You can’t fix supply chain problems if you don’t know what they are.
Many will argue that the season is won or lost on the shop floor. However, all too often production is a black box for retailers and their brand partners, who are often a world away. Without insight into their supply chain, retailers can’t nip production costs in the bud before they escalate, leading to increased labor and production expense.
Seasonal trips to the factory can help increase visibility, of course, but in light of shifted corporate travel priorities the industry also needs to adopt virtual tools designed to amass the information needed to determine the root cause of product, worker and equipment issues. Let’s explore how retailers and brands can achieve shop floor visibility to mitigate remakes, bottlenecks and inefficiencies, as well as keep costs down and production timetables on schedule.
Lower the cost of employee onboarding
In the past year, we’ve seen extreme turnover across industries. The Bureau of Labor Statistics reports that job openings increased to a series high of 10.1 million (+590,000) at the start of summer. Job openings increased in several industries, with the retail trade experiencing the second highest rate of vacancies trade (+133,000).
In this environment, a company’s ability to provide efficient and informative onboarding is an important component to their ability to stay afloat. Dean Scaduto is co-founder and senor editor at Kitchen Infinity, a leading home decor brand. He maintains that while onboarding new staff member is always exciting, the process can be time-consuming.
Recruiting employees can be costly, with external recruiting fees for costing between 15 percent to 25 percent of the employee’s annual salary. Even companies that don’t hire out for recruiters wind up spending around $4,000 for each new employee. Not to mention additional costs like paperwork, in-person training, and the production lags that can come with getting a new employee up to speed.
“It’s occasionally an afterthought to teach new hires key communication methods,” Scaduto says, something exacerbated in today’s increasingly digital world where even remote onboarding has become the new standard following the global pandemic of 2020. “Fortunately, an employee app can help with onboarding in a variety of ways, regardless of how your company executes the process.”
And the quicker they get up to speed, the less it costs to get them there.
Scaduto suggests that brands and retailers focus on designing onboarding standards that are both clear and easy to follow, as well as educating new employees on the communication techniques utilized inside their firm.
“Your new hires will quickly feel like part of the team,” he said. “and their onboarding processes will be integrated into the communication flow.”
To provide adequate digital training, communication software needs to go beyond just the traditional channel of middle management to the frontline. Training protocols need to be communicated from corporate to the frontline, while inventory tracking needs to encompass manufacturing, back-of-house operations and shipping and delivery.
Increase worker efficiency during times of change
Worker turnover and onboarding new employees can result in lagging productivity. Michael Colarossi, vice president of innovation, product line management and sustainability at Avery Dennison Retail Branding and Information Solutions, says that one of the biggest communications challenges in apparel manufacturing is ensuring that demand signals cascade through the supply chain—from brands to garment manufacturers to material providers, and more.
“End-to-end communication is an obstacle because of the number of sourcing decisions involved and the length of the supply chain,” Colarossi said. “The impact of Covid-19 has only exaggerated that challenge as many brands have been forced to react quickly to supply chain changes driven by Covid lockdowns.”
Fortunately, through digitization, brands and retailers can facilitate supply chain visibility across their organization. This helps to keep production on schedule, reduces errors, and, ultimately, mitigates unnecessary labor costs.
Colarossi says that digitization eliminates bottlenecks in two ways. First, having visibility of all aspects of your supply chain allows teams to facilitate improved communication at various levels of the supply chain—between brands and garment factories, garment factories to their suppliers, and so on—to avoid any delays in availability of key components. Second, when brands understand how much inventory they have and where it sits in the supply chain, they can better anticipate supply chain outages and quickly address them.
