Two Costly Apparel Supply Chain Problems You Can Easily Solve
Keeping your customers happy by always having the item they want (whether it's a garment, footwear or a fashion accessory) without keeping an overstocked inventory is a classic conundrum. Oftentimes, failing to strike this fine balance is caused by inaccurate demand forecasting, or inexplicable demand surges or drops.
However, demand is only one side of the equation. The other side of the equation is challenges in the apparel supply chain that force you to overstock. Too much inventory forces you to sell it off at a loss. It also costs you while it's lying on your shelves because it ties up capital that's best used elsewhere in your apparel business. If its quantity is substantial, it also adds to your warehousing/storage costs. Here are two important supply chain problems:
Deals that seem too good to be true can be costly. Choosing suppliers on the basis of price alone may set you up for late deliveries that cause temporary stockouts that nevertheless create customer defections to the competition. In order to cope with your suppliers' unreliability, you're forced to maintain extra safety stock to tide you over until late shipments arrive
How to avoid the challenge?
This state of affairs is avoided by properly vetting your suppliers. Go with reputable companies with a history of excellent service. Make a thorough research before committing to any supplier including reading reviews about them if there any available online. It's also best to have backup suppliers to fill in when one of your regulars is experiencing difficulties.
Suppliers With Excessive Lead Times
Long lead times require that you purchase, and therefore commit your money, well in advance of when you need the apparel. Demand forecasting in the fashion and apparel industry gets fuzzier when projecting further into the future. Compensating for this greater uncertainty means a bigger safety stock of your apparel items if you want to ensure of not running out of stock. For year-round items, you need more inventory to handle the lengthy lead times themselves. That is, you must order and commit money well before your inventory has run low.
How to avoid the challenge?
Solutions to avoid committing to companies with excessive lead times include the following:
1. Use local suppliers
When possible, stick to nearby suppliers to reduce shipping time (and costs). Shorter shipping distances also reduce the risks of weather induced delays.
2. Split the order
If a supplier states a lengthy lead time for your order, ask if splitting the order in two will help. Perhaps they don't have enough in stock to fill your entire order. In this case, they can immediately send what they currently have in their first shipment, followed later by a second shipment when they acquire or produce the remaining items you need.
3. Change shipping method
Perhaps you can speed up delivery by requesting a faster, but more expensive method of shipment. This is viable if the shorter lead time monetarily compensates for the increased shipping expense.
4. Share your demand forecasts
Yet another way to reduce lead times is sharing your demand forecasts with suppliers with whom you have a good business relationship. This simplifies their forecasting of your demand, which means they'll be ready for you when you place an order.