The current trend of automation ‘Industry 4.0’ is prompting the leading technology suppliers across the globe to introduce high-end technology solutions to address the business goals of their customers. Lectra is one such company which is not only empowering fashion and apparel, automotive and furniture industry to be future-ready with their integrated technology solutions, software, CAD/CAM equipment and associated services, but also enabling its customers to lock Industry 4.0 principle into their process. In an exclusive tête-à-tête with Team StitchWorld, Daniel Harari, CEO, Lectra defines the pathway of growth for the industry…
South-east Asian countries like India, Vietnam and Bangladesh are proliferating at unprecedented rates and at the same time, Lectra’s penetration in these markets is slow. Why?
Daniel Harari: It is not true to say that Lectra’s penetration in India, Vietnam and Bangladesh is slow or weak. Initially, the garment companies based in these countries were looking for “low-cost automation” and, because of a lack of experience, were not interested in the value that Lectra was able to deliver. This situation has changed, especially in Vietnam and Bangladesh. After learning about cheap competitive solutions, many of these companies now understand the difference between Lectra and its competitors, and they are coming to us; not to mention the automotive industry, where Lectra has more than 2/3rd of market share in India.
Another point to take into consideration is that Lectra’s strategy is to develop long-term relationships with customers that appreciate its value, and not to maximize its market share. Lectra, despite higher prices, provides the cheapest solution in the market in terms of cost per cut piece.
What is your take on the African market (especially Ethiopia)?
Daniel Harari: The African market deserves Lectra’s attention as we have seen some of our apparel customers moving to this region. Lectra has always had a strong presence in Northern and Southern regions of Africa, mostly through our own subsidiaries. The biggest change in Africa over the last few years has come from Ethiopia. We have decided to invest in this country and develop our presence. We have a number of major global customers who have already invested in Ethiopia and their plants are already equipped with state-of-the-art Lectra cutting technologies.
Do you see any marked difference in adoption of CAD/CAM between some of the growing markets like India, Bangladesh and Vietnam? Are all equally open to invest in technology? There are already observations by some software solution providers that Bangladesh and Sri Lanka are more open to investment in technology than India? What’s your take? Why? (In your own admission, Sri Lankan market is open for more sophisticated and high level technology. Why?)
Daniel Harari: Apparel companies based in Sri Lanka are open to high level technology because they are specialized in producing value-added garments. It is the only way for them to fight against giants such as China or Bangladesh. In the region, this is the country where our proportion of high-end cutting machines is the highest. Sri Lankan companies have perfectly understood the value that our solutions can bring to them. In Bangladesh, because many companies are working for H&M – one of the key Lectra customers maximizing the usage of our technology – they strongly invest in Lectra CAD software solutions. Therefore, they take full advantage of data integrity that our software suite can provide. This being said, we have noticed recently that this trend is coming to India now, with companies wanting to standardize their product development process and asking Lectra to assist them to achieve their objectives.
Do you feel there is some indication of segmentation happening among the CAD solutions providers: the premium ones (the early developers and old ones, Lectra, Gerber, etc.) and the economy ones (offering only basic applications: pattern making + grading + marker making)? What additional value the premium ones like Lectra are likely to offer (3D simulation, cut planning and PLM) that economy players can’t offer?
Daniel Harari: Lectra has been the leader in the Fashion CAD market for 30+ years. During this time, we have developed best practices through working with customers who are leaders in their domain themselves. Our knowledge of the industry and our experience set us aside from our competitors.
What also sets us aside from our competitors is our premium offer. Lectra’s offer meets basic CAD needs, as well as more complex needs. A customer may have basic needs when they start to integrate CAD services into their company, but these needs will evolve over the years as the market changes. By choosing a premium offer, our customers can evolve and bring perspective to their business.
Lectra can also provide customers with 3D CAD, cut planning and PLM, which help them to standardize and improve their product development process. Please keep in mind that there is almost no standardization in India (and in the neighbouring countries) when it comes to product development. If you ask a factory manager to show you the SOP (Standard Operation Procedures) to develop a bra for example, you will get no answer. This means that there is no control on how the products are developed, and no one knows if the process is optimal or not.
“Economy players” thrived in the past because the output of their “so-called” CAD systems was just plotting a marker; there was no automatic cutting involved. Now that automatic cutters are considered a “must have“, instead of a “nice to have” by most apparel companies, these apparel companies understand the limitations of the “low-cost systems”; therefore, they naturally turn towards Lectra to make the most of the data integrity that we can provide and guarantee, internally and externally with their main buyers.
What is Lectra’s strategy to gain traction in the aforementioned three markets… Price, service, education or any other?
Daniel Harari: Lectra’s value proposition is based on high-end technology and expertise. Our strategy is to accompany our customers in their quest for operational excellence.
