How Tech-Enabled Supply Chains are Driving End Customer Growth?

The fashion industry is fast-paced and highly globalized, with clothing designed in one country, raw materials sourced from another, manufactured in yet another, and despatched to customers in various countries - this is the 'logistics of fast fashion'.
How Tech-Enabled Supply Chains are Driving End Customer Growth?

The formula to succeed in the fashion industry used to be simple - give the customers what they wanted: trendy garments at the right price of acceptable quality in an attractive store setting with helpful salespeople. The only challenge was to get the goods to the stores on time.

The sales environment today is very different and much more complex. New alternatives to high-street stores are online e-commerce websites that are easily accessible via social media and mobile technology. Today, a typical fashionista has high expectations. She wants services such as click-and-collect, mail order, a wider range of online offerings, free delivery, free returns through any channel, and a mobile-friendly website. Companies need the flexibility to fill orders and manage inventory while satisfying customer needs across many sales channels.

The fashion industry is fast-paced and highly globalized, with clothing designed in one country, raw materials sourced from another, manufactured in yet another, and despatched to customers in various countries - this is the ‘logistics of fast fashion’.

Lead times, accuracy, availability, and reliability are all critically important and so is keeping up with the whims of consumers. This shift combined with the need for ‘speed to market’ is requiring adaptation of new supply chain processes and technologies.

Today’s apparel retailers need to optimize their supply chains to keep up with the rapidly evolving world of the multi-channel retail marketplace. Commercial success or failure is determined by the organization’s flexibility and responsiveness. This may entail any or all of these: changing inventory strategies, tweaking transportation management, implementing new technologies, or revamping logistics. 

Many leading fashion retailers have embraced the concept of performing multi-channel distribution within a single facility with a single information system achieving dramatic improvements in labor productivity and inventory optimization. The apparel marketplace is evolving and reinventing itself regularly. New sales channels are popping up which require companies to continuously evaluate and remodel their logistics and transportation networks.

The COVID-19 pandemic resulted in an unprecedented health crisis and a global economic shock. Amid the pandemic, the apparel industry like others grappled with the business ramifications. Companies with digital know-how weathered the storm comparatively better. Now the whole fashion industry is taking action to build its digital and analytics capabilities - not just to ensure business continuity but also to emerge from the crisis.

Digital is not only an increasingly important sales channel; it can also help companies adopt cost structures and make each step of the value chain better, faster, and cheaper. For example, digitization can enable new logistics and sales-fulfillment options (such as click-and-collect and drive-through), fuel innovative ways of customer acquisition, and help predict and manage inventory to create a more resilient supply chain. The fundamental enabler to all this will be data - the transparency, governance, and accuracy of which have never been more important. Many companies have accomplished years of digital transformation in months.

To stay ahead of the curve in today’s fast-changing retail landscape, apparel companies need to understand what all emerging technologies are critical in shaping their supply chain operations for the coming times.

In anticipation of a shift toward online sales, apparel retailers are allocating more of their marketing budget to digital channels. Customers are also establishing digital-performance dashboards, providing a cross-channel view of e-commerce, customer relationship management, and social media, thus enabling rapid identification of opportunities for efficiency optimization or growth.

At the best-performing companies, an ‘inventory war room’ uses big data and advanced analytics to first simulate dynamic demand scenarios specific to locations and SKUs, then to synthesize the resulting inventory risk - thus enhancing decision making. The war room decides, for example, whether to redistribute SKUs, transfer inventory to future seasons, or accelerate markdowns. A company’s investment in developing advanced analytical tools to steer markdowns during the crisis will pay off almost immediately. 

Digital and analytics can not only drive top-line growth but also significantly improve speed, cost, flexibility, and sustainability across the supply chain. For instance, some leading companies are using radio-frequency identification (RFID) to track products more precisely and reduce in-store merchandising manipulation. Companies’ RFID investments typically yield operations simplifications and service-level improvements.

In addition, automating logistics through digital warehouse design and predictive exception management can significantly increase efficiency. The benefits will flow to consumers as well- in the form of better product availability and faster, cheaper, and more accurate deliveries. Leading online players, for example, are using models powered by artificial intelligence (AI) to predict sales of specific products in certain neighborhoods and cities, and then stocking the predicted amount of inventory in nearby warehouses.

The requirements for supply-chain speed and flexibility will continue to increase. Digital and analytics will play a critical role in helping companies emerge stronger from the crisis. The apparel industry must set an ambitious aspiration and define a clear road map. A digital and analytics transformation is typically an 18-24-month journey, requiring an ambitious aspiration, a clear plan, and concrete milestones. 

To provide an excellent omnichannel experience, apparel retailers are moving their traffic and engagement-generation engine to digital and leveraging digital channels to drive store traffic and vice versa. Besides scaling up digital sales efforts, fashion retailers need to reconfigure their store footprint accordingly - for example, making it easy for customers to perform any omnichannel operation, including complex ones (such as buying online from a store if the product is not in stock there and then picking it up from another physical store in the next 12 hours). Data analytics is being used to tailor the assortment in each store and to streamline and optimize assortments overall. Fully integrated inventory management of stock in stores and warehouses is core to any omnichannel operation. 

Digitization of support functions is another key lever for improving efficiency. Automating repetitive tasks in back-office functions can result in significant cost reductions and free up time and resources to reinvest in more valuable activities. 

Brands are also deploying mechanical automation solutions at the fulfillment centers to enhance productivity, accuracy, and timeliness. A lot of automation opportunities are available in both storage and handling including an overhead conveying system for transporting different items, sorting and sequencing, conveying systems and automated guided vehicles for in-house transport, manual, semi-automated, and fully automated picking systems including - Goods To Picker, Pick To Light, Pick By Voice, etc. - for fast order processing, ergonomic work stations for accurate picking and packing performance, WMS solutions for manual, semi-automated and fully automated warehouses, KPI and dashboard tools as control towers and decision support systems. There is a ‘no one size fits all’ solution but each business should analyze and evaluate emerging technologies and adopt ones with the potential to add value. 

Today’s apparel companies need solutions that align demand with product distribution, reducing profit-eroding markdowns, while also providing data on the emerging fashion trends that will propel them first to market. Artificial Intelligence already is providing this solution by improving efficiency in warehouse operations and product design. Artificial Intelligence utilizes deep learning to analyze an enormous amount of data extracted from social media and the web to provide critical insights. AI is also being used to determine which products are popular and which are sluggish. Utilizing technology that increases your ratio of hits to misses by better allocating resources to leading products should be the goal of every apparel company seeking to maximize its profits. 

Going forward, an organization’s success will depend on how well it knows the emerging trends and how well equipped it is with technology, tools, and innovative solutions, and the right partners to enable all this.
 

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