Lectra unleashes ways to survive in the long-run

by Nitish Varshney

27-November-2019  |  16 mins read

Lectra headquarter in Bordeaux-Cestas, France
Lectra headquarter in Bordeaux-Cestas, France

It was year 2008 when massive global economic crisis caused atrocious recession which did not allow many of the big companies to survive for long and the fashion industry was not an exception.

Even in today’s era, US-China trade war is hurting business sentiments and the industry can see blockage of investments to such an extent that stagnation has reached its peak in 2019. Amidst this, France-based integrated cutting room software and service technology provider Lectra stands firm, fighting all odds because of its strong business model which runs on recurring revenue. Team Apparel Resources, in an exclusive interview with Daniel Harari, Chairman and Chief Executive Officer, Lectra, digs deep to understand Lectra’s strategies, newest technologies and the sentiments of global fashion market.

Daniel Harari, Chairman and Chief Executive Officer, Lectra
Daniel Harari, Chairman and Chief Executive Officer, Lectra

AR: How is Lectra positioned in 2019 when economic slowdown is massive and investment from garment factories is squeezing?

Daniel: 2007 was the year when we started out in the Industrial Internet of Things (IIoT) and since then, we have managed real-time monitoring effectively in cutting rooms all across the world. Everybody is now talking about ‘smart manufacturing’ but we are really assisting factories to digitally transform them in this connected 4.0 world and that’s the difference between others and us. Our 2017-2019 roadmap is the first stage of the company’s evolution over the next 10 years. We developed Industry 4.0 technologies till the start of 2017 and accelerated our efforts after that through demonstrations and installations in different markets, mainly in fashion, furniture and automotives. So, as far as our position in 2019 is concerned, we are not running after grabbing large market share as we are aiming at premium customers. It’s true that economy is going to be shaken and one needs to have vision, strategy and determination to stick to that strategy. A lot of companies may be tactical and may not invest in new innovations. But, we are different. Our 90 per cent of expenses are covered by our recurring revenue business model.

Our goal is to help our customers understand the value of our technology as we know we are more expensive than our competitors and we don’t actually fight on prices. All we want to assure our customers is that Lectra can digitalise their pre-production processes which ensures them the optimisation of subsequent processes as well. Not just fashion, we have set benchmark in automotive industry as well wherein we are market leaders with over 65 per cent share of the global market. We have been able to achieve this as it’s easier to demonstrate the value of our technology to automotive customers through benchmarks since they have regular production. To be honest, it’s more difficult to demonstrate in the fashion industry as people don’t really do benchmarks but again, as market leaders, we have been successfully convincing our fashion customers to invest in our connected technologies.

AR: How is your recurring revenue model ensuring business stability?

Daniel: 90 per cent of our expenses are covered by our recurring model. No matter what’s going to happen in future, we feel we are safe and therefore we will continue to invest in R&D activities; today 12 per cent of our revenues are invested in this. However, the ongoing trade war is destroying a number of things. If tariffs are high, companies will source from somewhere else than China. People are now unsure about the future. Chinese people say they will invest in other countries. In worst case scenario, 43 per cent of garments will continue to be manufactured in China. Manufacturers will have low margins, retailers will have low margins and ultimately the consumers will have to pay more. The top consequence that people are apprehensive about is that recession might prevail as an outcome of all this and half of our competitors will disappear in coming years. We are ready for both good and bad times. Our strategy is a winning one in both cases.

AR: So, how are your strategies favouring your technologies to place them firmly in the industry?

Daniel: Today we make US $ 35 million investment per annum in our R&D activities, which is more than 3 times what our closest competitors are investing in their R&D. Half of our investment is made in cloud technologies for our software solutions and half in cutters. Our long-term strategy is based on 4 parameters:

  • Leveraging and forming technology in accordance to Industry 4.0; we have over 4,000 connected machines since last 12 years.
  • Cloud is what we focus on extensively. We didn’t develop our previous versions of software on the cloud system, but with continuous development over the years, we are now developing an all new software with cloud system.
  • The third parameter is ‘Big data’ which is one of the major elements to ensure precision in connected technologies.
  • The last but not the least is Artificial Intelligence. We have machine learning and algorithm everywhere,which is a part of our DNA. Our machines come equipped with hundreds of sensors, which are able to track potential failure in advance.

We have ‘one version of truth’ as we combine software, machines, data and services effectively for launching Industry 4.0, improving transparency and collaboration of team within an organisation.

Lectra_Fashion On Demand by Lectra

AR: Lectra always talks about 4 production models  Mass Customisation, Mass Production, Agile Production and Made to Measure. How are your technologies helping manufacturers achieve efficiency in all of these production models?