The benefits of supply chain visibility are predictive as well as analytic. Improving communication is a continued benefit of digitization. Agile staffing can also help to fill in the gaps, despite any vacancies that arise from the pandemic, such as call-ins, leaves of absence and turnover. Fortunately, newer solutions enable brands and retailers to go beyond traditional demand forecasting to identify where issues most often arise within their organization. Digitization can help fill in the gaps where traditional management techniques fall short. Whether it’s anticipating staffing issues, or bridging the gap between corporate offices and frontline production employees, complete supply chain visibility is key to retailers’ ability to catch supply chain issues before they damage the organization.
Reduce bottlenecks with supply chain transparency
Supply chain transparency isn’t just a top-down proposition. Optimally functioning organizations collect data from every touchpoint along the product’s journey to achieve cohesive insights. They then take action on those insights, whether it means refining their employee onboarding process, adding additional safety protocols to a production machine, or branching out into a new type of product based on purchasing data.
Daniel Binder is a partner at Columbus Consulting with 18 years as the president of global retail planning and allocation, as well as supply chain and digital transformation for DFS Hong Kong, a division of LVMH. Binder says that it is important to understand exactly where a manufacturer’s production capabilities stand at all times. “This requires an understanding that stretches down to how materials are being transferred throughout production, bottlenecks within manufacturing process, and cost-saving measures.”
According to Binder, receiving real-time data and having visibility into all portions of the manufacturing process allows for better decision making, as well as increased efficiency and a more optimized production process over time. “With real-time data and visibility, manufacturers are more informed and can benefit from capacity planning improvements, a reduction in wasted time, risk mitigation and increased flexibility in decision making.”
When functioning optimally, end-to-end transparency eliminates information gaps. Retailers can use techniques such as 3-D supply chain mapping to see their organization as a whole. Being presented with a complete visual of their organization gives retailers the opportunity to prioritize areas where they need to refine their operation based on need, time investment and potential cost. They can then remedy any areas where lags or bottlenecks occur, to ultimately create a more streamlined and productive workflow.
Colarossi adds that mining customer data provides valuable information at nearly every level of a business. In the context of the supply chain, customer data provides insights into preferences and behaviors, which retailers can then use to modify their product offering, forecast/model demand, etc. “More accurate forecasting then enables the supply chain to more accurately plan capacities to avoid outages,” he said.
Real-time inventory visibility reduces human error
Employees are the keystone of any brand or retail organization. Yet employees can easily make human errors which, without interference, end up impacting production timelines, the bottom line and the end customer experience. Through digitization, retail brands and managers can achieve real-time inventory updates to monitor issues as they arise. The result is not only an organization with greater insight into its supply chain, but one that is able to weigh priorities to identify the most glaring production issues. Only then can they make modifications that result in the organization achieving maximum efficiency.
Simon Elkjær, the chief marketing officer at Danish electronics company avXperten, touts the benefits of inventory visibility within his company.
“The very nature of real-time inventory visibility not only helps teams stay updated or have a detailed view of the state of their business,” Elkjær says, “but also makes the entire inventory process more efficient and less prone to human error. If the software and systems are used right, real-time inventory can help teams avoid costly mistakes, make the most out of their efforts and streamline their success.”
Colorassi agrees that real-time inventory visibility is essential. However, he cautions retailers not to turn a blind eye to additional supply chain issues that can ultimately impact a brand’s success with consumers. Colorassi cites a recent McKinsey study which found that 75 percent of consumers changed brands during the Covid-19 pandemic. “The top three reasons were: value, availability and convenience.”
“The issues are not just limited to availability, convenience or speed,” he cautioned. “According to a recent CapGemini study, 79 percent of consumers are changing their purchase preferences based on sustainability. So, not only do brands need to ensure the integrity of their supply chains, but they increasingly must address the environmental and social challenges of those supply chains.”
To address these challenges, brands and retailers first need to be able to identify them. Utilizing technology to achieve supply chain visibility can help retailers track, prioritize and manage where bottlenecks occur. The end result is fewer bottlenecks that eat up employee’s billable hours: the staff budget is better utilized, employee’s time is better spent, and the supply chain continues to function at maximum capacity.