How technology can affect fashion in marketing of Armani Company

Abstract

Armani Company increasingly demands systems that are having ability to share data between separate entities and can function uninterrupted 24 hours, seven days of the week – in all regions around the world. With the increased focus on cost-cutting and the quality of being efficient, Armani Company needs to integrate a network of communications, transportation, and distribution across its operations to lessen useless products and duplication. Information technology is the only efficient tool the company has to control and bring together its operations and processes around the world. IT can play an essential role in facilitating international expansion by Armani Company. This paper examines innovative information technologies incorporated by other companies to enhance productivity and profitability that help maintain competitive advantage in today’s dynamic environment. The focus of the paper is to evaluate information technology that will more effectively provide goods and services for the ultimate consumer.

Purpose of the Report

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A factor affecting IT requirements for Armani Company is the increasingly global nature of the company. Giorgio Armani is increasingly outsourcing production to countries in Eastern Europe and the Far East. Therefore, a challenge is to build organizational processes to take the full advantage of a highly distributed – and often complex – supply chain. Armani Company needs information technology that can manage inter-company processes and large-scale information flows. The technology solutions to support the complex models should be increasingly web-based. Web interface functions and E-commerce applications will allow the company to maintain centralized control of its demand for goods and services, while giving required information to entities all over the world. Customer relationship management (CRM) is a powerful customer-driven approach, mediated by a set of information technologies. CRM focuses on creating two-way exchanges with customers so that companies have an intimate knowledge to meet customer specifications. Computer Sciences Corporation (CSC) offers CRM that is used by “over 150 fashion customers, including the well-known international brands” (CSC website). CRM software is specifically engineered for fashion and retail companies and has become the industry high level of quality. With value chain management, CRM and business intelligence functions, this web-based solution will help Armani Company contain costs, meet customer expectations, plan their strategies all over the world and gain tighter control of the entire production and distribution process. The purpose of this report is to evaluate integrated technology infrastructure for Armani Company on which to run the entire business.

Background of the Company

The Giorgio Armani Company owned and run by the founder fashion designer Giorgio Armani has earned the fashion industry through its exclusive design and personality based trends. Armani Company is one of the most highly valued fashion companies in the world. Today, the extent of the production reached global proportions never before known. The company ventured different product lines, in different segments, and ever different markets all over the world (Twitchell 312). More importantly, Armani started selling all products online as a part of expanding strategy.

Discussion of Current Business Issues

Following a period of rapid development in the nineties, in which the Giorgio Armani Company acquired new brands and boutiques, the current issues are strictly focused on value chain control and improving internal effectiveness of the company. The challenge is to plan and carry out with maximum efficiency internal processes to gain control of production. If the company has greater control over the final sale to the buyer, it can have better understanding of what it needs to produce. In addition, it can build customer loyalty through the goods it produces to its outlets. As a result, the company has more chances to build its brand in the customer’s imagination.

The global trends require Armani Company to use IT that will allow build tighter links between distribution information about what the customer is buying and the activities further down the supply chain. Such information technology– CRM software – will help Armani Company better foresee consumer demand and provide production to meet that demand. This is increasingly important in a fast-moving fashion industry that has begun to organize four or five collections every year. The problem for Armani Company is that it often needs to buy material before it knows what quantities of products it needs to produce. CRM strategy provides forecasting and planning tools allowing the company to maximize the efficiency of buying and production.

Research Findings on the Topic

Innovative technology solutions delivered by CRM are increasingly being utilized by companies throughout the United States and in many parts of the world. Mcginn (2002) explains that “IT budgets that include expenditures on software, hardware, maintenance, IT labor, training, and consulting, are now ordinary thing in larger corporations” (104). The companies invest in this information technology to improve the flow of information regarding the difference between the total revenues of a company and its total purchases from other industries with the goal of meeting the demands of consumers by producing goods or services in the most efficient way capable of existing. This can be accomplished by developing internal systems to produce the good or service, subcontract to another company those procedures that may provide more efficient techniques.

CRM is widely utilized by companies to facilitate procurement, buying, and selling. CRM initiatives include global information exchanges that assist the progress of communication between locations around the world. Improvement of internal processes of a company facilitates an ultra-flexible market environment. CRM software provides the supporting systems to these new flexible environments. Diesel has implemented CRM mechanism to provide goods and services to a variety of customers in a timely, flexible fashion.  “Such companies need solutions that can manage intercompany processes and information flows,” explains Calabrese, solution delivery manager for fashion at CSC Italy. “For example, the production house in China might deliver its goods to a distribution house in Australia that is responsible for distribution to outlets in the entire Asia-Pacific region. The technology solutions that support this model are increasingly Web-based, because they allow companies to maintain centralized control of their distribution, while allowing systems access to entities all over the world” (CSC website).

