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:
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
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. http://www.appareltextilesourcing.com
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