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Up Close: In Conversation with SML CEO Ignatius K.C. Lau

Fashion is at a crossroads: continue with cutting-edge strategies developed to persevere during Covid or slide back into familiar (yet unprofitable) habits? Get the experts' perspective at our in-person Sourcing Summit, Oct. 19 at New York’s Cipriani 42nd Street.

Up Close is Sourcing Journal’s regular check-in with industry executives to get their take on topics ranging from personal style to their company’s latest moves. In this Q&A, Ignatius K.C. Lau, vice chairman and CEO of retail branding and RFID solutions firm SML Group, discusses the need for improved inventory management and why sustainability should extend to labels.

Ignatius Lau SML

Ignatius K.C. Lau, vice chairman and CEO of SML Group

Name: Ignatius K.C. Lau

Title: Vice chairman and CEO

Company: SML Group

Which other industry has the best handle on the supply chain? What can apparel learn?

When it comes to managing supply chains during Covid-19, I don’t believe that any industry has had the best handle on it since it’s such an unprecedented time. When the pandemic initially took effect as early as last February, we witnessed a global crisis that was exemplified by shortages of pharmaceuticals, critical medical supplies and other necessities. As a result, these shortages shed light on existing vulnerabilities in all industries when it comes to managing inventory and supplies.

The apparel industry in particular had been struggling to restructure its operating model before the pandemic, and the onset of Covid-19 uncovered one main challenge faced by most retailers: global supply chains overstocked with inventory. I believe that in order to successfully navigate through the pandemic, the industry needs to create more resilient supply chains. As a partner to some of the world’s largest brands, we’re helping customers in this way by offering continuous support, speed and agility—consistently analyzing and mitigating risks. This was exemplified when we diversified our production sites to accommodate our customers around the world.

Additionally, between lockdowns and the inherent limited access to physical stores, the mass shift and reliance of online shopping, and consumers’ ever-evolving shopping behaviors, brands were quickly forced to transform physical stores to online more than ever before. To keep up with the fast-changing online landscape, they needed to act fast to maintain a high-level of inventory accuracy throughout their supply chains and storefronts—turning to technology solutions like ours to help alleviate the pressure.

To cope with these challenges, brands ramped up on e-commerce, which we’ve seen with those like PVH and Levi’s, who are building more robust online shopping strategies to navigate uncharted waters. We’ve even seen one of our customers’ e-commerce performance increase by around 25 percent and its in-store revenue drop 30 percent. This shows how important it is for the apparel industry to strengthen its e-commerce channels and emerge from the pandemic successful—and remain so for years to come.

As a consumer, what does it take to win your loyalty?

I look for brands that not only offer high-quality products but are also socially responsible. In addition, brands that offer personalized experiences both in-store and online are more attractive. In the case of e-commerce, those that skillfully recommend products based on my past shopping history and provide a truly seamless personalized experience keep me coming back.

What’s the best decision your company has made in the last year?

Even though the market was experiencing a tough time last year, SML invested more budget in R&D than ever before to ensure that our business is as resilient and impactful as possible. We expanded our footprint in Southeast Asia, opening two manufacturing facilities in Vietnam and Bangladesh. We also invested in machinery engineering and local talent to provide quality products and services to our customers. It is during the most difficult time that we should keep innovating.

How would you describe your corporate culture?

Loyalty is deeply rooted in the corporate culture of SML. Our team of talented and diverse individuals is 100 percent committed to both each other’s success and our customers’—consistently delivering on our promises with the highest quality.

What can companies learn from Covid-19?

Rather than a drop in efficiency, I’ve seen greater unity among our employees and more collaboration throughout the crisis. Covid-19 improved the way we work and interact with one another, and others can either mirror or improve upon these efficiencies as we enter the next phase post-pandemic.

We’ve also seen the importance of remaining nimble and bolstering supply chain resilience plans, especially when it comes to sourcing, which will continue well beyond the pandemic. A lot of our customers have shifted their sourcing to North America—for example, Mexico—or Southeast Asia—for example, Vietnam, Bangladesh, Cambodia and Sri Lanka—and we’ve even had to strengthen our capabilities in these regions in order to better serve our customers.

What should be the apparel industry’s top priority now?

Maximizing profits and determining the best strategies that will help drive this in the short term. H&M’s strategy, for example, was to close a number of physical stores globally and shift the focus to online shopping. We’ve also seen some brand consolidations happen in response to the impact of Covid-19. Over the next 12 months, however, brands’ priorities should be focused on how to come out of Covid-19’s shadow and maximize their profits long term.

Retailers should also focus on using technology to further drive efficiency and build supply chain resilience. This requires brands to identify the right technology to enable digital transformation. SML has the technology—with proven ROI—to help brands collect data, drive efficiency and increase sales.

In addition, as consumers become more environmentally conscious, the industry should focus on how to make the supply chain more sustainable, from using technology, like item-level RFID to improve efficiency and reduce manual paper processes, down to the small details, such as creating labels from sustainable materials.

What keeps you up at night?

I’m paying particularly close attention to Covid-19 safety protocols globally. Since we have employees and customers in many different countries who are in different stages of the pandemic, safety is my top concern. We’ve implemented safety measures for those working in the office and created a hybrid work schedule to allow our employees to work from home as needed so they feel safe and comfortable.

What makes you most optimistic?

Beyond commitment to our customers, I am excited about 5G technology and its potential opportunities. With data management a big part of our offerings, 5G’s faster data processing will enable our platform to process even greater amounts of data and optimize analytics functions to further innovate and deliver for our clients. This technology advancement will also benefit retail solutions like item-level RFID, which will enable much faster data collection and offer advanced analytics like inventory predictions and consumer insights.

Tell us about your company’s latest product introduction/service:

We have quite a few, but some of our latest innovations and services include the following: Our eco-friendly product collection, EcoInspire, was created to transform our labels and trims products to 100 percent recycled materials. We’ve introduced several new RFID inlays that have been approved by the Auburn University RFID Lab and further reduce tag size and enhance cost-effectiveness. We also rolled out a new software feature to support buy online pickup in store (BOPIS) options in response to changed consumer behaviors during Covid-19. And we developed our virtual, 3D/AR product development platform—Digitiz3D. This will help brands and garment vendors gain enhanced flexibility and increase overall speed to market by completely eliminating the need for physical samples, especially helpful during these times.

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