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09/22/2015

One Size Doesn't Fit All: Why Apparel Needs Better Supply Chain Management

When it comes to apparel, ?rst impressions are everything.

When consumers want that must-have item, it can be a major disappointment to discover that their size is nowhere to be found. Ask any store manager what they need most, and they will almost always tell you, “more inventory.” Excess inventory comes at a cost, though, so it's not in a company's best interest to counter stockouts by simply increasing stock-in-channel.

Given the seasonality of the apparel industry and the ever-shifting preferences of consumers, this can lead to companies trying to shed excess inventory via sales, which eats into gross margins. This problem is only compounded by the globalization of apparel supply chains, making it all the more dif?cult to meet consumer needs in a timely fashion.

But what if there were a way to reduce stockouts, while also reducing stock-in-channel? By putting the supply chain on one platform, with one single version of the truth, this can become a reality. To explore this further, let's first take a look at some of the key dynamics influencing apparel industry players and their supply chains and then examine three game-changing opportunities for apparel companies.

Volatile demand
Demand forecasts are rarely accurate, so adjustments will always have to be made as demand signals change. The seasonal nature, constant new product introductions, and globalization of apparel supply chains further exacerbate the negative effects of forecast inaccuracies. Seemingly small adjustments can cause large waves within the supply chain, leaving apparel supply chains particularly vulnerable to the bullwhip effect.

These waves can lead to a surplus of obsolete inventory or a shortage of much-needed products, as well as heavy discounting, write-offs, and subpar customer service levels. Increasing visibility through all tiers of the supply chain and giving suppliers a clear, near-real-time view into customer demand can help mitigate the uncertainty.

The importance of being a trendsetter
Fashion is all about change and looking both modern and different. As customer preferences change, supply chains that focus on improving service levels through effective product allocation by channel will satisfy those needs ?rst. Having the ability to commit with con?dence to demand as it changes based on actual supply chain management (SCM) capabilities makes all the difference. Synchronizing channel supply to volatile demand during all phases of the product lifecycle, as well as the supply chain, will ensure that the right products get to the places they are needed most.

The only constant is change
In the fast-paced apparel industry, the only constant is change. Without a single platform that puts all parties on the same page, these changes can't be addressed in a timely manner and can lead to unfulfilled customer demand. To counter this challenge, brand owners keep extra safety stock-in-channel and expedite deliveries, both of which increase costs and don't help to give companies a sustainable competitive advantage.

Three game-changing opportunities
There are a number of game-changing opportunities for apparel companies to get in front of the SCM challenges they face, which include:

Connect the different types of "visibility" to achieve a synchronized, shared view of the supply chain. Planning visibility, supplier visibility and collaboration, manufacturing visibility, logistics visibility, and demand visibility, when uni?ed, provide companies with the ability to sense and respond to demand changes. By connecting each of these types of visibility in one platform, companies can ensure everyone is on the same page and reduce the need to keep excess safety stock-in-channel.

Ensure availability and avoid obsolescence by executing an effective postponement strategy. There might be agreement around the base demand for a product line but it can get a little ambiguous when expanded upon to include color and size. Postponement allows you to buy the base fabric for a product line, and respond to changes in demand at the SKU level, within the execution window. This creates a repeatable competitive advantage that helps to increase revenue, avoid markdown risk and keep up with ever-changing consumer preferences.

Move to a hybrid, segmented supply chain model. Within a single apparel company, there are often different product lines, with vastly different shelf lives and sales pro?les. Take luxury fashion versus staple products, for example. Luxury fashion items are higher margin, lower volume, and the opportunity cost of not having the correct size on shelves is high and thus requires a quicker, more ef?cient response to shifts in demand. By contrast, a staple, such as a white T-shirt, can have a signi?cantly more predictable order cycle. For those reasons, there isn't a “one size ?ts all” supply chain model that works for both of these ends of the apparel spectrum. By tailoring the supply chains for these channels, supply chain partners can reduce end-to-end cycle times, collaborate on buffers and exceptions, and shift to a pull-based replenishment model.

The apparel industry needs a global supply chain that can keep up with the speed of fashion. Fashion trends come and go, but like a classic little black dress, a well-run supply chain is always in style. If you want to be successful in today's global marketplace, it's time to give your supply chain a makeover by providing all parties with access to a single source of reliable, near real-time data.

With that framework in place, you can make the most of the three game-changing opportunities mentioned above, putting your business squarely ahead of the fashion curve.


With more than 25 years of supply chain experience, Sean Rollings currently serves as vice president of product marketing at E2open. His areas of expertise are in global trading networks, cloud computing, S&OP, and software-as-a-service (SaaS) delivery and implementation for enterprise customers.