring Harward, please click here.