When describing CRM software, one must keep in mind not only the production and supply-chain side of operations but the segmentation of buyer groups as well. Actually, many refer to the mechanism as a “pull-to-order” system, the driving force of which focuses on consumer “demand pull” (Currie 215). In general, CRM implements both a business to business and a business to customer character as it processes customer orders via Web-related software and streamlines this demand pull to a number of component suppliers who ship component parts to be assembled in the factories to be delivered to the customer.

CRM technology has been the model that many companies cite and aspire to implement (Brynjolfsson and Urban 201). CRM has worked closely with its suppliers through the use of a data exchange system. This has resulted in a maximum efficiency of the production process because providers can determine more precisely what CRM needs on a daily basis to fill orders. Because of this Web-based supply chain management mechanism, CRM provides companies with opportunity to streamline their supply, production, marketing, services, and distribution activities.

The data (Mcginn 2002) clearly shows the growth of Internet activities across industry sectors. What this means is an increasing transformation of companies and industry structures. The evolution of Internet activities has increasingly transformed companies from “brick and mortar to click and mortar” (Brynjolfsson and Urban 18). CRM strategies will enable Armani Company to streamline its supply, production, marketing, services, and distribution activities in this new flexible environment. The next section presents recommendations for the executive management team that will allow it dynamically control production and supply chain.

Recommendations for the Executive Management Team

The challenge for Armani Company is to face up to the increasingly global nature of the fashion industry. Whether it is providing goods to new markets, such as China, or subcontracting production to the Far East, it is obvious that global dynamics will be increasingly influencing the industry’s future. Therefore, the Executive Management Team should exploit efficiency and cost-cutting opportunities offered by information technology. It is recommended to migrate to a web-based model, based on open architectures. CRM innovative technology developments will help the company reduce logistical costs and make supply chain management tighter.

Effectively using the Web Armani Company will optimize planning processes. CRM has developed portals as easy-to-use gateways to ERP applications and data for professionals supporting E-business operations. Operational CRM processes customer data for a variety of purposes: managing campaigns, enterprise marketing automation, sales force automation. From this perspective, CRM systems can handle high-volume Web transactions and ensure that orders are fulfilled. The direct contact with its customers facilitates feedback that helps CRM react instantly to shifting demand.

Armani Company can use CRM to achieve new efficiencies in demand forecasting and planning and supply planning. In fact, CRM can help Armani Company reap very large cost savings. CRM is a decision solution that can be applied to the company, to private marketplaces where one company is dealing with its suppliers, and to public marketplaces where many companies and suppliers come together to exchange goods and services. Revenue increases come from customer service improvements and increased production throughput in capacity-limited facilities. Cost decreases result from more efficient use of production resources, reduction of overtime work, and decreased expediting costs, such as premium freight (Mcginn 68). Investment decrease comes from minimizing raw materials, work-in-process, and finished goods inventories, and from postponing capital expenditures by planning and scheduling bottleneck resources better (Tansey 150-60).

To assist management in obtaining a better understanding of its forecasting, manufacturing, and supply chain operations CRM tools can be employed to obtain appropriate patterns, trends, and rules. For instance, CRM is used largely as a process control tool both to control factors impacting product quality as well as to generate rules for production control systems. This information allows the managers to correct the problems quickly.

CRM strategy has given birth to a new enterprise-wide “world order” that focuses on customer demand which, in turn, specifies what the company will produce (Mcginn 202). It should be emphasized that CRM is a customized value creation approach (for example, delivery of products and services that match the value definition of each unique customer served versus serving the similar in kind requirements of a generalized market). For Armani Company to be successful, CRM strategy presents unique new business practices that allow the company to identify individual customer needs and expectations and respond with products and services that exhibit unique preferences for each customer.

When viewing Armani Company’s operations on a global basis, there is a need to go a step further by utilizing information technology software. It can assist managers at the top levels throughout a global-based company. As a starting point, CRM strategy is a key component. CRM strategy will help Armani Company deliver goods faster and more efficiently as well as to use its global channel of distribution as an instrument of corporate strategy.

References

• Brynjolfsson, Erik and Urban, Glen L. (2001). Strategies for E-Business Success. Jossey-Bass: San Francisco.
• CSC Helps Restyle Italian Fashion IT. CSC.  Available at: http://www.csc.com/features/2006/16.shtml
• Currie, Wendy. (2000). The Global Information Society. Wiley: New York.
• Mcginn, Dennis. (2002). Information Technology, Corporate Productivity and the New Economy. Quorum Books: Westport, CT.
• Tansey, Stephen D. (2003). Business, Information Technology and Society. Routledge: New York.
• Twitchell, James B. (2002). Living It Up: Our Love Affair with Luxury. Columbia University Press: New York.

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