Bringing back production is a drive which both US and EU are aggressively pursuing… We even have examples of Chinese companies setting up factories in the US with state help… Is Lectra looking more towards those material markets as compared to the production existing bases?
Daniel Harari: Until recently, most companies believed that to be competitive, they had to seek for the lowest labour cost possible. This is why we have seen production moving from Europe to China, then from China to South-East Asia. This phenomenon is coming to an end: there are less and less “low-cost” countries and no country in the world has the same production capacity as China, which produces almost 50% of the garments worldwide. The disappearance of low-cost countries from the spectrum is an opportunity to rethink about multi-shoring, based on two criteria: on the one hand, the respective needs for fashion items and timeless basics; on the other hand, the need to supply shops in time to limit the hidden costs of items that are unsold due to late delivery. Competitive differences between countries will be so slight that the cost factor will barely matter; the major differentiating factor will be time to market.
Through our network of 33 subsidiaries, we can accompany worldwide manufacturing wherever our customers are located to help them overcome the challenges of operating in a globalized economy. Our teams combine customer business expertise and a command of the most advanced technologies to bring global and local projects to a successful conclusion, while respecting different cultures.
Educational programmes were projected to be a significant part of Lectra’s promotional strategy in developing markets. It has dragged on for almost 2 years now but nothing concrete has come out of it. What is the reason behind this?
Daniel Harari: Again, this does not correspond to the situation. We now have a significant amount of fashion schools teaching our solutions to their students. Today, Lectra has about 850 partners in more than 60 countries. Lectra has developed strong partnerships with all main schools in the world, including those in Asia, and has the same strong commitment in emerging countries. In 2016, we had, for example, reinforced our collaboration with BUFT to include another 240 software licenses, and support the opening of two new CAD laboratories with a capacity to train 60 students simultaneously.
We have also signed a new partnership in Ethiopia. These are two such examples among a large series of new projects developed with schools.
However, we must keep in mind that most of the students are more interested in fashion design, which is more into glamour, than in garment engineering. And it will take time for them to become decision makers and to recommend our solutions. But things are changing in countries such as India where there is a huge domestic market and where domestic companies now understand that pattern making and fitting are not a “constraint” but a “must” if they want to keep customers’ loyalty.
Lectra had started web-based services (as SaaS model) where small and medium manufacturers can use pattern making, grading, marker making services. What further advances has the company made in that regard? SaaS model and M2M feature are already integrated in Lectra solutions. What new directions you feel will be included as part of IoT and Industry 4.0 initiative?
Daniel Harari: We have identified four mega-trends that will significantly impact the textile industries over the next few years. These trends are the rise of the Millennials generation, the complete digitalization of all businesses, the emergence of Industry 4.0 and China’s evolving economy. Lectra’s objective is to harness the full benefits of these trends and help our customers to get on top of these waves, as their success will eventually become Lectra’s success.
We are convinced that disruptive business models, such as SaaS or value-based pricing, and leading-edge technologies, such as cloud computing and IoT, are the ideal paths to adapt and “surf” these industry shifts.
Back to your question, it is to be noted that web based service opportunities are not limited to small and medium manufacturers. As SaaS reduces considerably the risk of ROI, it can of course help smaller companies to consider products and solutions that they could not afford before. However, this opportunity is way more profound. Even large companies are aggressively turning to the subscription-based economy. Actually, the benefits for larger international companies may even be higher as these new solutions completely remove distance and delays, helping them to be more effective in their business.
As data has increasingly become the new oil, we are working to provide our customers with all the tools to unleash the power hiding in their data assets, whether they are patterns, markers, fabric usage or overall product development or cutting effectiveness. We are working at leveraging cloud computing to deliver faster and more relevant data to assist our customers in taking better business decisions and actions, thriving to remove waste of time and fabrics.
It is critical for Lectra to position our customers at the center of everything we do, solving their everyday issues and addressing the challenges of the textile industry to deliver products at an always increasing pace, lower cost and without compromising on quality.
What’s Lectra’s take on future R&D?
Lectra will continue to enhance its capabilities in all areas, including software, hardware and services. Over the last four-years, the company has invested €86 million in R&D, which represents 9.4% of its revenues. This is as much as what our top ten competitors combined have invested in R&D and three to four times more than our main competitor. Moreover, the close proximity of our R&D teams, our main call centre and our production facilities within one single location on Lectra’s Bordeaux-Cestas campus–emblematic of the company’s strategy and a showcase for its expertise–will further spur innovation. The campus creates a highly modern setting for Lectra’s workforce fostering creativity and the sharing of information and experience. As a privileged venue for dialogue and international gatherings, the campus is and will continue to be a major asset in years to come. Moreover Lectra has already been developing pattern draping modules for many years, which will give additional edge over other competitors.