Managing a global supply chain can be complex, especially due to the pandemic, which caused a stream of material and labor shortages, shipping disruptions, and geopolitical tension. Digitizing supply chain processes can give brands a competitive advantage over others and gain substantial benefits.
Increased Productivity & Lower Costs
The integration of technology can help brands enhance productivity and reduce costs. One survey found that 90% of respondents believed that supply chains would be overhauled within the next five years with more focus on technological integration. For example, Nike has made many investments into supply chain technologies in the form of RFID tags, predictive analytics for inventory management, machine learning, and artificial intelligence. Matt Friend, EVP and CFO of Nike, said, “Digital transformation is developing and refining new capabilities that are transforming our operating model, quickly becoming a competitive advantage for Nike.”
Better Risk Management
Analyzing a brands supply chain for risk can result in many unforeseen benefits. Executives must look over all their manufacturing processes, judging risk failure for each, and how those failures would affect the rest of the chain. Apparel brands can also establish CAPA plans to find and eliminate risk before it hurts the brand.
Technology like AI and machine learning can help leaders predict the likelihood of a disruption and how the brand will be affected by it. Lastly, digital twin technology can be used to model different scenarios for better planning in the event of a shut-down.
Improved Supplier Relations
Maintaining a strong working relationship with the brand’s global suppliers can result in many benefits like reductions in availability problems, delays, and quality-related issues. Recently, countries like the United Kingdom, France, and Germany are now requiring large brands to disclose supplier information to ensure that there are no ESG violations occurring in any part of the supply chain. Technology can help to meet these new requirements by providing visibility into production hubs to ensure that no violations such as child labor/forced labor, workplace safety standards, and environmental degradation are occurring either in the home country, or abroad.
Higher Quality
The average return rate for the US apparel market is 20.8%. The 1-10-100 explains that as a defective product moves through each stage of the production process, the cost to fix the issue becomes multiplied by a factor of ten. That means that the returned items (20.8% of total inventory) now cost the brand exponentially more money than if they had corrected the problem much earlier on in the process.
These statistics show why it is so important for brands to have a robust quality management system, since it can potentially save a lot of money, but also keep the brand favorable among consumers. Quality management solutions like QUONDA, allow the brand to schedule all their global inspections, receive real-time information on product defects, and allow for better quality control in the long run.
Optimized Shipping
The pandemic showed apparel brands that they were far too dependent on China for manufacturing. China, for most of 2022, had been shutdown due to increased covid cases. Part of the new philosophy is to geographically diversify the supply chain, meaning operations would not cease completely in the event of a shutdown in one particular area. One study of leading apparel brands revealed that Chinese manufacturing had slowed down significantly, with the apparel brands favoring Vietnam and Cambodia instead.
Some apparel brands are taking it a step further, choosing to use nearshoring, and reshoring as a way to gain more control over their supply chain. In one report by McKinsey, 71% of fashion companies are planning to increase nearshoring operations in the next five years to avoid further disruptions.