Like it or not, every fashion company is facing a complex list of external challenges, like climate change, radical new buying habits, increased consumer expectations, new technologies, AI, data analytics, and more. What’s more, your business model itself, or the key people that drove your company’s success, may have even become the main challenge to the company itself.
The future is now, however, and speed to market and mass customization have never been more crucial. Retail store closures, and large brands’ woes nowadays come from not being able to meet the customer demand. We are not talking about quantity here, but an appealing product at the right time, right place and right price.
Retailers are beginning to come to the brutal realization that quality, trend and newness of a product is superseding how much of a bargain that product is when it comes to what’s important. Reading the sales and reacting efficiently and effectively to it, is enabling companies to reduce both inventories and lost sales. Retailers that rely on 50 percent markdowns at the end of the season, will not be able to sustain the practice any longer, unless they fundamentally take a hard look on their supply chain, and all their partners along the value chain.
Rather than a push system driven by singular focus on commodity or FOB prices, your value chain should factor in all risk-reward assumptions, and opportunity costs of different inventory positions, as well as process-shortened lead times between different supply chain nodes. Although never easy to achieve—if it was, the more than 12,000 stores that shuttered since 2010 would still be open today—the result of this transformation would set the company’s path toward an “agile” value chain that would be both nimble and sustainable to meet customer’s pull effect.
The global supply chain is hungry for a new chapter.
To stay competitive in this tough environment, companies need agile, trustworthy partners, who will walk hand-in-hand to perfectly align your product offer and supply chain processes in a sustainable yet ethical way to exceed your customer demands.
This partner should have both a tactical and strategic mindset, will need to foster a culture with innovation, have know-how of both the consumer and supplier side, and need to be very agile to cope with the fast changes. Supply chain partners should also be resourceful to cater the exponential growth of your successes/challenges, have a global ecosystem where different subject matters collaborate together and, perhaps most importantly, they need a passion for inspiring designs, great quality and doing the right thing.
Erman Sinan Tarim was a former senior manager at Li & Fung, and he co-founded Oculas Virtual Manufacturing (OVM). OVM is a design, data and technology driven supply chain specialist with focus on sustainable and transparent sourcing. OVM provides its services and products to established (e)-retailers and start-ups.