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Digital Relationships Build Foundation for Efficient, Ethical Supply Chains

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Fashion is undergoing a makeover to reduce commercial and compliance risks, but the industry will need technology to successfully collaborate for change.

The final mile of the supply chain has seen significant technology investment in recent years as retailers chase speedier fulfillment, but upstream operations remain comparatively opaque and manual. Consumers may be the ones spending money, but creating better collaboration and connectivity at the point of purchase order enables retailers to more effectively deliver to the end customer.

“Supply chains are connected—your product’s here, your customer’s here,” said Rob Garrison, founder and CEO of import management system Mercado Labs. “Those aren’t two different things; those are one thing.”

In a recent conversation with Sourcing Journal president Edward Hertzman, Garrison explained why and how his company is working to break down silos in the first mile of the supply chain. Mercado Labs did a study and found that up to 16 people across eight departments are involved in each purchase order. Outside of the importer, there could be around 12 other parties, including the suppliers and forwarders. And without the right technology, communication can break down.

As an industry veteran with 30 years in the business, Garrison has witnessed the challenges firsthand. “The problem hasn’t changed, but the ability to solve those problems has changed dramatically,” he noted.

Even if a retailer has an enterprise resource planning (ERP) system in place to create orders, if a supplier doesn’t have its own customer relationship management (CRM) system to plug the order into, the process becomes manual once the order is received. Retailers then have only limited information about their products as they’re being manufactured. In contrast, by having everything connected and having consistent oversight of production, brands can more easily connect and adapt their orders to demand, or sales.

Additionally, retailers might not be aware of all of their suppliers. If a company has 100 suppliers, and each of these suppliers has 10 factories, that quickly scales the importer’s supply chain to 1,000 entities, making it difficult to manage manually. When a company goes to make a sourcing decision, such as moving production to a different country, “it becomes this big, complex mathematical equation pretty quick and we can’t process it in our hands and we certainly can’t do it on a spreadsheet,” Garrison said.

In their quest for new models—including leaner production and improved speed to market—brands are relying more heavily on factories as partners to execute, such as asking them to hold fabric or produce smaller runs. Comparing the industry’s revolution to rebuilding a house, Garrison said that technology offers a strong foundation to collaboratively act on new strategies, while a home built out of spreadsheets and email copies would topple over.

Given the potentially significant number of suppliers than an individual retailer may have, technology is also a means to have better visibility into factories’ practices—from quality control to social compliance.

“You have to fundamentally change the way you do business and build better relationships, but you also need technology to help you do it effectively and measure it,” Garrison said.

Click the image above to watch the video to learn how first mile transparency can make a difference for retailers.

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