Greater agility enables companies to meet demands of flexible and mobile consumers. Speed enhances companies’ growth by responding to shifting market trends. How should Fashion and Lifestyle companies structure their supply chain to create the required responsiveness and speed?
Companies need to make clear choices in their operating model that fits the market’s demand while ensuring low costs and paying attention to sustainability. The right operating model is different for each company. For instance, opening an online store would have quite an impact into operations and service offerings when the company today only delivers products to a limited number of distributors across the globe. Specially if this company has high volumes, limited complexity, forecastable seasonal demand and a modest peak to average factor. Hence the supply chain needs to be aligned with the business strategy.
With the differences in speed required in the various channels, set-up and responsiveness differs. Depending customers and sales channels, the network type, the amount of DCs required and the lead time varies. However, it is not only about the lead time from the warehouse to the Customer. Are you for instance able to deliver from you store same or next day for remote countries? But there is more, for instance:
Selection of the right location and technology for your distribution center is becoming even more important due to labor availability challenges. The labor market is tight in North America as well as in North Western Europe and regulations are developing, such as the new WAB law, which will take place per January 2020 in the Netherlands. This law will increase the protection and right for temporary labor, which is especially challenging for companies with high demand spikes.
Due to labor availability challenges companies are looking into robotization and automation. This can be part of the solution but will depend heavily on the brand owner’s scale to make the investments work or have the 3PL make these work. Given the dynamics of high spikes in demand, solutions which use both mechanization/robotization as well as flexible man power can work together as well.
Besides the distribution network set up and the level of automation, a key question is whether outsourcing to a 3PL, insourcing and having an own account operation or a hybrid option where the brand owner is responsible for the building, material handling equipment and WMS. Different strategies and solutions exist. Key decision criteria include for instance:
Digitization is used in supporting to improve forecast including help of (external) big data. In addition, Carlo Peters identifies that “digitization is rather mainly used in customer behavior analysis and targeted marketing”. Digitization can provide more values than just improving forecast and personalization. The value of big data in supply chain is not broadly adopted by companies because they do not know what needs to be digitized.” An example of further
BCI recently hosted on this topic an interactive roundtable together with Abercrombie & Fitch with supply chain executives of fashion industry.