By CGS, Inc.
Before the pandemic, many fashion and consumer goods sellers targeted most of their improvement initiatives on engaging consumers – think ecommerce, experiential retail, and product assortment. The seemingly non-stop chaos of the pandemic era has painfully reminded us that delivering on consumer demands also requires agile production and logistics capabilities.
Since the beginning of the industry's massive shift to global sourcing, procurement strategies have focused primarily on securing the lowest cost per unit for needed supplies and finished products. While all the attention on cost-cutting has benefitted consumers with lower prices and buoyed brand margins, it has also prevented companies from recognizing potentially broader, longer-term opportunities for all stakeholders in the value chain.
What's most needed now is a productivity mentality. As many brands are beginning to recognize, supplier relationships must evolve into strategic partnerships that fully reflect both parties' challenges and needs, strengths and weaknesses. While some are already taking a more hands-on approach to supplier relationships, a new, collaborative process that is data-driven and digitally connected will be needed to achieve substantial and sustainable change.
Data Insights over Gut Instincts
While many factories closely monitor key performance indicators (KPIs), most brands and retailers do not have access to this level of information. This is often because the data is being maintained manually or a convenient means for sharing the information is not in place. These issues can be quickly resolved with real-time shop floor control and integrated supplier management technologies like BlueCherry Shop Floor Control. To facilitate the use of these technologies, brands and retailers often partner with suppliers on joint implementation to achieve greater supply chain collaboration, visibility and control.
A 2022 Sourcing Journal/AlixPartners survey report, Fashion in Focus, revealed that almost half (44%) of sourcing teams do not have insight into factory capacity, and 49% are not provided with production line efficiency metrics. Even more concerning is that 59% do not have data on suppliers' defect rates, 61% lack insight into nonproductive time, and 73% are unaware of factories' right-first-time performance.
Manufacturers also cite buyers' lack of production knowledge and inability to effectively interpret the data for not sharing this information. Regardless of the reason, without this detailed factory data, sourcing decisions are often made based on gut rather than reliable, up-to-date information.
While supplier cost (49%) and quality (52%) still ranked as the top two factors in sourcing decisions, lead times and capacity were also popular, with each garnering about 40% of survey responses. Fewer executives said they frequently weigh factors like ESG compliance (32%) and country risk (25%). As we have seen, health, weather, geopolitical and other disruptions also have the potential to upend production and must not be overlooked.
Technology to the Fore
While the digital age is clearly upon us, fashion supply chains are still playing catch up with digital transformation. When the survey asked participants which collaboration and production tools, they used to improve efficiency, the answers highlighted a relatively weak adoption rate of less than 50% for all key technologies.
As digitizing product development has long been a popular improvement initiative, it is no surprise that most responses cited virtual design tools (48%) and PLM solutions (46%) as the most implemented technologies across the group.
A deeper dive into the survey responses shows that productivity and visibility technologies are increasingly important. More than one-third of respondents cited country/factory capacity planning tools (39%), real-time supply chain visibility (36%) and real-time manufacturing visibility (35%) as the next most used technologies to improve supply chain efficiency.
Unfortunately, this means that nearly two-thirds of brands and retailers are not yet leveraging available supply chain and manufacturing visibility tools that could enhance their ability to more effectively identify and act to resolve the disruptions and uncertainties that dominate today’s business environment. Perhaps more telling is that only one in five respondents cited digitized raw materials management solutions that could help them better align supply with demand. This means plenty of opportunities remain to improve supply chain productivity through these technologies. Of course, no one is suggesting you should implement technology simply for technology’s sake. But as we have discussed here, many highly justifiable solutions can deliver measurable results with a fast ROI.
CGS BlueCherry is a leading global supplier of a full range of integrated technologies and services with the expertise to advise and support fashion and consumer goods companies in achieving the productivity solutions needed to navigate these challenging times.
Are you considering taking your visibility and productivity to the next level? Why not start a conversation to discuss why right now could be the perfect time to take action? Reach out by phone at (315) 371-4970 or visit cgsinc.com.