A new report by Drapers examines how businesses are tackling the increasingly demanding supply chain challenges in today’s competitive market.
Businesses in the fashion industry are requiring their supply chain to be as nimble and agile as ever to remain competitive and relevant to their customers.
Consumers’ demand for newness has pushed up the number of drops per season, while businesses want to respond quicker to unseasonable weather and new trends.
In response, brands and retailers are improving visibility across the supply chain, diversifying their suppliers and streamlining the logistics process to meet these challenges.
As a result, Drapers has launched its Supply Chain Report to delve deeper into the challenges and opportunities retailers are facing. We brought together supply chain experts from leading retailers at a round table discussion to discuss and analyse the topic. The report, which surveyed Drapers’ subscribers and readers found that half of the respondents view the supply chain as an integral part of their sourcing strategy.
Furthermore, 26.5% look to supply chain partners to fit in with their sourcing strategy, while only 8.8% see supply chain as playing no part in their sourcing and procurement strategy.
When asked what factors have the biggest effect on businesses, our survey found that the leading challenge for our readers was quality control (40.6%). As more clothing and accessory purchases are being made online, quality control is more important than ever to help avoid returns.
Following this, 37.5% cited controlling costs a larger burden has been placed on the supply chain as businesses look to supply new markets and multiple channels in difficult domestic trading conditions.
Supply chain visibility, which can help manage costs and drive efficiency, is also a challenge (34.5%).
Lastly, flexibility to meet emerging trends or changes in demand (37.5%) was underlined, as factors such as unseasonable weather can drastically change demand and impact retailers’ bottom lines.
The report also explores how businesses are utilising inventory to meet customer demand and tackle excess stock.
Inventory management is a key challenge for one in four businesses we surveyed as single stock pools, click-and-collect and fulfilling orders from store become more commonplace, as well as the need to reduce costs.
An increasingly demanding customer means it’s up to retailers to meet and satisfy that demand or otherwise lose that sale - and customer - to a rival. The report investigates how retailers such as young fashion brand Superdry, department store Harrods and value fashion chain New Look, are maximising their stock by moving towards a single stock pool for both online and stores and forecasting inventory needs by the individual store rather than clusters of locations.
We also look at how brands and retailers’ sourcing strategies are evolving as businesses are working with an increasingly diverse set of suppliers with varying lead times.
Brands and retailers are looking further afield than China, following rising labour costs in the Far East. In order to source the cheapest products at the best value, countries such as Vietnam, Cambodia and Dubai are rising in popularity. Young fashion brand Yumi has been one label to look elsewhere and is exploring opportunities in Vietnam where labour costs are lower. For those looking at shorter lead times, Turkey and Portugal are proving popular choices.
Although our survey finds cost is still the number one priority for businesses when choosing a supply chain partner,
speed to market and flexibility are also significant.
The report also delves into the hot topic of international expansion. Businesses cite the challenges of understanding demand in the different markets (48%), forecasting inventory needs (36%) and understanding local regulations (36%) as the main supply chain challenges, which is often the reason retailers opt for a franchise partner.
Avoiding inefficiencies (36%) is also highlighted as a stumbling block, as suppliers are often closer to the destined overseas market than the retailer’s central distribution centre in the UK. As a result, retailers such as Marks & Spencer are developing regional hubs to serve more directly overseas markets.
The report also covers multichannel, in which our survey revealed the biggest challenge to attaining a single view of inventory is lack of systems and integrated processes (55%). Click here for an exclusive excerpt, which analyses how retailers are working towards achieving this.
The multichannel chapter also reviews how the continued rise in the volume of online sales is driving businesses such as SuperGroup and department store John Lewis to streamline their logistics via larger, centralised distribution centres, while M&S and Asda’s George clothing brand are leveraging a port-centric distribution model (logistics activity in or close to the port, without trucking to a central location) as a way to reduce the number of warehouses they operate.
The report also reveals how warehouse staff can be key for generating repeat custom for retailers such as House of Fraser. The department store’s supply chain management partner, Norbert Dentressangle, is educating its staff in the latest trends to move them closer to the transaction process because, for online purchases, they are the last person to handle goods before the consumer receives them.
Most of all, this report outlines how retailers and brands understand the importance of the supply chain not just for delivering multichannel and international expansion, but also its ability to improve efficiency, cut costs and increase speed to market.