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The Textile Industry
Getting it Right the First time!
Keeping Ahead and Out of Trouble
The Right Technology Choices
Industry Digital Progress
The oldest industry in the world has been operationally automating unnoticed by many over the years since the beginnings. From spinning to weaving to cut & sow, some degree mechanization has historically been adopted including in the 20th century use of numerically controlled processes as well as some electronics for cut & sow operations as wellas in knitting and weaving ( e.g., jacquards) as well as rudimentary production control processes. But it was really after the coming of the internet that digital transformation really started in earnest.
In any industry, including textiles, digital maturity can be measured along four dimensions: How well are firms (i) internally digitized and connected? (ii) digitally connected to their customers? (iii) digitally connected to their global supply chains? And (iv) how well do firms use these connections through predictive and other analytics to improve their competitive position (I.e., improve customer experience and value) and increase profitability?
Along the lines of the WEF analyses for consumer goods, the single largest transformation in textiles has been on the customer facing side, to omni-channel retail, yielding massive cost savings and productivity improvements for consumers and society. From time saved shopping online, fewer car trips, to alternative last-mile delivery options such as drones, the shift to e-commenrce has had a significant impact on the textile industry. Ecommerce in textiles has in turn driven automation in order processing, fulfillment, transport and logistics, not to mention in payment systems as well. Textiles, which drove industrialization in the 17th to the 19th centuries is actually also now driving the 4th. industrial revolution.
On the supply chain side progress has been slower. Offshore, where most textile manufacturing now takes place, the supply chain is highly fragmented and geographically diverse and labor-intensity has been slow in giving way to technology especially in garment manufacturing with slow improvements in production speed, precision, and quality. But supply chain visibility, and standardization of sourcing and selection processes have been even slower to digitize although some online partnership platforms (such as Foursource) are now beginning to appear.
Overall, while the customer side of the textile industry (B2C) has advanced to digital in a big way, the supply chain has been slower to catch up resulting in a sort of digital imbalance in the industry with the B2B side remaining slower to catch up. Overall our assessment of digital maturity of the textile industry is of the order of 68%
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Digital Transformation in the Textile Industry - CASE STUDIES
The Yield is an Australian agricultural technology company on a mission to transform food and farming practices by building secure, scalable digital technology to sense, analyse and predict on-farm growing conditions, and then deliver information in a usable format to help increase yield, reduce waste, mitigate the risk and cost associated with soil and weather and inputs. Partnering with Microsoft (Azure) and Bosch, Yield has received several innovation awards from Government and International organizations. Learn More..
- Michelin¹ is a global player in mobility and one of the leading tyre manufacturers across the globe.
- Michelin has 107,000 employees and achieved revenues of €21 billion for period ending TTM 6/15 and an EBITDA of €3.4 billion; margins have increased from 13.8% in 2011 to 16.6% TTM 6/15.
- EFFIFUEL™ by Michelin Solutions was the first innovation in the market targeting increased efficiency in fleet fuel consumption.
- Michelin Solutions makes a contractual agreement to meet pre-defined targets, or otherwise provides a refund in proportion to expenses incurred.
- EFFIFUEL™ is a comprehensive ecosystem that includes sophisticated telematics, training in eco-driving techniques and the EFFITIRES™ optimized tyre management system.
- EFFIFUEL™ provides a “satisfaction or your money back guarantee” by providing the fuel efficiency service risk-free to truckers.
- EFFIFUEL™ encourages careful handling of the truck equipment, leading to extra savings for companies and a potential doubling of pervehicle profits.
- A reduction in fuel consumption of 2.5 litres per 100km represents annual savings of €3,200 for long-haul transport (at least 2.1% reduction in total cost of ownership and 8 tonnes in CO2 emissions).
- Business model shift from selling tyre as a product to a service guaranteeing performance, has helped Michelin achieve higher customer satisfaction, increased loyalty and raised EBITDA margins.
- Michelin initiated the digital transformation internally, but they soon realized that in some critical areas, such as big data analytics or infrastructure they needed to partner with external experts.
- Cultural change was another prerequisite to successfully manage the digital transformation journey.
- The risk of changing the business model was mitigated since Michelin Solutions was created as a standalone entity and the company decided to test the solution by launching several pilots.
Sources: Michelin, WEF/Accenture Analysis
- The LEGO Group¹ engages in the development, production, marketing and sale of play materials. It provides toys as well as experiences and teaching materials for children in approximately 130 countries.
- Founded by Ole Kirk Christiansen in 1932, LEGO is based in Billund, Denmark. It is a subsidiary of KIRKBI and is currently privately held.
- In 2014, LEGO earned €3.8 billion in revenues and €1.4 billion EBITDA, with a margin of 37.1%. It currently employs approximately 13,000 people.
- After a period of expansion (1970-1991) LEGO suffered a steady decline (1992-2004) and by 2004 LEGO was close to bankruptcy.
- Reaching a tipping point, LEGO started restructuring and a digital transformation programme focused on new revenue sources coming from movies, mobile games and mobile applications.
- LEGO’s design capabilities have been increasingly handed over to their fans e.g. through the Digital Designer (a web-based 3D design tool to create own designs). It’s USP towards learning and development differentiates it from competitors and convinces parents from millennial generation about the usefulness.
- LEGO achieved an EBITDA margin of 37.1% in 2014, an increase of 15% since 2007.
- Revenues for LEGO have grown at a CAGR of 20% from €1.6 billion in 2009 to €3.8 billion in 2014.
- In 2014, the first LEGO movie achieved revenues of approximately $468 million with a production budget of only $60 million.
- LEGO has recovered steadily post 2005 and it is now seen as “the Apple of toys”.
- LEGO’s new business group has become the incubator of the company, an open platform that allows fans and partners to experiment with “micro businesses”.
- LEGO was able to transform itself by launching new digital based businesses such as movies, LEGO Mindstorms, video games and applications, connected to their block systems that are more appealing to digitally savvy customer groups.
Sources: Lego Corporate Information, FT, LA Times, Global Toy News, WEF/Accenture Analysis
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