Centric IT Conference Promotes the Power of PLM
Selling software systems during a recession is a tall order when retailers are closing stores and manufacturers and importers are cutting staff. But Centric Software executives think it’s more important than ever to invest in technology.
Company executives recently visited Orange County, Calif., to pitch its new Centric Eight PLM and sourcing software to some of the region’s top brands during its Fashion and Networking and Leadership Forum, held at the Marriott Irvine in Irvine Calif. Their message centered on taking action before the recession gets the best of them.
“For the past six to nine months, it seems like companies are hunkering down for the nuclear winter. There’s lots of movement, but they’re doing nothing,” noted Ray Hein, executive vice president of the Campbell, Calif.shy;–based company. “At the end of the day, we’re going to come out of this [recession]. You have to rethink the business that you’re in.”
Some companies are cutting costs, including their technology budgets, but that could be actually counterproductive, Hein noted.
“Cost cutting does not equal leadership. Cost cutting does not equal survival,” he said.
Citing recent research from AMR and the “McKinsey Quarterly,” Hein said it’s been proven that product innovation is a strategic investment even during a recession. The reduction in technology investment produces minimal yields.
According to McKinsey research, investment in technology-enabled business processes delivers up to 10 times the impact on earnings than cost cutting. For example, reducing technology investments by 15 percent results in only a 0.5 times return during a six- to 18-month period. Yet, investing in merchandising, supply chain and pricing (technology) can yield returns of up to fivefold, according to McKinsey.
The returns are stronger by investing in the right IT, said Hein. PLM (product lifecycle management) is the right IT for the times, Hein emphasized.
“People think in phases and stages,” he said. “Your business in not about IT. But it can reduce capital requirements and risks and result in more successful SKUs and collections.
Centric’s Centric Eight systems include PLM and sourcing applications that help companies manage line planning, product specs, action calendars, enterprise searches and connectivity to other aspects of a business organization. More specifically, it helps managers realize true costs and margins of new products.
Centric Product Manager Humberto Roa cited a case study with client Dorel Industries, whose children’s group was in need of an IT makeover. Using Centric’s Product Profitability and Planning application, the company went from a spreadsheet-intensive back office (where there was a lot of haggling and time wasted) to a streamlined operation that allowed managers to attain visibility into their production pipelines.
“They were dealing with more than 400 spreadsheets at a time,” Roa explained. “Some employees did not want to be held accountable, but now the team managers speak the same language and have the same priorities. What was interesting is that the system was used by teams not associated with PLM, like AME specs, finance sales and operations. Now the cost models are accurate. The executives fix the problems instead of discovering them. They manage by exception.”
