The current state of the global supply chain is bleak ahead of the holiday season, with products stuck out at sea for days at a time, ultimately leading to a nightmare scenario for retailers and brands—not having enough merchandise in the year’s biggest shopping period.
But the disruption represents a ripe opportunity for retailers and brands to take back control by dedicating investments to improving supply chain visibility.
Whether through leveraging technologies that collect data from every point in the supply chain or redefining employee onboarding and training, merchants must forgo antiquated, manual processes like spreadsheets to gain better insight on the products being manufactured and overall productivity levels.
“During the pandemic we added PLM software to smooth our supply chain and drive better decisions with data,” said Tony Drockton, founder and chairman for California-based handbag manufacturer Hammitt LA. “We also added to our data team to help tie everything together to allow us to continue to scale rapidly and profitably. We are constantly upgrading our software because the key to efficient, accurate communication internally, with vendors or customers, requires our team to have quick access to all areas of the business.”
In Sourcing Journal’s Visibility Report 2021, Paul Magel, president, business applications and technology outsourcing division, CGS, noted that the software company’s BlueCherry Shop Floor Control (SFC) platform offers manufacturers a way to digitally connect the actions on the factory floor to a company headquarters. That way, brands can capture, track, analyze and benefit valuable production information in real time.
“It’s about monitoring your symptoms before you get the prescription,” Magel said. “Do you have enough supplies? Where are the cargo containers?”
Among other benefits, CGS says the SFC software enables typical savings such as 5 percent to 25 percent increases in operator productivity; and 10 percent to 30 percent dips in excess labor costs.
The right technologies can save costs and reduce lost sales
While reasons for not adopting such technologies vary, it’s clear that there are long-term issues that result.
More than 80 percent of 170 retailer respondents surveyed by Coresight Research in June estimated lost sales of at least 3 percent due to allocation issues such as in-frequent stock replenishment—an issue that has become even more of a concern as supply chains remain constrained.
Yet we can take a look at the other side to see where tech adoption can deliver quick benefits. Among retailers that adopted enterprise-grade, AI and technology-driven applications for assortment planning, 76 percent reported cost savings of at least 3 percent or more, Coresight said.
With the right technology in place, merchants also can better prioritize how they measure productivity in the first place, especially at the factory level.
Jason Schott, chief operating officer of leather jackets and motorcycle apparel seller and manufacturer Schott NYC, identified “standard average hours,” or SAH, as a standard KPI the company uses to measure performance levels at the company’s Union, N.J. factory. Every jacket style the company produces is assigned an SAH value, which indicates how much time it would take an employee working on each, to determine efficiency and even monetarily incentivize productivity.
“Each one of our jackets can have 40 to 50 value-added operations that go into the product,” Schott said. “We’re tracking every employee and each of those operations, and we’re constantly looking to see how we’re doing.”
And although visibility into productivity can be a major win for a brand, especially as they aim to get the right merchandise in front of the right consumer, deploying these technologies could make a world of difference in the supply chain’s workforce wellbeing.
But brands must view visibility in this lens as a team effort. Tackling complex social issues that extend beyond the influence of private business is a shared responsibility that requires actors across the supply chain and government to work alongside each other.
“The more you know about the supply chain, the more responsibility you need to take. It might be easier for some brands to claim it is too complex or too difficult, so they’ll not need to take any responsibility for what they might find in their supply chains,” said Sandya Lang, sustainability manager at Swedish denim label Nudie Jeans.
Learn more by reading Sourcing Journal’s Visibility Report 2021.