Apparel's Biz & Tech Conference Tackles Supply Chain Conundrums

11/20/2013
While "Building a Better Supply Chain for Today & Tomorrow" was the title of Janet Suleski's opening keynote at Apparel's Business & Technology Leadership Conference, it easily could have served as a guiding theme for the entire day's event, which included several other presentations as well as multiple interactive technology solutions sessions and informational briefings.

Suleski, research director, retail with Gartner, kicked off the conference, which was held at The Roosevelt Hotel on Oct. 31 in New York City, with a roadmap — literally. Like maps — which often reflect the haphazard nature of the way in which communities develop and grow close together, without having roads to connect them — retail channels and their related processes typically have "grown up in their own universes," and the supply chains that support them grew up alongside them, reflecting the siloed nature upon which they were built, said Suleski.

"Essentially you have a collection of roads that don't necessarily connect," says Suleski. The challenge for retailers is to knock down the silos between channels and implement global best practices across them while also being able to service individual local needs, channel needs and brand flavor.

Deconstructing the silos
"In omnichannel retail, the supply chain is center stage, and processes have to revolve around the supply chain," she says. In a significant shift from about eight to 10 years ago, says Suleski, companies have moved from the goal of optimizing individual channels, such as design, sourcing and logistics to viewing everything as one channel. "It's just retail. You cannot optimize across silos. You have to deconstruct them."

This was also the message from Chris Devous, vice president of information technology, Antigua Group, who stressed that "it's really just one channel" and said that many companies are failing to fully understand and meet customer demand by continuing to view customer behavior through multiple channel lenses, and creating different sets of KPIs around those channels. "If we see that a guy bought something from his mobile phone on an airplane, we create a whole different set of KPIs [for consumers shopping from airplanes]. … Why do you want to create borders between channels?"

Removing the borders between channels ? and between pools of inventory — is key to creating a seamless omnichannel experience that allows shoppers to buy anything from anywhere, and retailers to fulfill from anywhere.

For example, at Aerosoles, the company has improved its fulfillment rate from 80 percent to 97 percent by fulfilling online and catalog orders from stores, a practice that it began in 2004 and has continued to refine and perfect since then. "In 2004 … it was a very tedious process. We had to get the information, find the inventory in the stores, and it would take two weeks to get it out of the stores and then ship it to customers," said Steve Siebel, vice president, merchandising at Aerosoles, speaking to a packed room at one of the event's new Technology Solutions Sessions. "We've gone through big changes to get to this point."

Aerosoles has also been knocking down barriers in its planning processes. "Previously, everyone was producing their own POs. They were ordering the same products, but separately. There was no centralized planning."

Recently, the company made the move to bring planning groups under one merchandising umbrella.

"We're planning 300 to 400 new styles a year," said Siebel. "There are thousands of SKUs that we need to plan or buy each year. We needed a planning system so we could roll up more strategic plans to be more effective with what we're buying.  We needed to consolidate purchase orders." To work toward this goal, the company implemented a planning solution from TXT MAPLE LAKE which has been in place a little more than a year. "We started with item planning and strategic planning at the category level, and we roll up divisionally — retail, outlet, web and catalog. One open-to-buy for all four. This helped in consolidating, in becoming more efficient in what we're buying."

In August, the company entered phase two, with the implementation of the assortment planning solution, and Siebel says the company is "just starting to scratch the surface" in terms of unlocking the potential that this capability has to offer.

Achieving supply chain maturity without losing the local touch   
As companies knock down barriers between components of the supply chain, they are moving through stage one of a five-stage model of supply chain maturity as defined by Gartner.  After stage 1, knocking down silos, comes stage 2, scaling supply chain functions, followed by stage 3, integrating the supply chain, stage 4, achieving demand-driven value network maturity and finally, stage 5, the development of a value creation network.

Suleski says that most apparel companies today are either at stage two or working to get there from stage one; that moving from stage three to stage four is the most difficult, because it requires a huge "mindset shift"; and that stage five is really only possible to achieve in short bursts.  "It's something to aspire to, but only will probably ever apply to a little bit of business for a little while."

Has anyone achieved supply chain perfection? "I'm not sure anyone is totally getting it right," says Suleski. "If we're talking about deconstructing and building from the ground up, some are doing it pretty well, but nothing is seamless. Nike is often held up as an example, [but] they are doing a lot of work behind the scenes to get it right."

Getting those "roads" to connect while also allowing for the option to personalize and localize to various regions or lifestyles is difficult, says Suleski, but it's crucial not to sacrifice "local flavor" to the needs of centralized supply chain planning ? things such as the "tater tot hot plate," a local Minneapolis favorite, which you can order at Target in that city, but won't find on the menu at a Target elsewhere, says Bob McKee, fashion industry strategy director, Infor. 

"You have to have supply in place to meet demand [where it's needed]," he said, giving the examples of selling surfboards in vending machines at resort locations, and noise-cancelling headphones in vending machines at airports (for those times when the patrons at your gate would indicate that you might be in for a flight full of crying children), he adds.

