California Apparel News

Q&A with Lectra USA President David Rode

David Rode was named president of Lectra USA Inc. in May. He becomes the first U.S.-based president for the division since 2003 and will manage the company’s U.S., Mexico, Canada and Caribbean Basin operations from New York and its headquarters in Marietta, Ga.

Paris-based Lectra, with 1,500 employees and $260 million in annual revenues, is among the leaders in supplying manufacturing equipment and emerging software products, such as CAD/CAM, visual merchandising and other design software, as well as Product Lifecycle Management (PLM) software, which is being touted as the next big thing in technology.PLM helps companies manage production and their supply chains via collaboration using the Internet.

Before joining Lectra, Rode was president and chief executive officer of Swedish software company Intentia Americas and spent 11 years with textile and chemical giant Milliken & Co. working in the company divisions in Mexico City as well as Japan. California Apparel News Technology Editor Robert McAllister recently caught up with the executive, who drew on his experience as both a manufacturer and technology supplier to offer some insight on the industry as well as his role at Lectra.

California Apparel News: You joined Lectra from Intentia, which was just acquired by another technology company, Lawson. Is this an indication that the IT market is consolidating?

David Rode: I think so, when you look at what Intentia does in supplying ERP (enterprise resource planning) platforms for mid-market companies. Relative to ERP, size matters. In that market, you have to be big and have a comprehensive solution. The name-of-game reference-able clients. Pertaining to the application companies, there are specific companies and examples such as you saw with Oracle’s acquisition of Retek (retail software) that will continue. Is it good for buyers? My personal opinion is yes and no. Once all the applications integrate into one platform, it will become more manageable for companies to operate. Specific applications offer unique point solutions.

Why join Lectra?

As a former customer [with Milliken], I have a great deal of respect for their organization and their product. Secondly, what was compelling is that Lectra creates a bridge between manufacturing solutions on both the hardware and software sides. Not only do they help companies optimize production, but also, relative to entering the market, they provide comprehensive products. And thirdly, I saw this as a good opportunity to leverage 12 years of experience, with the past eight years in software.

Lectra has not had a U.S.-based president in three years and managed operations here mostly from France. Did the company abandon the U.S. market?

Lectra has two lines of business covering fashion and retail, where it mainly focuses on brand and pure marketing. It also has an area covering industrial fabrics and textiles, which involve top-tier automotive suppliers and other industrial companies. They waited to hire a president until those two business units stabilized so they could build up marketing again. The company was not well-marketed in the U.S. A lot of people consider Lectra as just a CAD/CAM company and don’t realize the full spectrum of what we provide. The other factor is service. They needed someone to build out the service arm, because when you provide software, implementing it is very important.

What kind of technology products should apparel firms look at to help them in the current business climate?

The obvious one is PLM. The challenge that apparel companies have right now is to define what PLM is. PLM for apparel can be vastly different from PLM for other industries, like automotive and aviation. The obvious trend is to manufacture in multiple locations.

The goal is to lower manufacturing costs while increasing speed-tomarket.

Those are incompatible notions, but from a technology point of view, PLM is really at the heart of automating the workflow. There is a tremendous amount of distortion of what goes on in production. PLM can be thought of as a business reengineering initiative, shifting to a new paradigm to manage offshore suppliers.

Although companies are lowering per-unit costs of producing a garment offshore, they are still realizing deficiencies. Their contract manufacturers can gain in those deficiencies, and the companies want to be involved in automating this. If an average fashion company can realize 400 to500 basis points of fabric yield, that’s significant on an annual basis.

Where is the apparel industry in terms of adopting PLM?

PLM as it is related to apparel is in its infancy. If you add up all the companies that have gone live, it’s very early. You can be an application company, very sophisticated from an IT point of view, but if you don’t have that third party support and are capable of communication, it inhibits your return on investment. Everybody has to be willing to get on board.

Many companies are jumping into PLM. How is Lectra differentiating itself from the crowd?

Our PLM is called Lectra Fashion PLM. We are in the midst of our first four implementations, most notably with [fastfashion retailer] Mango in Spain. It’s almost a prerequisite in PLM to be somewhat industry-focused. I would break down our differentiating position as twofold. One is that we offer a full suite of design products, not just creative design, but technical. All those fall under the Kaledo suite, which is integrated so you have a seamless workflow between different processes and areas. Secondly, you have to look at the organization. The majority of people who touch the client here are industry practitioners with operating roles in the apparel space. In other words, they get it.

How long before PLM becomes a standard application?

The inhibitors are just waiting to see results, and that’s up to the vendors. Once it is proven, it will go mainstream quickly. I don’t think it will be a fleeting technology such as CRM (customer relationship management) software.

Many of the companies on the West Coast are start-ups and smaller companies. Can technology help those smaller companies, and what about the costs?

Fashion companies are small to midsize. Just look at the industry averages. The average is probably less than $100 million in revenue. The cost of PLM is more in terms of internal training cost, because, frankly, it changes management. PLM is not automating what you did before but changing the workflow and improving it.

What about other technologies such as 3-D, which is starting to be used in CAD and visual merchandising?

I think 3-D will become more of a mainstream technology. What’s driving that is the need to have lower per-unit production costs. One way of achieving that is to launch more innovative styles and lines more times per year. And 3-D is one way to streamline the design process, giving companies the ability to strike off prototyping with 3-D virtual prototyping to not only do multiple iterations to determine fit, but to drape fabric and more. We have a product that we are currently beta testing with several clients. It will be available in early 2007. We are conducting intensive testing and want to be sure it’s a great product.

What are the company’s goals for the U.S. market?

From a financial point of view, the idea is to create an organization that can grow topline revenue 20 percent a year. We have the products and existing customers. We believe we have the market to achieve that. At the same time, from a client perspective, we have to help them solve fundamental problems, like how to take advantage of lower production costs and be on the forefront of design. What that’s going to require is to be closely tied to operations in Asia. We have offices in Shanghai and Hong Kong. We need to be working with our peers to deliver value on both sides. Most companies do design here but production there. There’s a unique service proposition to help our clients. We have the knowledge.