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Sourcing Journal / September 14, 2018

Time is Not On Your Side in Fashion Supply Chain Management

One of the Rolling Stones’ early hits famously begins, “time is on my side.” Time, however, is most definitely not on the side of retailers and fashion brands today. In fact, time is one of the biggest risk factors in the supply chain. Today’s retail and fashion winners are companies like Zara, Xcel Brands, TechStyle and others that race the clock to get the best products to the customer faster than anyone else.

“Time equals risk,” says Paula Rosenblum, managing partner of Retail Systems Research. “Because companies are sourcing so far away from the point of demand, they’ve added more elements of risk. Long lead times tend to drive designers and buyers to place big bets. When you’re placing big bets, you tend to place safe bets, and that leads us to the ‘sea of sameness’ that customers complain about. You have to do anything you can to get faster, so you can place smaller bets and react to changes in customer interests.”

That means shrinking the timeline from concept to customer, so retailers can get the right products to their customers faster. The more time that passes, the greater the risk that fashion trends, consumer demand and other variables will change. It’s much like weather forecasts; the further out the forecast, the less accurate it will be. The closer you get to the actual date, the more the accuracy improves.

Time plus complexity equals risk

Time isn’t the only risk factor, however. The complexity of fashion and retail supply chains, and the speed at which decisions must be made to improve speed to market, adds additional risk, especially when companies are producing more styles while simultaneously reducing cycle time. In the high-stakes world of apparel and retail, teams must manage all the details of product design, sourcing, compliance and supply chain planning and execution for thousands of products or styles simultaneously—while also reacting to constantly changing demand signals, fashion trends, weather patterns, sales data, production delays and many other variables.

What happens when samples aren’t approved, material shipments are delayed, or sales are trending higher than expected (or conversely, when you’ve placed a large order for a style that’s selling poorly)? Supply chain executives must continually adjust—cancelling production of styles with weak sell-through, for example, or increasing production on items with higher-than-anticipated sales.

Digitization helps retailers and brands overcome technology barriers

The problem is, most retailers and brands lack the technology and processes needed to react quickly to constantly changing demand signals and other information. As John Thorbeck, chairman of industry consultancy Chainge Capital, has said in the past, the industry’s over-reliance on outmoded ways of supply chain communication, like spreadsheets and emails, means too many are maintaining an analog supply chain that can’t accommodate a digital consumer.

Today’s retail and fashion supply chains are disconnected, siloed and slow-moving, limiting a company’s ability to have the information it needs to quickly make important decisions. Companies must sift through mountains of emails, reports, and spreadsheets to understand the critical issues that need attention now—and by then, it’s often too late.

That’s why there is so much emphasis today on digitizing all the manual, disconnected processes in fashion and retail supply chains (hence the term “digital supply chain”). Digital supply chains connect all these formerly disparate systems, processes and information into a “connected enterprise” that breaks down silos and enables faster decision-making by bringing together planning, design, sourcing, production, logistics and replenishment into a single enterprise.

Digitization has immediate benefits now. But even more important, digitization creates the opportunity to incorporate artificial intelligence (AI) and machine learning into digital supply chains. AI can then predict outcomes and make recommendations on how best to position raw materials, adjust work-in-process, allocate products, expedite shipments, and much more. With AI and machine learning, the digital supply chain can continuously adapt, learn and predict, in order to aid human decision-making—or even automate many decisions.

People sometimes speak of creating a better supply chain roadmap to optimize their supply chain performance. But what’s happening today through digitization is akin to personal travel, with its rapid evolution from street maps to GPS systems and Google Maps (which continually updates the best route based on real-time, constantly changing traffic patterns), and ultimately, self-driving cars. Fashion and retail supply chains are moving quickly to a much more connected, automated future where information flows freely in a high-speed digital superhighway.

The end result is that retailers and brands can deliver on their central mission: getting the best products to the customer faster. Digitization and AI will help overcome the big risk factors of too much time and complexity and enable retailers and fashion brands to deliver differentiated, compelling products that delight their customers, drive higher sales and profits and establish lasting brand leadership.