Adroit management of the supply chain is indispensable for fashion retailers
Given the complexities involved, it’s a strenuous job to manage the modern fashion supply chain profitably. Even reversing the wheel of time by a few years, one can see that the biggest challenge the fashion industry used to deal was the seasonality of trends and styles. But, things are now unrecognizably different. Arrival of the omnichannel concept, rise of commerce in the virtual space, technological empowerment of the customers, reduced product lifecycles, constant fear of margin erosion for simultaneous presence at multiple touchpoints, growth of disruptive models like fast fashion, or demographic shifts in the emerging markets have made light-speed transformations in the sector. Apparel retailers have got it into their heads that to breathe a new lease of life amid these mounting pressures they have to build a super-responsive, highly agile, and significantly malleable supply chains.
Supply chain challenges that are giving fashion retailers the heebie-jeebies
In the bid to reprogram supply chains to deliver in the most productive way, fashion retailers are confronting a clutch of challenges. Below is a quick roundup of the important and peskier ones.
- It’s becoming tough for fashion retailers to balance soaring shopper expectations and supply chains that are unpredictable and fragmented. The ongoing digital revolution has given enormous power in the hands of the shoppers. They like to connect with brands instantaneously without any temporal or spatial restrictions. If the retailer’s supply chain fails to put up a resilient face under these conditions, then the business is sure to go for a toss. Furthermore, political unrest, infrastructural bottlenecks, etc., in the sourcing regions are forcing supply chains to take a sluggish and splintered approach.
- As the entire retail fraternity is turning to an omnichannel environment, fashion retailers have to be omnichannel-ready. And, the first thing to do that is establishing a company-wide inventory visibility. Unfortunately, fashion retailers’ hoary practice of ring-fencing stocks to separate channels is standing in the way of complete visibility.
- Two other challenges that are bedeviling apparel sellers in a big way are the issue of ethical sourcing and the increased government regulations. Some recent tragic mishaps in Asian sourcing hubs have thrust responsibilities upon retailers to come clean and show that they have maintained ethical standards in procuring raw materials and finished items. They have to manufacture clothes in safe working conditions and ensure that no prohibited material is used in the production process.
What to do to come out of the quagmire?
Now, let’s get down to brass tacks. How fashion retailers can avert the avalanche of problems. They can do it by adding some adaptive features to their existing supply chains or can go for a sweeping overhaul.
- Flexibility is one of the fundamental tenets of a high-performing supply chain. Retailers should design supply chains in such a way that it can shrink and expand according to the market dynamics. This will give fashion enterprises a competitive edge over their peers and enable them to accommodate escalating customer demands.
- For better results, retailers can segment supply chains based on different consumer niches. For instance, the supply chain catering to the fast fashion category must support speedy replenishment and quick inventory turnover. On the other hand, the operational mode of a supply chain dedicated to luxury fashion will have a considerable difference. On the similar lines, retailers can tailor their sourcing requirements too. When they need a low-cost source, they can outsource production to factories located in distant countries. In the opposite scenario, they can opt for nearshoring.
- A relatively old strategy named postponement can help retailers to optimize production and minimize the chances of inventory going out of date, thereby retaining flexibility across the supply chain. The premise of this model is that companies will make generic products and then according to nearness to the point of sale customization will be executed.
- Another way of getting a leaner supply chain is by embracing the shared delivery paradigm through a third-party logistics provider. Here, the inventories of different organizations are pooled together by the logistics provider and offloaded at retail stores and DCs.
- Use of effective supply chain management and supplier analytics tools can help retailers use technology to coordinate effectively with the supply chain and make pragmatic decisions based on real data and insights.
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