The pandemic of COVID-19 has affected supply chain operations across the globe. Customer buying behaviour has been impacted in a big way, as they are more cautious about what product they are purchasing, where they are purchasing it from, and how they are purchasing it. It has become difficult to predict the market demand, and therefore, retailers and brands need to rethink their supply chain operations in order to cope up with the situation.
For managing supply chains, companies usually rely on low-cost supply and minimal inventory. However, given the unpredictable circumstances today, this model can rapidly imperil a business. In such a scenario, having a flexible network can help companies to adjust quickly to the changing market demand. A research by Bain & Company shows that firms with resilient supply chains have a much faster recovery rate, as they are flexible to adjust themselves to the changing market demand shift. Businesses achieve increased 20 to 40 per cent perfect order rate and 30 per cent customer satisfaction. It can also help in increasing the inventory turn to expand their product category and save money that can be utilised in investing in advanced analytics for improved forecasting and planning.
“In today’s challenging times, businesses can’t survive without a supply chain that’s agile, resilient and fast. Retailers need visibility into a transparent supply chain that provides real-time data into planning, development, production and distribution statuses, allowing them to quickly adjust processes according to fluctuating demand. With so much uncertainty in the world, supply chains must be able to quickly change direction, react to unforeseen disasters – and do it very, very quickly. They must also be able to adjust orders, redeploy raw materials and revise distribution with postponement and JIT (just-in-time) manufacturing techniques,” said Mark Burstein, President, NGC, a digital supply chain provider.
Companies today are investing in technology to make their supply chain resilient and minimise risks, and increase the long-term benefits with improved efficiencies. One of the examples of how technology has proven to be beneficial in shortening the lead time and remaining relevant with updated trends is H&M that relies on IT integration between the central national office and the production office for better communication and transparency. All the communication happens electronically especially in the design and product development team. With the help of technology, the retailer has been able to reduce the average lead time by 15-20 per cent, which has further reduced the risk of buying wrong products and has also allowed to quickly replenish the bestselling products at affordable price.
Also, the implementation of technology has helped fashion companies reduce the disruption due to unavoidable situations, and adjust to the changing market trends and meet the customer needs. The crisis has highlighted some companies with a flexible production line and supply chains and their immediate action to overcome the challenges. The sudden increased need for face masks and PPE in the market pushed a lot of manufacturers to immediately transforming their apparel production lines to PPE production lines. LVMH was one such company to immediately turn its perfume factories into production hubs for hand sanitisers. Giorgio Armani, Gucci and Prada also contributed by halting their apparel manufacturing operations for the production of medical overalls, face masks and nonsurgical gowns. A flexible supply chain played a major role in rapid raw material sourcing, product design, development, and testing and distribution.
The step ahead
Technology integration can help companies improve flexibility in their supply chains with better insights and quick action. The tools like Industry 4.0, cloud and analytics for real-time visibility are the need of the hour. The real-time visualisation of the supply chain with the help of technology can help brands have a better control over the supply chain and empower them to quickly react to the changes in the market. The cloud-based solution can help enhance information sharing, improving the speed of decision-making within an organisation. Whereas, the big data and analytics can help companies easily analyse the internal and external data, and use machine learning and artificial intelligence to identify the trends and predict the demand. This analysis can be used for preparing them for the market demand and taking better decisions in response to the trends. “A digital supply chain provides retailers the flexibility they need to do all of this. It brings together all the systems, applications, processes and information in the supply chain, while uniting all stakeholders on a single digital platform. As a result, it’s essential for managing a current crisis like COVID-19, as well as those to come,” said Mark.
The solution to all the above requirements is with NGC’s Andromeda Cloud-based platform that helps fashion companies to digitise their supply chains and enable collaboration by bringing all the departments – planning, merchandising, product development, sourcing, compliance, purchasing, production, quality, logistics, marketing, sales and operations – to one single platform. The platform allows Calendar and Critical Path Management, Global Enterprise Collaboration and Exception Alerts & Notification.
Integrated with AI, retailers get the leverage to react to the market trends with the analysis and reports obtained. The insights based on the sales data of each store and channel help in better assortment planning using a top-down merchandise plan by assortment, channel, floor set, region and delivery. The sales data can, therefore, be used to understand what products are customers buying, and accordingly, create collections and promote those products with discounts and new range. “NGC’s digital supply chain platform helps retailers prepare for unanticipated obstacles with an innovative digital solution that can react quickly to shifting circumstances. The cloud platform enables retailers to optimise product lead time and distribution time with scenario analysis that quickly leads to the best decisions,” said Mark.
The accurate and timely update about the SKU’s count by division, product and category helps in managing the inventory with quick replenishments. The inventory information is then used to plan the replenishment based on categories and products, and convey the same to the manufacturers while ensuring that the products are not out of stock which then affects the sales of the company as well as the customer satisfaction level.
The global sourcing feature offers flexibility in terms of selecting the vendors based on the requirements for the manufacturing of products. The tool offers complete necessary information which can be used to make an optimal sourcing decision. It creates an RFQ and selects the participating vendors based upon various criteria such as capacity or special machinery. The selected vendors are then informed of the new request and then they can enter their information like price, cost breakdown and delivery date. The software can also perform the calculations like landing costs, and provides an LDP comparison view.
For product manufacturing, retailers can directly connect with factories to make sure that orders are made on time and are available to the market at the right time. Factories can easily update work-in-process in real time so that the production and logistics teams can act accordingly. This allows the retailers with ‘just in time’ decisions in assortment planning. Apart from this, the retailers can constantly check for the quality of products through web using a tablet or any other device. Regular inspections, audits and visits can be scheduled at the manufacturing facility, helping to stay up-to-date with the timeline and maintain the required documentations on a web-based portal which can be accessed by all in the global supply chain. All the quality audits of corrections, fails and approval are notified to the QC manager using the solution. Moreover, all of these data and results collected are continuously analysed to deliver insights that help in making better sourcing decisions, and identification of factories that need improvements.
For shipments, retailers can ensure to update all the content of each carton and packaging which manufacturers can use to validate, therefore reducing the chargebacks and packaging errors. This also helps retailers to directly ship products to customers from factories, contractors and suppliers. All the barcode carton labels, inbound paper work and ASN are done via a web browser. Once the shipments are out, the logistics team can access the same information to reach to each location. Any delay in the process is communicated to retailer, manufacturer and customer. Once the order is delivered, the unit count of the product is updated on the website and inventory. “With store closures and unpredictable selling rates, NGC customers can use postponement and just-in-time strategies to produce and deploy inventory where and when it’s needed, quickly accelerating production when they see a sharp increase in demand and adjusting orders in other categories where demand suddenly drops,” commented Mark.