Transformation and Innovation in the Supply Chain
Updated: May 13, 2019
The supply chain for apparel companies is often faced with unique challenges resulting from internationalization, advancement of the trend cycle and consumer demand for quality and transparency. There is also the need to reduce losses and increase profits amidst an increasingly competitive fashion and apparel market.
The State of Fashion 2018 report, issued by The Business of Fashion and McKinsey, revealed that one of the biggest challenges fashion companies are likely to face in the coming years is the digitization and improvement of the supply chain. 75% of the executives examined confirmed that Artificial Intelligence (AI) will be implemented in some divisions of their companies' supply chains. The implementation will be expected to achieve increased flexibility in this new, fast-moving era.
Flexibility in the supply chain
Innovation in the supply chain impacts all processes of a company, and automating certain processes in the supply chain system can help build efficiency and allow businesses to adapt to change quickly. ERP systems streamline key functions such as financials, procurement and manufacturing, allowing you to manage these operations at the touch of a button.
Data monitoring and interpretation tools can allow companies to react to new trends in a more agile way. An example of a situation that needs quick reaction is the need for increased production of a specific product that became an overnight sensation as a result of a successful product launch campaign or a viral social media post. Such a situation is common for companies in the retail sector but can only be resolved in a timely fashion and with little impact via innovation in the supply chain. Fashion brands such as Zara rely on data analysis to keep their supply chain agile and create runway-inspired apparel within a matter of weeks.
Transparency and quality in the supply chain
Consumer demand for transparency and quality has led to the need for changes in the supply chain. This change is driven by an increasingly diligent and socially responsible buyer. Tragedies such as the collapse of the Rana Plaza building in Bangladesh, which housed workers that produced clothing for global fashion brands, have highlighted the oppressive conditions many items of clothing are made under. As a result, methods that track and document all levels of the supply chain are coming into focus. Solutions such as blockchain are being used to make supply chain practices more transparent for both brands and consumers.
Adapting to shifting consumer purchasing cycles
Social media has led to the need for immediacy. Fashion brands have had to adapt to the the 'see now, buy now' mentality of the ever-demanding consumer. In this sense, many companies have advanced their product monitoring with the use of ERP systems tailored for the fashion and apparel industry, which enables them to sample collections before launch and control their stock.
With the help of the sample tracking tools, it is possible for the supply chain for apparel companies to run effectively. Brands can measure the popularity of a product and predict demand before the complete collections hit the market. This strategy allows for more accurate projections of production needs, optimization of resources and reduction of potential losses.