For the past few years, fast fashion retailers like Zara and Forever 21 have demonstrated how companies can accelerate their supply chains to quickly react to changing demand over the course of a retail season.
Recently, Xcel Brands, an NGC customer, made headlines in The Wall Street Journal when the company worked with Lord & Taylor to quickly replenish a best-selling blouse that had sold out in days.
Retail industry thought leaders have been talking about this supply chain concept, termed “just-in-time manufacturing” or “postponement” for more than 15 years, but it’s taken nearly that long for retailers and brands to start getting it right. The companies that have implemented just-in-time manufacturing practices, like Zara and Xcel Brands, are reaping huge benefits.
What it means
The concept of just-in-time manufacturing encourages manufacturers to wait until the last possible moment to make key decisions about production, based on the most recent sales results. If a particular item isn’t selling, cut your losses and stop producing it; if it’s selling quickly, accelerate replenishment and take advantage of the trend.
When Lord & Taylor couldn’t keep the hot off-the-shoulder Isaac Mizrahi blouse made by Xcel Brands on the shelves, feedback was immediately shared within the supply chain, and blouses were back in stock within six weeks—something that would previously have taken nine months.
However, the process doesn’t begin there; it begins when designers plan their lines using materials that can easily be re-allocated to produce more units of a best-selling style, rather than continuing to produce a product that isn’t selling.
Apparel is behind
This isn’t a new concept. However, the fashion industry is well behind the curve. The automotive and electronics industries realized many years ago that just-in-time manufacturing is the key to survival. Japanese automotive manufacturers perfected this concept during the 1980s, and it earned them a dominant position in the global marketplace. They realized that their supply chain must react more quickly to consumer demands and changing needs. The same model must be adopted by fashion brands and retailers if they expect to survive and flourish.
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What’s the delay?
Why is it taking the fashion industry so long to get here? As Retail Systems Research’s Paula Rosenblum pointed out in her recent blog, the industry is a creature of habit and refuses to change with the times. In addition, when this concept surfaced in the early 2000s, the technology simply did not exist for retailers to address just-in-time manufacturing and meet quickly changing demands. However, the widespread adoption of the internet and advent of cloud technology allows real-time communication throughout the supply chain and sourcing eco-system. These key technologies enable supply chain visibility, transparency and connectivity, which are essential to the success of fast-fashion leaders such as Zara, Xcel Brands, Forever 21 and others.
In addition, the changing customer demographic and the increased buying power of millennials and Gen Z have made it necessary to address these “on-demand” generations. The technology and current shopper demographic have created the perfect formula to push retailers and brands to embrace just-in-time manufacturing.
Don’t be left behind
Traditional retailers who are not addressing the shift in buying habits are being left behind in favor of more innovative brands, both in fast-fashion and luxury. Brands and retailers have a short timeframe in which to transform, as consumer demographics are changing rapidly.
By 2020, Gen Z will make up 40% of all shoppers, and this generation expects to get what they want, when they want it. If retailers and brands can’t keep up with these demands, they will be left behind and will cease to exist. As Rosenblum summed up, “It really is time to change. For real.” It’s not a matter of choice; it’s a matter of survival.
By Mark Burstein, president of sales, marketing and R&D, NGC Software