The Key Benefits of Digitizing Supply Chain ManagementMay 10, 2018
Ask anyone in the fashion industry about the biggest trends in supply chain management, and you’ll get varying responses: Faster speed to market. Greater agility. Optimizing inventory levels to ensure more full-price sales, to name a few of the answers.
However, underlying all of these is the concept of digitization, because companies can’t achieve any of these goals unless they move away from manual, siloed processes and make the move to digital systems. In our most recent blog post, we looked at the key benefits of digitizing your product development processes. This blog post takes a close look at the benefits of digitizing the other part of the concept-to-shelf lifecycle: supply chain management. In the future, we’ll also look at digitization’s impact on product control and vendor compliance -- but first things first, what does digital transformation mean for supply chain management (SCM)?
Digitization eliminates barriers to supply chain productivity
As we discussed last week, CIO.com defines digital transformation as the “application of digital capabilities to processes, products, and assets to improve efficiency, enhance customer value, manage risk, and uncover new monetization opportunities.” And while a number of supply chain initiatives in recent years have focused on these issues, retailers and fashion brands still have a long way to go. Simply put, many companies have hit the wall in supply chain efficiency and speed to market. That’s certainly true in the retail and apparel industries, where the demands of fast fashion and omnichannel retailing have exposed a critical weakness: organizational silos that hamper the ability to collaborate, innovate and improve speed to market and agility.
Digitization breaks down silos by eliminating manual processes and spreadsheets with enterprise digital systems that unite stakeholders around the world, radically improving communication, collaboration and ensuring a free flow of real-time information to everyone involved in the product supply chain.
Benefits of digital transformation supply chain management
There are many benefits as companies digitize their supply chain processes with modern SCM systems. Some of the most common, though, are the following:
- Enable a demand-driven supply chain. A demand-driven supply chain is the nirvana of supply chain management; without a digital system, though, it’s impossible. Digitization allows companies to adjust products in the supply chain based upon demand for those products using real-time sales information, allowing them to accelerate production of best-sellers and cut their losses on the laggards.
- Optimize supply chain lead times. These include factors such as the lead time for raw materials, reserving production capacity to ensure factory availability at the right time, and distribution planning.
- Utilize 'just-in-time' techniques. Just-in-time (JIT) manufacturing, first championed in the electronics industry, means that fashion brands can postpone critical decisions on style adoption, product quantities, etc., until the last possible minute -- allowing them to design styles much closer to final delivery date and to take advantage of the latest trends.
- Reduce markdowns and stockouts. Adopting JIT techniques, optimizing lead times and responding to consumer demand greatly increases the likelihood that companies can have the right product mix and to attract consumers -- minimizing markdowns and out-of-stocks. Markdowns are dollar-for-dollar profit reducers, while out-of-stocks result in missed sales altogether.
- Improve cash flow and cost management. The faster the supply chain moves, the less capital is tied up in the supply chain -- a crucial benefit of digitizing your supply chain management processes.
Real-world results of digital transformation
What is the real impact on supply chain digitization for fashion companies? Here is what a few of NGC’s many SCM customers have shared with us:
- VF Corporation: is the world’s largest apparel company and relies on NGC’s digital solutions for supply chain management and global sourcing, and integrated quality management. Benefits to VF Corporation include paperless transactions, a common digital PO management solution and single data repository for all brands, cost savings through streamlined processes, and instant visibility to information. A longtime partner to VF Corporation, NGC continues to innovate and support the apparel company’s continued growth and market dominance.
- DXL (Destination XL Group, Inc.): is the largest omnichannel retailer of big and tall men’s apparel. DXL has seen impressive results with NGC’s digital SCM solution, combined with NGC’s PLM. NGC’s solutions are critical to ensuring that DXL has the right styles and sizes in the right stores at the right time. DXL’s on-time delivery, quality and compliance reached over 98% a year after implementing NGC’s digital solutions, vs. 85-90% before NGC enabled DXL to streamline its work processes. “The workflow from the time our season starts to when we deliver the goods to our DC is all captured and reported, and our reporting is accurate and centralized,” says Angela Chan, SVP and Chief Sourcing Officer.
Unlock the benefits of digitization with NGC’s Andromeda SCM
NGC Software helps brands and retailers worldwide digitize their supply chain processes with the AndromedaTM SCM solution. Our cloud-based solution transforms design productivity and unlocks all the benefits of digital supply chain management.
Configurable and user friendly, Andromeda SCM enables the speed and responsiveness for today’s demand-driven supply chain. You can monitor current consumer selling trends and ensure that your most popular products are quickly delivered to the customers that want to buy them. Your product development and supply chain teams can utilize postponement techniques and optimize lead time for fast in-season flow, chase and replenishment programs.
Andromeda SCM also allows you to collaborate with your global supply chain partners in real-time, with visibility into your purchase orders, material commitments and inbound shipments. Factories can create barcode cartons labels, shipment paperwork and ASNs for DC and direct-to-store delivery.
You can further extend the functionality of Andromeda SCM, or even existing SCM systems, with NGC’s additional cloud-based solutions for PLM, global quality control and vendor compliance. Find more information on Andromeda SCM here.
In our next blog we’ll focus on the benefits of digitizing the fashion supply chain with global quality control.