Today, the watch industry is struggling to adapt in a complex and fractured marketplace. As with all industries coming to terms with disruption caused by the growth of ecommerce and Industry 4.0 – the current trend of automation and data exchange in manufacturing, the watch industry can no longer rely on outdated production and operation methods that lead to unsustainable business conditions.
In this 5 part series, we examine the most troubling issues facing the watch industry today, the underlying cause of each and how implementing the FINS solution solves them for watch brands.
Part 2 – Overproduction
When the difficulties of the watch industry over the last few years are examined, it becomes clear that current business practices don’t keep pace with a constantly evolving market. In the years leading up to the latest crisis, the watch industry benefited from year on year sales increases that were mostly the result of exports to China and Asia. Watchmakers responded the way that they always had before – producing more watches, raising prices, opening more retail locations. It was a naturally optimistic move that saw brands sinking enormous amounts of capital into mass manufacturing infrastructure to meet the demands of a lucrative, yet unproven market.
When Asian sales plummeted dramatically, due to domestic anti-corruption policies combined with a rising swiss franc, watch brands were caught off-guard. They had relied on a traditional mass manufacturing model which led to massive overproduction, bloated inventories of component stock and assembly lines that now lay silent. This overproduction and oversupply to distributors resulted in costly buybacks, fire-sale pricing on inventory and reduced brand exclusivity.
The traditional model of watchmakers selling watches into wholesale for retailers, who themselves are suffering from declining sales as they try to compete with ecommerce upstarts, has proven to be difficult if not impossible to sustain, resulting in 3 years of decline in Swiss watch exports.
It’s not all doom and gloom for the industry, 2017 has been a transitional year and has shown signs of recovery. However, it’s clear that for the industry to survive and thrive in the new economy, a fresh approach and new tools are needed that allow watch brands to run leaner, streamline operations, apply intelligent business data and adapt fast to changing consumer demands.
FINS is the 1st Cloud ERP solution created specifically for the watch industry supporting Just-In-Time manufacturing. FINS uses lean inventory practices, micro-manufacturing and advanced merchandising with end-to-end traceability managed by an online portal customized for your watch brand.
FINS was designed by watchmakers, for watchmakers and addresses the biggest problems facing the industry today…
Preventing Overproduction – FINS uses the latest in Lean Inventory practices and Micro-Manufacturing. It is fully integrated with sales, marketing and distribution to constantly analyze sales and adjusts production to create only the minimum amount of watches needed. It uses powerful data tools to monitor and identifying slow moving stock. With FINS a new inventory model is created which drastically reduces component stock and eliminates dead inventory. The reduction of inventory is a key component of the FINS system that reduces costs and frees up essential cash flow. Typical inventory carrying cost reductions of 4x or more are common.
Because FINS is an end-to-end fully connected supply chain, it can prevent overproduction and the costly remedies that it requires. FINS is fast, flexible and lean. It changes as the market changes, constantly adjusting and optimizing to fit current market conditions. It is a modern tool for modern brands who are looking forward rather than back to prepare for a profitable future.
Register to try out our fully functional online live demo to see exactly what you get with
the FINS manufacturing software solution for the watch industry.