First of a three-part series – Insights from Ambrosetti’s Global Fashion Unit’s Supply Chain Design Advisory Board EU 2017 elaborating on SC Management challenges from the opinions of a three-session panel of more than 20 C-level executives from leading European fashion, premium and luxury companies with combined sales of more than $20 billion.
The flood of challenges engulfing supply chains has led one think tank and global fashion consultancy to undertake a unique approach to problem solving: Supply chain competitors collaborating through sharing insights.
Ambrosetti.eu a leading European think tank and global fashion consultancy, has assembled a panel of supply chain executives who meet in half-day sessions every two months at the company’s headquarters in Milan, Italy and share their immediate solutions and future concerns for the sector. A follow-up survey and summary of findings are then distributed for each of the three bi-monthly sessions and on the Ambrosetti
In the first round, the major topics included exploring the necessity of supply chain officers contributing to enterprise-wide strategies, the need for new KPI’s and the end of functional silos.
“It is critical to translate business strategy into supply chain strategy, making strategy happen,” the head of strategic merchandising of a leading luxury brand, said during the panel.
Confirming this notion, Gian Mario Borney, head strategist for Ambrosetti’s Global Fashion Unit, said, “The timing is right for supply chains to be called to the strategy table and to assume a central role in contributing to enterprise wide scenarios and outcomes.” His perspective was one echoed by the overwhelming majority of the participants on the panel.
To play such a critical role, this function must extend its boundaries to embrace activities often kept separate and become the orchestrator of different actors, internal functions, third parties and processes.
According to panelists, orchestrating supply chains will evolve to include the whole range of operations processes, including quality management, especially increasing the focus on demand-supply planning.
What SC management will increasingly need to embrace
One such critical objective identified by the panel as the battlefield where most key results can be achieved in terms of increased responsiveness and optimization was the supply chain interaction with merchandising and design.
This, they reasoned, would require that the old “sequential” world of decision-making be left behind and parallel paths be followed simultaneously through functional and team integration.
“There is no more time to follow old calendars, roles and functional ‘territories.’ New organizational approaches, company specific, must be put in place,” one panelist expressed. “We need to work in new ways and cross functional understanding and integration is paramount.”
Panelists said performance measurements and their indicators deserved a specific focus too. Though the supply chain has become a powerful origin of the value provided to customers, its main KPIs are still, in most cases, cost of goods followed by industrial quality and on-time delivery indicators.
“Until when SC will be measured on products’ actual in store performance (notably sales at full prices), little will really change,” a panelist commented, indicating that to measure SC value contribution costs must be linked-up to market performances generating a whole new paradigm.
The panel called for an organizational and managerial evolution to reach across functions, understand the strategy’s implications, elaborate scenario and strategic feasibilities. A similar initiative, focused on the American market, slated to launch in Fall 2017, is now in the works.
Bill D’Arienzo is the founder and CEO of WDA Brand Marketing in Princeton, New Jersey, and ApparelAnalytics an online consumer research service, and serves as U.S. strategy advisor for Ambrosetti, the No. 1 think tank in Italy and in the top 20 of global business and fashion consultancies.