The Great Supply Chain Disruptor
By Jordan K. Speer
With their smartphones, iPads and numerous other digital devices, consumers these days are an always-on, networked, review-writing, product-purchasing, mobile-posting, locating-sharing bunch, and retailers are working fitfully to ensure that the customer experience they provide, regardless of channel, time, location or product is top-notch and consistent across the brand.
Achieving the optimal “customer experience” is every retailer’s goal, and it involves the entire apparel supply chain. As noted in this month’s 7th annual PLM Report, companies continue to build on earlier benefits achieved in areas of faster time to market and better visibility to costs, looking now to the next tier of competitive differentiation: excellence in design and better control over inventory.
In his keynote presentation at last month’s Manhattan Associates’ supply chain conference, president and CEO Pete Sinisgalli addressed the many challenges that apparel businesses face in trying to achieve “zero disappointment retail,” from government regulations and resource shortages to elections and supply chain challenges. Although these hurdles present difficulties, he said, businesses can plan for them.
What’s more likely to knock you off your feet are those “black swan” scenarios — events that are highly improbable, but that will cause devastating and irreparable damage if and when they do occur. Last year’s earthquake and tsunami in Japan is one such event. It totally disrupted large global supply chains — none more so than Toyota’s.
A company lauded for its supply chain efficiency, Toyota was so hard hit that it took eight months for the company to get back on track, says Sinisgalli. That opened a window for GM, which took the lead as the world’s top-selling automaker. Toyota determined it would never find itself in that position again, and is developing a new flexible supply chain model that it says will be able to respond to any “black swan” event within two weeks, in part by ensuring it’s no longer dependent on any one group of suppliers or any one global location.
“That’s a good way for anyone to run a business,” said Sinisgalli. In this wireless, connected world you can’t miss a beat. Wireless mobile devices were not circulating in 2005, he notes, yet by 2015, there will be 2.13 billion people connected wirelessly.
The implications of this are phenomenal. Already, 75 million U.S. consumers shop via mobile. Three percent of Brits with wireless devices shop in the bathroom. (This may seem odd, says Sinisgalli, but does point out the increased productivity we get from our wireless devices.) Retailers now must deal with models like Amazon’s by finding ways to compete with its lack of brick and mortar and its price-check app, and to hold on to consumers who use retailers’ stores as its “showroom.” Amazon is now the 13th largest retailer in the world, up from 19th since just last year.
Retailers are fighting back with private merchandise, improved services, in-store pickup, in-store digital offerings and global sales. One customer in Australia, Sinisgalli relates, ordered a $100 blouse from a U.S. retailer without balking at the $200 shipping charge — demonstrating the “amazing opportunities” of the shifting retail landscape.
Which brings me to Manhattan’s executive VP and COO Eddie Capel, who put a different spin on things. The endless choices that consumers increasingly have in their hands provide a rich opportunity to build intimacy, but they’re also a wildcard, a series of constantly changing variables that make planning harder than ever.
Indeed, when you think about the evolving nature of retail, “you might call choice a disruption,” says Capel. Every online purchase, every pick-up in store, every return to a different place from where it was purchased may and will change the original plan — like a series of baby black swans swooping through your supply chain all day. (I’ve completely stripped the black swan concept of its meaning as an extreme outlier, but you get my point.)
Companies must respond, says Capel, by intelligently breaking and fixing the plan, over and over, to account for the constant disruptor of choice, by implementing systems that can solve thousands of small decisions “all day long” so that businesses can both provide a great experience and do it efficiently — by not throwing inventory, or air-freight spend, or any other band-aids at it.
Band-aids waste money and deplete profits. Proliferating consumer choice will only accelerate the need for quick fixes if your supply chain isn’t built to accommodate it. Conversely, not pleasing the consumer — especially in today’s connected world — is a recipe for lost loyalty and lost sales.
The choice to develop a flexible, connected design-to-retail supply chain is easy. Getting there may not be, but not trying will surely lead to bleeding profits or customers who choose to shop from your competition.