Are you searching for an ERP for Luxury Retail that will replace your existing business management software solutions?

If you run a business that deals in luxury products, chances are that you cater to a customer segment that is highly discerning and seeks bespoke products as opposed to commoditized or mass-configured ones. It also means that your supply chain is a strategic competitive advantage as are your design, manufacturing, and procurement processes. It is important, therefore, that your ERP system provides you with reliability and robustness to manage these processes and collaborate within your organization as well as with external business partners. 

Let us examine in detail what are the key features and abilities that users from different departments expect to see in an ideal ERP for Luxury Retail. 

Product Management and Product Attribute Set Management

Whether it is luxury apparel or accessories, organizations may typically have a lean product line but each product may exist across several variants. Each product could have several “characteristics”, a unique combination of which defines a specific stock keeping unit (SKU). To accommodate such complex product definitions, it is important for the ERP to provide the ability to define individual products and build associations with a set of characteristics to define distinct SKUs. 

With this ability to define products to a desirable level of granularity, the next important aspect for the ERP for Luxury Retail is to define associated Bills of Material (BOM). The BOM does not merely describe the constituent raw materials required to manufacture a particular product but should also help in managing the product life cycle. This means that the ERP should have the provision to define BOMs for different purposes, from design prototype to production. With such complex BOMs, comes the requirement to manage multiple units of measure (UoM) and conversion between these UoM.

MRP and Material Planning

Organizations involved in the luxury products market typically work with specialized suppliers and procurement lead times for raw materials could range from weeks to months. With such long lead times, a failure to source critical raw materials may lead to undesirable consequences such as delayed order fulfilment and production outage. To prevent these circumstances, the ERP for Luxury Retail that organizations in this sector use must ensure reliable and robust material and resource planning capabilities, usually found in the MRP and Planning modules. 

The planning process starts from the calculation of net demand from forecasts (if applicable) and confirmed sales orders for finished products. With this as the starting point, the planning module of an ideal ERP would traverse the multiple levels of the product’s Bill of Material (BOM) and calculate dependent demands for semi-finished goods and, eventually, the raw materials. A truly enterprise scale planning module in the ERP would concurrently handle multiple units of measurement and any associated conversion that might be needed. The MRP process of such an ERP would generate production and purchase orders with the appropriate quantities and schedule them considering all applicable lead times defined in the product master data of each element of the BOM.

Procurement Management

The sourcing and procurement departments at luxury goods organizations are one of the most prized and often the most secretive ones. A strong procurement department can be a source of sustainable competitive advantage to companies in this sector. It naturally follows that an ERP for Luxury Retail, needs to provide a state-of-the-art Procurement module

One of the key priorities of buyers is the ability to maintain excellent supplier relationships and nurture this over years, if not decades. A strong ERP solution would provide buyers in the luxury goods sector the ability to not merely manage the transactional aspect of procurement, but also monitor vendors for quality, accuracy and timeliness of their deliveries. This is an important tool for buyers and suppliers alike, for it gives the supplier critical feedback on areas to improve and level their businesses up to the expectations of a demanding customer. For the buyer, continually monitoring and rating their suppliers can be a powerful tool to manage risks and ensure that the business is resilient enough to absorb supply shocks in the event of unforeseen black swan events. 

Moving to transaction management, a suitable ERP for Luxury Retail industry should provide the capability to the buyer to consolidate several purchase requisitions to larger procurement volumes that will give increasing bargaining power to buyers over their suppliers. 

Another significant overhead within organizations of all sizes is the approval workflows that are derived from Levels of Authorization. These workflows establish an approval hierarchy that is based on threshold values of purchase requisitions and whether a particular requisition was budgeted as a capital expenditure or an operational expense. Usually, these approvals flow via physical paper or email-based documents, but an ideal ERP solution should be able to provision workflows that can be configured based on the monetary value of various orders and route these orders to the appropriate approving authority based on the organization’s Levels of Authorization. This will not merely save precious time in workflow overheads, but also establish proper control and approval trails for audit and compliance purposes.

Manufacturing Management and Control

Manufacturing in luxury goods industry is another source of competitive advantage. Despite production volumes being lower compared to traditional manufacturing companies, the importance of planning, execution control and ability to monitor production cost is equally important in the luxury goods industry. 

A suitable ERP should, therefore, provide specific capabilities in the manufacturing domain that allows organizations to define various stages in the manufacturing process and be able to process a production order to reflect the actual production stage of manufacturing a specific order or a lot. Additionally, a suitable manufacturing module would give organizations the ability to associate costs to labor and machine time related to a series of manufacturing steps. Once production orders are monitored for these series of manufacturing activities, it is possible to accurately capture the associated manufacturing cost as Cost of Goods Sold (COGS) and calculate profitability by product groups in a more informed manner. These profitability analyses can yield interesting insights to business leaders and help them make informed strategic choices to improve the financial performance of their businesses. 

For production planners, a robust production module can give the ability to plan and schedule manufacturing operations according to a defined priority, whether it concerns the available production capacity or the priority of order fulfilment.

Product Lifecycle Management

The product development departments at luxury goods manufacturing organizations are the lifeblood of innovation in the industry and collaborate with the marketing department to manage the lifecycle of their products. A trusted ERP for Luxury Retail should allow for capturing crucial data right from the product development phase. 

For instance, apart from providing various versions of the Bill of Material (BOM) for design and prototyping to live production purposes, the ERP should provide the ability to manage these different versions and revisions of styles and their corresponding BOMs. This will give the product developer adequate intelligence in the factors that influenced the decision to introduce a certain version of the product over others. The ERP should also provide a native Document Management System that allows product designers and engineers to upload and store design files such as CAD files or scanned copies of images along with each version of the product to complete the history of changes made. 

Companies also collaborate with external business partners such as specialized design firms or critical raw material suppliers and the ERP for Luxury Retail should provide organizations the option for a collaboration portal, where users are able to share data and documents across and within the organization to increase productivity while working collaboratively with each other.

Evidently, the luxury goods sector can be very demanding because they serve an equally demanding customer segment. It is important that organizations in this industry choose an ERP solution that understands their needs and the critical aspects of their businesses. Only then would a reliable solution provider be able to build and implement a solution that adds value to the luxury goods organization. 

VIENNA Advantage ERP for Luxury Retail

VIENNA Advantage has worked with several companies in the luxury goods sector and understands the nuances of the industry. If you are looking for an ERP for Luxury Retail, one that can provide substantial business value at a dramatically lower total cost of ownership, please contact us and we will be pleased to have a conversation about your needs.


5 Features Every ERP for Luxury Retail Must Have
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