Daniel: We have different solutions for different production models. Vector serves the mass production industry, while newly launched Fashion On Demand by Lectra, including the Virga single-ply cutter, is aimed at ‘made to measure’, ‘agile production’ and ‘customisation’. However, here I want to make one fact clear that all these solutions need to co-exist. They may be different today but in future they will be combined which will allow customers to switch or combine different production models. Industry 4.0 requires the integration of smart, connected solutions and services which would benefit consumers in the most optimum way. Our solutions for the Industry 4.0 are propelling factories to create a new digitalised value chain for different garment products.

AR: Is there any possibility that Lectra allows customers to use one technology and work on multiple production models?

Daniel: In hardware, no! In software, yes! We have different kinds of cutters because it is not possible to use one cutter for different production models while expecting high efficiency. However, we have a unique cloud platform which manages every process in the cutting room, connects all our machines and brings them on the same platform.

AR: AI and ML are buzzwords and Lectra claims to have these in its DNA. However, there is no clear demarcation between these two terms. As an early adopter of AI and ML, what do you have to say about this?

Daniel: Machine Learning (ML) is sub-set of Artificial Intelligence (AI). Lectra has smart cutters, software and a platform (cloud) which connects both. The platform gathers information from product development team, consumers and manufacturers. And, it has algorithms to optimise every information it receives. So, the platform will automatically give a number of suggestions based on that data analysis and one of the significant suggestions is fabric optimisation. This platform analyses different ways to optimise fabric and then it transfers the intention to the cutter. This is ML and the whole process in AI.

The main difference between our ML tool in cutting technology and our competitors’ cutting technology is that our machine doesn’t have any definite plan to cut. It will self-address ways depending upon the fabric that is laid on the cutting bed and the machine achieves the best according to the best way possible. The machine will adapt cutting as per the situation.

AR: China gives immense opportunity to both apparel export and domestic markets. How does Lectra see China as its prospective market in future?

Daniel: China is undoubtedly a huge market and the country is on track to become the top consumption market in the world. Chinese fashion brands are growing as their production becomes more upscale and as their productivity increases, fuelled by the Government’s plan called ‘Made in China 2025’. Lectra is well positioned to help Chinese companies become more agile and creative by digitising their processes, from creation to manufacturing, as well as their production facilities. We are not targeting the whole market but the people in manufacturing and retail industries who are early adopters of technology driven by Industry 4.0 principles. Moreover, the companies which are already using cutting technology are our prime focus because they are in the best position to compare technologies. This is the reason why we have launched Fashion On Demand by Lectra and Furniture On Demand by Lectra at CISMA for the Asian market as Chinese consumption of fashion and furniture is massive and it will further grow in the years coming ahead.

AR: Fashion On Demand by Lectra was launched in Europe in December last year. Why did Lectra take 9 months to come up with this solution in the Asian market?

Daniel: There are two main reasons – first, we wanted to see the progress of Fashion On Demand by Lectra in Europe. Before we expanded our horizon, we wanted to understand the market and customers. Secondly, we needed to reduce a certain number of things in cloud because of the internet policies of China which are not user-friendly. And now we have launched Fashion On Demand in China and know what kind of consumers we have to target. There is no separate strategy for the Chinese market and we will be moving ahead with the same global strategy of ours to tap this market.

AR: The best integration of different technologies happens when user chooses all of them from one technology supplier. However thats not the case with most of the manufacturers. Why is that so?

Daniel: This happens when factory owners run after cheap products. They want to adopt technology in each and every department within their factory but credibility of that technology is somehow missing due to the low level of technology. Instead they should focus on return on investment. Either the customer values the state-of-the-art technology Lectra has, or he buys cheaper solutions. Even if our competitors offer their technologies to the customers for free, it doesn’t help to optimise costs and save fabric but the garment manufacturers, majorly, don’t pay enough attention to this severe issue. That’s why we are trying to educate the industry. Lectra’s aim is to provide the customer with best payback, best quality and productivity.

AR: What’s your take on limitations of 3D virtual simulation?

Daniel: I think it will take some years before 3D virtual simulation is widely used, because there are some limitations with 3D technology. I know a lot of companies are trying to get perfection in 3D prototyping but up to now, the success is limited, and they use it mainly as a marketing tool. The fashion industry is maturing and everybody is speaking about the potential that 3D technology has. The issue is that most of the people who understand pattern making don’t understand 3D and those who understand 3D, have less understanding of pattern making. We sensed this gap back in 2006 when we launched one of the first 3D virtual prototyping solutions.

When you look at existing 3D software for fashion, most of them can only handle basic products. We are aggressively working to change this.

Share This Article