Embrace the Digital Supply Chain: New McKinsey Survey is Apparel Industry’s Wake-Up Call

Embrace the Digital Supply Chain: New McKinsey Survey is Apparel Industry’s Wake-Up Call

September 27, 2017

The apparel industry has been one of the hardest-hit sectors in retail the past few years. However, an important new research study from McKinsey & Co. provides clear direction on how to thrive in today’s tough business climate – embrace the digital supply chain.

In its study, “Digitization: The Next Stop for the Apparel-Sourcing Caravan,” McKinsey surveyed 63 chief purchasing offices (CPOs) from leading apparel companies and found that digitization is a major priority despite its low maturity rate in the apparel sourcing industry. These results are no surprise to NGC, and they validate our vision of the digital supply chain as the key to business transformation.

As the McKinsey study makes clear, apparel executives are laser-focused on change, and they’re looking to technology as the key enabler.  McKinsey found that, “More than 80 percent of CPOs in our survey expect digitized end-to-end process management—including centralization of product-development and procurement processes in one cloud-based system. More than two-thirds of sourcing executives expect to have digitally enabled capacity planning in place, helping them to allocate production capacity more efficiently and spot bottlenecks earlier. A similar number expect to have digital portals up and running to foster transparency and collaboration both with external suppliers and internal colleagues.”

The features described above are a picture-perfect description of the features in NGC’s Andromeda platform for the Digital Supply Chain. Andromeda brings together all departments – Merchandising, Product Development, Sourcing, Compliance, Purchasing, Production, Quality, Logistics, Marketing and Sales – in a single cloud-based solution that connects vendors, suppliers and other providers in a digital supply chain. With Andromeda, all global users share information and can quickly react to rapidly changing market trends. As a result, retailers and brands are using Andromeda to optimize lead times, reduce expenses, improve quality and maximize company revenue and profit.

Andromeda enables the digital supply chain. And as NGC’s next-generation technology platform, it’s ideally suited to bring about the changes that apparel executives are hungry for. According to McKinsey, 76% of executives surveyed said digitization will lead to a significant reduction of lead time from assortment planning to first touchpoint in the market – “reducing their lead time by 2 - 8 weeks to achieve the agility needed in a demand-driven market.”

They also expect to see increased flexibility to change production volume and product allocation. With the continued rise of fast fashion, minimum order sizes are falling, which requires suppliers to be more flexible. McKinsey concludes that, “Greater agility and flexibility are critical if companies are to give savvy customers what they want, when they want it, where they want it, and at the right quality.”

We couldn’t agree more. McKinsey’s survey results align perfectly with NGC’s vision and technology for the apparel industry, and we encourage every industry executive to read this report and take it to heart. Click here for McKinsey’s overview and to download the report.