Covid-19’s constant disruptions to global apparel supply chain have forced businesses on their heels to adapt to new processes, communication tools and technologies at a rapid clip, but how adaptive have they truly been?
According to Gartner research, 80 percent of companies still base their strategic planning cycles on an annual calendar. With the fashion calendar already considered outdated, hewing to such a rigid structure was undoubtedly ripe for external disruption, particularly as the habits and consumption patterns of social-distancing shoppers have evolved.
During the opening keynote of the Gartner Supply Chain Symposium/Xpo, Tom Enright, vice president analyst with the Gartner Supply Chain practice, said companies building a truly adaptive strategy must continuously monitor and identify trends.
“Supply chain leaders should make it a regular exercise to learn about, and evaluate, the current trend landscape. They must focus on those trends that will impact their business and present opportunities to grow and gain an advantage over competitors,” Enright said. “It’s crucial to regularly update the strategy to reflect changes. Adaptive strategic planning is an always-on activity to navigate and succeed through any turn, in any version of the future.”
Later in the virtual event, Gartner analysts said that organizations that outline their function’s “fit for purpose” and choose a corresponding organization design will improve their results and be better aligned to the overall business.
The term “fit for purpose,” as defined by Gartner, describes an approach where planning leaders focus on what they should be doing, instead of benchmarking what others are doing, but may not necessarily work for them. Essentially, while everyone is largely aware that a “one size fits all” strategy doesn’t work, they can’t just blindly look to other businesses to take inspiration for what may make sense to them.
To design a fit-for-purpose planning organization, supply chain leaders must consider three factors, according to Gartner: their companies’ business and operating model, their operational mindset and whether a decentralized, center-led or centralized model is the best fit.
Understanding the operating model is fairly simple, and stems from knowing factors such as customer base, products sold and serviced markets, all while determining the extent to which those factors are changing.
Flexibility drives successful go-forward operational mindsets
The second factor is a little more in-depth, in that it considers what is important to the company’s operations and decision-making going forward. For example, mindsets related to cost-focus, customer experience, innovation, agility, resilience and risk have a significant impact on how planning leaders organize.
In this case, adaptive investments to carry out future decisions are often difficult. According to Gartner research, 72 percent of supply chain strategists say slow budget reallocation is the biggest barrier to a more adaptive plan.
The research and advisory firm says that one step towards achieving an adaptive investment approach is through capability funding, in which supply chain leaders can allocate blocks of funds to several initiatives. This allows them to remain flexible in directing additional funds to initiatives when priorities change.
During the keynote, Lisa Callinan, vice president team manager with the Gartner Supply Chain practice, posed a second option.
“Mimic the approach that venture capital firms use when assessing whether to fund early-stage startups,” said Callinan. “Success with a prototype or trial is the basis for developing more accurate estimates on how much further funding is needed. Teams feel less constricted and feel less pressure to present a solution that guarantees returns from the start.”
Decentralized, center-led or centralized?
After understanding both the operating model and the mindset required to discover the right purpose, supply chain planning leaders can then evaluate if a decentralized, center-led or centralized model is the best design for their function.
In a decentralized model, all planning roles report into the separate business unit leaders. This approach makes sense for large portfolio companies with mostly independent business units, such as retailers with various brands under one roof. As more apparel retailers look to manufacture garments locally and even turn to an on-demand production model, decentralized supply chains may be more of a fit in that realm.
The center-led model leaves planning operations within the business units but creates roles at a global level that focus on planning processes and long-term planning. Finally, in the centralized model, all elements of supply chain planning report into an integrated planning leader who is running all aspects of planning across the different regions.
The latter is becoming more popular in an era when transparency and traceability are now bigger factors in the apparel buying process for the end consumer.
Lux Research: Sensors are still underused
What would adapting the supply chain to modern times be without implementing new technologies designed to improve enhance transparency and connectivity?
One recent report from technology research and advisory firm Lux Research indicates that the answer to the disruptions in the retail and manufacturing supply chain comes in the form of IoT sensors that can alert companies to problems and help them address these issues, sometimes even before they become a problem. These issues usually arise at one of four critical areas of the supply chain, including point of origin, warehousing, transit and destination.
“Things that go wrong in the logistics process include pilfering, asset misplacement, and physical damage due to improper storage conditions and unexpected events,” said Lisheng Gao, Ph.D., analyst at Lux Research and lead author of the report. “It’s now more important than ever to ensure the right goods are transported in the right quantities, under the right conditions, and delivered to the right place at the right time. Only then will it be possible for society to remain functional and ensure that abundant resources are available to fight the pandemic.”
Gao highlighted the sensors’ ability to enhance data visibility and transparency across the entire process and facilitate planning, optimizing, and uncovering other invisible insights. All without needing a network connection, these sensors can be used to monitor environmental conditions, prevent misplacement, identify damages, avoid accidents, ensure compliance, track location and reveal real-time conditions.