Upstream analytics is a new landscape, yet it’s almost completely barren.
Technology needs to migrate upstream to the “first mile,” where it can create the same sort of value and brand differentiation that investments have forged in the “last mile,” but it has only begun to evolve in that direction.
“Delivery was once considered a cost of business, but Amazon redefined it as a sales asset of convenience, service and difference,” said John Thorbeck, chairman of Chainge Capital, a firm focused on fashion transformation and sustainability. “The same potential exists upstream to create value and brand difference; that is, a responsive supply chain at far less risk.”
To explore this necessary shift, and how far it still has to go, Thorbeck, an expert on speed-to-market applications at retail and short life-cycle product companies, will moderate the panel “The Buyer/Supplier Evolution” at Sustainability Summit: Road to 2030 on June 1. He will be joined by Rens Tap, senior economist, Modint and International Apparel Foundation (IAF); Matthias Knappe, senior office and programme manager, fibres, textiles and clothing, The International Trade Centre (ITC/UN); and David Savman, head of supply chain, H&M Group.
“Upstream value is emerging as a force for industry change, but it remains a contrarian view—an inversion of the retailer-first narrative,” he said. “Most retailers are buyers of goods, and they focus on ex-factory price and quality. Merchants tend to have limited knowledge of manufacturing and the potential for supply flexibility, and therefore do not understand upstream levers that determine downstream results. Supplier innovation is underestimated, just as it once was in autos.”
While technology will drive this evolution, too much software is focused on improving creation, rather than addressing the overarching theme of excess production and inventory uncertainty—namely data science and AI applications to reduce risk.
Related Stories
It will be hard to break the “make more, sell more” mentality, but hope is not lost. Sustainability changed the narrative toward end-to-end impacts, while COVID accelerated the urgency. Meanwhile, a cultural shift is being forced by Gen Z consumers who demand more transparency and trust in brands, investors who insist on responsible practices and governments who want accountability. “Some CEOs see this as a marketing challenge, but it’s more than that,” said Thorbeck. “Brand value must reflect the values of a new generation—one that increasingly understands that ‘first mile’ ties back to worker well-being and supplier value.”
Thorbeck sees this new buyer/supplier relationship as a new equilibrium in fashion, and considers shared risk—versus shared cost alone—as the key to unlocking capital to accelerate a more sustainable business. “Shared risk is process innovation across all tiers of the supply chain and is based on productivity and zero waste,” he said. “Would you rather have forecast accuracy of 30 percent with a long lead time, or 90 percent with supply flexibility? The goal is total profitability of the value chain, accelerated by analytics for risk. Its contracts and metrics are collaborative, longer term and relational versus seasonal and transactional.”
Hear Thorbeck speak on the Sourcing Summit New York panel, “The Buyer/Supplier Evolution.” Visit our event page for more info and to buy tickets.