Your Supply Chain Isn’t as Fast as Zara’s—But it Could be
By Caletha Crawford, Sourcing Journal, June 23, 2017
Sixty seconds. That’s how long it would take Blair Eadie’s followers to purchase the latest look from her Instagram feed. While you may not know Eadie, more than one million young women are intimately acquainted with her wardrobe, and they slavishly attempt to emulate it. So, what if tomorrow, Eadie (better known by her blog moniker Atlantic-Pacific) were to showcase a dress from your label? Cha-ching, right? Right… but only if you had the right product in the right stores at the right time.
That’s how commerce works today. GenZ is motivated not by ads or product labels but by what they see in their social media feeds. If they like it, they buy it immediately with just a few clicks. And, contrary to what some say, they’re happy to shop. (The average Zara shopper pops in there 17 times a year.) In fact, they have to because what could be more embarrassing than showing up on SnapChat with the same outfit you were Snapped in two weeks ago?
And what could be more depressing—to profits, if nothing else—than to miss out on sales because your company can’t keep pace with consumer buying habits? For too many retailers, that’s exactly what’s happening every day.
Dissecting Zara (again)
The mantra of every fashion label is read and react, but not many are able to do it in real time. Pulling weekly sales results and applying those learnings to the next season isn’t enough any more—not when the most nimble competitors out there are continuously monitoring sales data with which they develop new items that will be in stores in less than three weeks.
For anyone who’s been watching Zara, this isn’t news. The fast fashion house is regarded as the gold standard for reading and reacting. And while some will (rightly) credit its success to the proximity of its factories and the company’s data analysis skills, Mark Burstein, president of sales, marketing and R&D at NGC Software, says that’s only part of the equation.
“At Zara, they’re afraid to not make a quick decision. At Gap, they’re afraid to make the wrong decision. They analyze and wait, analyze and wait. At Zara if it’s the wrong decision, they’ll recover and move on,” he said.
That corporate culture is a big part of what sets the Inditex company apart, Burstein said.
If a silhouette stalls, they’ll pivot to the new hot body. If a color is killing it, the next delivery will be awash in it. And while that sounds simple, the current systems most fashion firms have in place aren’t capable of pivoting quickly enough.
“People want to react but they’re not positioned to react,” he said.
To close the gap between recognizing the need to change and actually being able to pull it off, Burstein said companies need to add a third step to read and react: plan the reaction.
In other words, know going in how you’ll marshal your resources and supply chain partners to create alternate products, if necessary. The most effective way to do this is to pull down the walls that often exist between departments and stakeholders, he said.
Building in Agility
This level of interconnectedness requires more than a standard PLM system. That’s why NGC has developed Andromeda, a new cloud-based platform that uses the data from existing PLM systems, to reach deeper and wider into the supply chain to centralize and share information.
“In a connected enterprise, everyone is linked in through the platform,” Burstein explains. “When something’s selling, I want everybody to know because there’s a lot of things that can be done from start to finish to get more product.”
Using the system, Burstein envisions a scenario in which a factory can proactively call a brand to remind them that they have more fabric for a particular style that’s selling out rather than passively waiting for an order to materialize.
Communication like this will help fuel the on-demand marketplace we’re headed to where there will be smaller deliveries that will hit floors every 3 weeks.
To ensure those goods are on the mark style wise, Burstein said there are ways to shorten the production timeline when all parties are working together.
“If a product is blowing out, you can bring in the same product and have a stable of similar styles in the same fabric to keep the floor fresh. It’s fit-approved and product-tested and ready to cut,” he said.
Also, designing into core fabrics that are positioned at the factory means merchandisers can wait until as few as three days in advance to decide which bodies and sizes to cut.
Shipping is another area where companies could rack up a time and money savings. For instance, for brands that chose to ship directly to stores, circumventing distribution centers can trim as many as three weeks from the schedule and save as much as $15 per carton. That savings could in turn be used to defray air cargo rates, which would expedite shipping even further.
Having the goods, factories and logistics plans in place and giving all players visibility to each part of the operation is what Burstein means by planning to react. He admits though that this level of coordination and planning is still in its infancy, with only a couple of brands taking full advantage of it.
“It’s a mindset change. It’s a procedural change,” Burstein said, adding it takes leadership with vision and a willingness to turn things upside down. “I see some companies wanting to do it, but it needs to start at the top.”