Langsey Company's Li Zhang is your insider guide to China. Here, she discusses a flexible supply chain.
Today, I want to talk about the importance of making your supply chain as flexible and smart as possible. First, I’d like you to ask yourself these questions:
How long is your product development cycle?
How long is your production lead time?
How quickly does your brand respond to the market trend?
Do the changes in market demand always cause a backlog in your inventory?
The answers to these questions will reveal how flexible your supply chain is – and if it’s flexible enough to succeed in today’s competitive industry.
Running a start-up fashion business? Make sure you read on to find clear recommendations and tips to help you improve your supply chain.
Traditional supply chain VS flexible supply chain
The American Fashion Designers Association refers to the traditional clothing industry's supply chain as a “collapsed system”. Six to twelve months is the time for the fashion company in the traditional mode to design a whole series, to make a sample, improve and approve the sample, do bulk production, product transition, and finally reach the retail store. For modern consumers who are losing patience, this time is too long.
The emergence of e-commerce and fast fashion has made the form of fashion supply chain management very different. The traditional model is that merchants produce products that are pushed to consumers through marketing and advertising. The flexible supply chain that relies on platforms and data is pull-style – that is, to understand what consumers really need, and then to do product design and development. The production and development process is closely linked to providing consumers with their most favorite things, in the shortest possible time.
The flexible supply chain has been a hot word in the apparel industry for many years, because players realise that if the market reacts to changes in the market and consumer preferences as before, the fate of the brand is quickly forgotten until death. The fast fashion brand supply chain represented by Zara is ten times faster than the traditional fashion brand. It only takes five weeks to update the SKU all the time, which also makes Zara’s parent company Inditex grow rapidly. In order to compete for more and more new consumers, fast fashion is still getting faster and faster. ASOS's self-operated product update cycle is as short as two weeks, and the number of new products is 4,500 per week.
Whether it can use new technologies to improve efficiency is considered to be the key to the survival and success of the current apparel companies. A smart supply chain system should be able to use data to accurately understand consumer trends, assist companies in making fast and appropriate commodity planning decisions, adjust production rhythms in a timely manner according to market demand, and control the burden of inventory shortages or excesses.
Supply chain management is as important as marketing, if not more important
Traditionally, fashion companies regarded marketing and sales as the key part in the value chain that created profit. Today however, everyone in the fashion industry should have realised that planning, production, and logistics are just as important as marketing, if not even more important. I believe that if your company is currently still spending more resources on marketing than on supply chain management, you have probably put yourself in a risky situation.
The higher the level of new products to meet market demand and the faster the development speed, the smaller the losses caused by inventory and the more sales opportunities. In terms of production, comprehensive consideration should be given to the versatility of parts, availability of raw materials, maturity of production processes and ease of production. In terms of logistics, it is necessary to pay attention to what the packaging materials are, whether it is enough to save space, whether it is easy to transport, and how high the damage rate is. If any of these components in the supply chain have been on the wrong track, a perfect marketing strategy could not save you from loss.
Many years ago, I predicted that the profit center of the future apparel industry is in the transformation of supply chain, rather than in marketing or sales. Traditionally, retail companies and fashion brands have invested huge amounts into their marketing campaigns, including advertising, promotions, discounts, and strategies. I believe there is simply no new room in this end. But there is big room in the supply chain end that these players will compete for – and an advanced supply chain has the potential to increase sales and save costs of inventory stock. This area is where new value can be generated!
How can start-up brands achieve a flexible supply chain?
I am aware that many of my readers and customers are start-up fashion brands, for whom it is not realistic to build a full data-driven or high technological supply chain management system. But should you avoid thinking about it and pretend that the world hasn’t changed at all? No way!
Based on my sound understanding about start-up fashion businesses, I have the recommendations for you to improve your supply chain and make it as flexible and smart as possible.
1. Use social media tools to understand your customers’ needs. It is a pity if you are only using your social media for marketing purposes – for example, introducing your new products, giving incentives, and promoting sales. Instead, start spending more time and energy in thinking about how you can interactive with potential customers, to gather helpful information for your product development.
Do not design and make products for yourself or your children, but make them for your customers. For in doing so, you have to understand your customers first.
2. Choose a small micro-processing factory to cooperate with, rather than big brand manufacturers who are designed to meet mass production. With small-scaled but highly responsive suppliers you can place small, multi-batch and quick return orders, which is critical for a flexible supply chain.
3. Purchase fabric and accessories in bulk and try to use them repeatedly. The minimum order quantities of fabrics and accessories are normally high and the lead time of fabric production is normally long. Although you could place small quantity orders with your micro-scaled factory, it is not always possible to produce your fabric in small quantities.
A smart way is to use classical in-stock fabric, saving you about four to six weeks of fabric production lead time, and then create your brand differentiation by applying print, embroidery or other decorations to your products.
4. Involve your professional suppliers/manufacturers from the very beginning of your product development process – this is probably the most important point that I would like to emphasis in this article. Do not wait until you and your designer have completed the designs before sending them to your supplier for sampling. Instead, ask for the manufacturer’s recommendations and feedback – is this detail hard to apply? Is that accessory hard to find in the market? If your factory tells you a detail is hard to apply or costs longer labour time to apply than normal, it’s best to give up this detail and ask the factory to suggest an alternative.
If you want to succeed in the fast-changing fashion market, you’ll need to learn to make compromises. Remember that the speed to market can be more important than holding on to an amazing detail you love on your design.