CARGOCONNECT-MAY23 - Flipbook - Page 20
COVERSTORY
APPAREL SUPPLY CHAIN
consumption. This results in retailers’ product
proposition becoming region-specific, leading to a multiplicity of stock keeping units
(SKUs). Further, the phenomenal increase
in operating costs due to the increase in
real estate prices is pushing down retailers’
profit margins considerably. These high real
estate rentals leave no room for retail stores
to stock excess or additional inventory. The
combination of these factors leads to a unique
Indian consumption supply chain, which
includes the handling of a large number of
SKUs in pieces, in contrast to the handling of
limited SKUs in the form of pallets by most
large retailers across the globe. Further, in
emerging countries like India, the retailing business continues to be dominated by
independent retailers, mom-and-pop stores,
and unorganised markets. Here, wholesalers
and distributors carry goods from various
suppliers to the independent retailer (owned
shops and unorganised markets). Due to such
inherent dynamics and multifaceted nature
of the clothing industry, fashion retail has
its own special prerequisites. Thus, there is
a growing need to learn the art of handling
these complexities, and to design, develop,
and execute supply chain solutions that are
distinctively Indian.
Many organisations in India are now
gradually moving towards improving their
profitability and efficiency by implementing
various supply chain techniques. Indian
textile and apparel companies have learnt
from their western counterparts and have
given SCM a strategic position in their
business strategy, instead of viewing it as
merely an operational issue. Large format
retailers are looking at SCM as a key to
increasing their profitability.
The most commonly used tools are
information technology based. Apparel
retailers have started seeing information
technology as an important tool to improve
efficiencies and are taking definitive steps
towards leveraging IT tools in bridging the
gaps in the supply chain. Companies have
begun to understand the need for building
a sufficiently flexible supply chain, which
enables them to capitalise on new growth
possibilities like developing a new product
in the shortest possible time.
A broader
holistically-driven
perspective
To survive in today’s challenging global
market, alongside buying the right goods
at optimum prices, it is also crucial to have
products at the right place, at the right
time, and at the right operational expenses.
This requires efficient logistics systems
and processes.
BEST PRACTICES FOR APPAREL SUPPLY CHAIN MANAGEMENT
Align Priorities
and Plans across
Teams and
Suppliers
Many fashion brands manage several product lines
and sales channels. With
large companies divided
into many departments,
it’s common for individual
teams to plan around their
own priorities, leaving the
supply network disjointed.
A business should have a
global supply chain plan
aligned across stakeholders and departments. All
teams should have the same
logistical goals and work for
collective objectives.
20 | CARGOCONNECT MAY 2023
Prioritise In-Season Sales
When items are in season, they sell
for the highest price. Ensuring that
all in-season inventories perform
well is therefore crucial. By letting
sell out of its styles before the end
of season, a brand avoids placing
items on clearance. This increases
the urgency for its products, since
shoppers can’t be sure that a product
will be marked down in a few weeks.
To optimise in-season sales, many
fast-fashion retailers start by producing a limited quantity of a new style.
They then ramp up production for
styles that sell quickly and do not
reorder the slower-moving products.
This “test and repeat” strategy helps
them make the most out of a fashion
season and sell off stock before it
moves to markdowns.
Segment
Customers for
a More Efficient
Supply Chain
In the case of an apparel
retailer with a wide product
selection, each product
may appeal best to a particular type of customer.
It’s essential to segment
finished goods and how
the retailer markets them
to its customers. Effective
supply chain managers
also use these customer
segments to enhance the
supply chain. They may
work with specialised
designers, manufacturers
and logistics companies
to manage products for
varying markets.
Focus on Total Cost of
Ownership over Price
In the apparel industry, moving
manufacturing offshore sometimes
offers reduced labour costs and other
benefits. Though fashion brands
may have to incur cost in shipping
and more complex transportation
logistics. This can reduce the cost of
manufacturing while increasing the
TCO. Inventory also requires storage,
which is sometimes a hidden cost.
Supply chain managers have to prioritise each product’s TCO. Keeping the
TCO down may require paying more
for a product initially. For example,
when ordering more frequently in
smaller quantities, one may not get
the same volume discounts. However,
the savings that comes with renting
a smaller warehouse, with less risk
of inventory going out-of-season,
often make up for it.