The Digital Supply Chain is Key to Lead Time OptimizationMarch 13, 2018
Lead time reduction has been the holy grail of the fashion industry for years. In survey after survey, apparel sourcing executives continue to cite “lead time reduction” or “lead time optimization” as a top business and technology priority. Nike, for example, made waves last year when it announced that it was cutting production time in half.
As Supply Chain Dive reports, “consumers expect to find what they want at a relatively affordable price and get it fast. This is the Amazon effect, and in order for other companies to keep up, they need to drive down production costs and accelerate the production process so consumers can get their goods quickly for a price they're willing to pay.”
The Digital Supply Chain Reduces Lead Times
The quest for ever-shorter lead times is one of the main drivers behind the digitization of the fashion supply chain. If you’ve seen the term “digital supply chain” quite a bit lately, it’s no accident: companies are moving quickly to eliminate the disconnected, data siloes that characterize many of today’s supply chains, realizing that they’re a major impediment to lead time reduction. Information in these older supply chains is characterized by spreadsheets and disparate systems, and the critical stages of the supply chain – development, manufacturing and distribution – often act as separate business units. Information is disconnected, siloed, and slow-moving, limiting a company’s ability to have the information it needs to make critical, timely decisions. This creates big barriers to faster supply chains.
The digital supply chain focuses on breaking down these barriers with a single cloud-based portal that centralizes and shares all the information that originates in legacy PLM, ERP, logistics and other systems. The digital supply chain unites all the disparate processes and information of today’s supply chains into a real-time, connected digital supply chain, and the benefits are significant.
A McKinsey report, Digitization – the Next Stop for the Apparel Sourcing Caravan, summed up these benefits, noting that “most CPOs (chief purchasing officers) surveyed aspire to reduce their average lead time by two to eight weeks, helping them achieve the agility needed in a demand-driven market.” The report also stated that many of them are “targeting cost reduction of at least 2.5 percent through digitization alone.”
These statistics are eye-popping in an industry that’s focused more than ever on the twin goals of lead time optimization and cost reduction. The report noted that “more than 2/3 of sourcing executives expect to have digital (supply chain) portals up and running within the next five years to foster transparency and collaboration both with external suppliers and internal colleagues.” Given the anticipated benefits from the digital supply chain, it’s no surprise.
The Future of Fashion is Digital
To learn more about the digital supply chain, download our latest whitepaper, The Future of Fashion is Digital – Embrace the Digital Supply Chain. And contact us to learn how NGC’s Andromeda Cloud Platform can help your company enable a digital supply chain without having to “rip and replace” your existing enterprise systems.