Good supply chain puts consumer first

An international thought leader has urged Australian fashion businesses to put consumers at the top of their supply chain or risk extinction.
Speaking at the Asia Pacific Fashion Forum (APFF) - which took place in Melbourne on October 24 and 25 - supply chain guru Dr John Gattorna said Australian fashion businesses could only stay globally competitive by "reverse-engineering" their supply chain activities to respond quickly to demand.
Gattorna cited Spanish label Zara as a lean and agile "leagile" business that bought from the best sources and also manufactured close to its target market.
"I am very confident that a Zara-like approach would work in Australia, certainly for some categories of fashion if not all," he said.
"With the creativity and innovation in Australian design, we can use these principles to attack export markets, doing some things at home but the final assembly closer to particular target markets. You are then playing the global supply chain game, which can be played out across networks anywhere."
Australian businesses were over-reliant on cheap labour as the key to a strong bottom line, he said.
"There is evidence that the savings from [cheap labour] are not as great as once thought, especially where the labour content is falling [because it is] being replaced by cutting machines."
Lower costs from distant labour markets were often "swallowed up by subsequent costs post-production".
Many US companies had begun switching from outsourcing, in order to work closer to the market and make quicker decisions about style, cut and colour, he said.
"The benefits of this approach include less inventory of finished product, increased sales through added responsiveness and fewer markdowns at the end of the season."
Australian companies continued to over-invest in technology, failing to effectively manage the relationships between all parties in the supply chain.
"Around 50 per cent of supply chain management is the human factor. Technology alone is not the saviour," he said.