Beyond localization, the trend toward personalization is putting even greater pressure on sourcing and the supply chain. "[We're seeing the advent of] Walmart Labs, Target Labs. [They're all trying to] find patterns in the noise, to crowdsource, to figure out how to personalize offers and promotions," said Scott Welty, vice president, retail strategy, JDA Software. "We're starting to see, for the first time since the Post-War era, a world of non-mass customization . It's coming full circle. How do you go from appealing to the millions to appealing on a one-to-one basis?"

Don't bite off more than you can chew
For retailers or brands ready to take the leap into moving toward an omnichannel supply chain, Suleski recommends breaking it down into pieces, identifying one or two supply chain metrics, and figuring out how to improve those pieces. Even if it takes two years, she says, focus on improving those metrics from one end of the supply chain to the other. "I think a trap companies fall into is looking at the big picture and [asking], ‘How am I going to solve this thing?'

Suleski suggests looking outside the fashion industry for ideas. She notes that high-tech companies and fashion businesses "actually have a lot in common" and that the latter can learn from the former. Both industries, she says, require supply chain agility, trendsetting, the balancing of demand and the need to read signals vs. set trends.

Suleski also says that the consumer product goods (CPG) industry does a good job of demand-sensing and –shaping, noting that P&G is a good leader in product innovation and supply chain synchronization, while Kimberly Clark offers a good example of supply chain collaboration. Grocery giant Kroger reworked its supply chain by working backwards from the shelf to figure out how to solve some of its supply chain problems. "If you started at the rack in your store and worked backwards, what would that change?" she asks.

For Aerosoles, improving planning is a careful, considered process that is striving for a balance between too much detail and too little in its assortment of 1,000-1,200 styles per season, a large portion of which is carryover. Says Siebel: "We spent a lot of time on item planning, [asking ourselves,] ‘How much do you plan at the item level? Can you plan every item?'

"We wanted to make sure we were always in stock, not having too much stock in the warehouse. … Consolidating of planning has helped get better deliveries, more efficiencies and appropriate factory space reserved."

Trends in tech
When it comes to tech, says Suleski, a number of trends stand out in the industry. Some of those are:
  • Many companies have purchased technology solutions but only partially implemented them, or have implemented them but are not taking full advantage of their capabilities. For example, she says, "a lot of companies have adopted PLM and put in pieces but not whole thing," while some companies have a "second-generation" PLM system but have not upgraded to the third or fourth generation that offers a more comprehensive PLM platform. Still, PLM cannot function in all capacities, and Suleski cautions against trying to turn a PLM system into a commercialization platform.
  • A number of technology solutions, such as markdown optimization and price optimization are "making a comeback." Many companies adopted these technologies but didn't take time to understand how to implement them to best effect, and they are now revisiting these solutions, realizing the great benefits they can reap from them.
  • Many apparel companies are focused on better aligning S&OP with merchandising and inventory execution, and in general, says Suleski, there is a much more "granular level of cooperation" among all company divisions.
  • There is "still not much in the way of tech" relative to quality management — it still involves a lot of hands-on processes and phone calls with mills. This "grey area is relatively ignored by tech providers" ? and is a great opportunity for them.
  • To meet shifts in globalization, competition and difficult economic times, companies have invested in getting the "basics" right by getting systems such as PDM and ERP properly in place so that they can be built upon.
  • "[During the past eight years,] investment patterns have shifted away from off the shelf to hosted software. Companies are much more interested in hosted and managed technologies. They've shifted back and forth, between enterprise platforms and specialty vendors, for specific pain points. What we're seeing is a definite trend toward a platform way of thinking about the niche. This isn't a tech problem, it's a business problem. [Companies are saying,] let me rework my business processes, and then backfill the technology from there. That may mean Excel and email for a while."
  • Apparel companies are moving away from modifying software. Customizing used to be the default, but today, more thought is being given to why a change is being sought. Companies are asking themselves, 'Is this a differentiating process? Do I really need to issue an order in a custom way?'  They are moving away from broad assumption that everything needs to be customized."
  • Many small-sized businesses are starting to look at investing in a variety of technologies. Suleski cautions them to understand, "When you are investing in technology, you are making a long-term commitment.
"When you're talking to tech vendors don't let the fact that you're small dissuade you from talking to big companies. Whether you'll be using this technology for three years or five or 15 or 20, it's long term. Give it a lot of thought," concluded Suleski.

In addition to presentations and open roundtable discussions, the latter which were new for 2013, the conference featured technology exhibits from a dozen leading providers.  Platinum sponsors of the conference were Human Solutions, Infor, JDA Software and TXT MAPLE LAKE.  Amazon Webstore was a gold sponsor and silver sponsors were Alpha Distribution Solutions, Core Solutions, ecVision, Embodee, IBM and NGC Software. 

The 2014 Apparel Business & Technology Leadership Conference will be held on Oct. 30 in New York, and prior to that the Apparel Technology Conference West will be held April 2, 2014 at the Fashion Institute of Design & Merchandising in Los Angeles. Visit apparelmag.com to register for the Los Angeles conference, which is free to qualified apparel retailers, brands and manufacturers.


Jordan K. Speer is editor in chief of Apparel. She can be reached at [email protected].
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