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In the Age of Connected Retail, Are You a Responsive Partner?

Originally posted Mar. 14, 2019

On March 12th and 13th, The CCCT (China Chamber of Commerce for Import & Export of Textiles & Apparel) and ECV International hosted the 6th Annual China Textile & Apparel Forum in Shanghai. Over 300 attendees from six continents attended. The audience from the global supply chain has increasing concerns about the challenges in the industry today. My keynote brought a different perspective - to focus on the consumer and not just your own efficiencies. A summary of my presentation follows:

Global Retail

  • 2017 was an important year for retail

  • Record numbers of stores closed

  • Amazon and Alibaba continue to grow

  • Consumers changing - baby boomers giving way to millennials

  • The year ended with the best holiday sales performance in years

  • Online sales continue to thrive - now at 16% of total retail sales

  • However, many retailers have not evolved… to listen, connect and service their customer

The Customer is in Control

  • Today’s consumer is smart

  • She is connected

  • She is digital

  • She does research and knows what she wants

  • The consumer is in control and if she is not getting what she wants, she will move on

The Threats of Retail

  • The shift of shopping in-store to online has become a challenge to retailers

  • This transformation means that brands and retailers must service their customer with a single message, whether she is connecting online, via social media or in the store.

  • Today’s consumers are digitally connected and are accustomed to searching online for product and price information.

  • It is never been more important for Retailers to have responsive and connected Design Chain … and Supply Chain

Other Disruptive Changes at Retail Today

  • Instagram is redefining customer engagement and communication

  • China has a growing digital wallet platform, as retailers try to capture more of their customer's spend

  • Subscription models, like Stitch Fix have removed the need for brick and mortar stores by selling clothes as a service

  • Leading companies identifying and creating lead roles to their executive teams - VFC added a Chief Digital Officer

  • Target’s recent performance was encouraging. They continue to invest into delivery services and remodeling their stores

And My Customer is Saying ...

  • “My margins have been shrinking due to declining foot traffic in the malls, stiff competition from e-commerce retailers and significant shifts in consumer spending patterns”

  • And in turn, my retail / brand customers are asking for more from their supply chain

  • It is very challenging time being a supplier in the apparel industry today

The Global Supply Chain Today

  • The retailer / brand is my customer

  • We see they are struggling. Same store sales are declining

  • Their profits are down

  • In turn, my relationship has changed

  • Demands are higher

  • Shorter led times

  • Price pressures are ever increasing

  • My margins are down

  • It is clear that a responsive and connected supply chain has never been more important

The Legacy Platform - The Push Model

  • Our industry, unfortunately, still has a long design & development calendar. Many brands and retailers continue using up to a 52-week calendar

  • Using “sales history,” the brand estimates how many units they think they will sell. The “buys” are projected months ahead of the delivery

  • The supply chain produces to this projection. Produces apparel for the customer - the changing, digital consumer …

  • This apparel is pushed to the consumer. Is this really want she wants?

  • What if the retailer forecast was incorrect - and discounts (markdowns) need to be made to try to incentify the customer?

  • This is a downward spiral. The Push model is an inefficient way of servicing the customer

The New Platform - The Pull Model

  • If the customer is in control, then we need to listen to her …

  • The Design Chain has to dramatically shorten the development calendar. A calendar that is built for speed, responsive design, based upon what the customer wants

  • In this model, products enter the supply chain when there is demand. This require an agile supply chain

  • Demand driven - for production and replenishment

  • Demand drives The Push model. This is change in the supply chain

  • This is the future of our industry

Optimization of Your Supply Chain

  • It must be your ongoing objective - your internal processes must include self-evaluation and continuous upgrading to match industry best practices, including ..

  • Providing Research & Development for raw materials, wet processing, embellishment and more

  • Providing design inputs to your brand customer

  • Manufacturing flexibility

  • VMI - willingness to partner in Vendor Managed Inventory

  • Responsiveness to the un-forecasted demand (new orders) that your customer is receiving

  • Speed - Near Sourcing

Advanced Supply Chain Considerations

  • Investment into Robotics

  • Offer MTM - Made to Measure. Servicing the “digitally native” brands and facilitating “testing” for larger retailers

  • Investment into technology - with transparency into your customers needs. Analytics to be able to respond to demand- driven activity.

  • Drive to be part of your customers Unified Commerce platform - offering a solution to their DTC growth opportunities

  • Investment into building a balanced manufacturing platform

Balanced Manufacturing Platform

  • We are seeing manufacturing strategies shift from the East to the West. Not just from US withdrawal from TPP.

  • We continue to witness investments into the west in textiles, garment manufacturing and logistics by Chinese and Asian investors.

  • This benefits of a multi-national platform is increased responsiveness to your customer. Better than just an “Asia-only” manufacturing model

  • Strategically invest into the Americas - into Central America, the Caribbean and Latin America, even the United States

  • Connect and grow with your US and Canadian retailers in important, emerging trade shows in hot spots in Toronto and in Miami.

In Conclusion - The New Supply Chain is .....

  • Is an aligned Supply Chain with Design and the Customer

  • Is solution-oriented as a trusted and responsive Supply Chain with flexible, agile manufacturing

  • Is aligned in the value chain, upstream with raw material and downstream with logistics

  • Has a broader, global manufacturing footprint allowing for demand-driven capabilities

  • Has embraced and invested into technology

  • Works as a connected vertical Value Chain - one integrated team

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