How Brands Can Create a More Resilient Supply Chain

Covid-19 resulted in major disruptions across the globe, and revealed the need for resiliency in the supply chain. Supply chain leaders realized that they needed visibility into their operations to prepare for another pandemic-like event. Since then, the Russia-Ukraine war, US-Chinese trade disputes, and labor strikes have also contributed to supply chain stoppages, and has showed that the pandemic was not a one-of-event. In the last survey by McKinsey, 49% of fashion executives answered that supply chain disruptions would impact operations the most in 2022. Global supply chains have become unreliable, and businesses must now analyze them to look for weaknesses, and engage in risk-management.

Global supply chains are siloed: people and information are packed together in distinct pockets, with not much communication between them. Technology can help key decision makers break free from these restrictions, and gain visibility into their firm’s operations for optimal planning and control.

Sophisticated supply chain solutions like  track-and-trace programs, and  enterprise resource planning systems provide insight into the supply chain in order to assess it for vulnerabilities.  Spencer, the British retailer, has been working since the early 2000s to achieve a more resilient supply chain through the use of RFID technology.  In 2014, they became the first to move to a 100% RFID tagging system for all their merchandise, which gives M&S a much more accurate look into their stock levels in every part of their supply chain. Their inventory accuracy has improved by up to 50% and items out of stock have decreased by 30%.

Predictive tools like data analytics, AI and machine learning can be used in tandem to help make predictions about the future, and help with risk management. Companies like Zara, Dior, Macy’s and Nike have seen the potential of predictive tools and have started to adopt it.

Zara uses their own AI platform to help with accurate demand forecasting. By collecting data from their past customers, they are able to gain information on sizing, popular colors, fits and style preferences which allows them to make better merchandising decisions. They have an accurate prediction of what type of clothes their consumers will want in the coming year, based on historical data.

The British brand  uses machine learning to help determine what their consumer lifetime value is, or how much each customer is willing to pay. Even small changes to this model gives them information on global customer behavior patterns, and allows them to streamline their production to better match what demand will be in the future, allowing them to become more resilient in the face of potential disruptions.

Other strategies can also be used to build resiliency:

Geographical Diversification

Due to the pandemic, brands realized that they were too dependent on China for manufacturing. The new  philosophy is to geographically diversify the supply chain, spreading the risk in case of another shutdown in one particular area. One study of 25 leading apparel brands revealed that Chinese manufacturing has slowed down significantly.

Nearshoring and Reshoring

By moving operations to the home country (reshoring) or closer to the home country (nearshoring), the brand has increased control. While local supply chains can be more costly, it allows for better inventory management and shorter lead times. Benetton, the Italian apparel brand, has moved production away from China, moving to countries closer to home like Croatia, and Turkey.

N-Tier Supplier Mapping

N-tier suppliers are suppliers below the brand’s tier 1 supplier that form a network that provide the tier 1 supplier materials that they use in their own manufacturing process. Many of the materials that are on backorder in the global supply chain come not from the brand’s main supplier, but from these smaller suppliersN-Tier supplier mapping can reveal vulnerabilities about the brand’s supply chain, and will also allow the brand to make sure that there are no ESG violations. H&M has been tracking their N-tier suppliers for some time now, even releasing the list on their website.

Triple Tree Solutions can help top apparel brands build more resilient supply chains. TrackIT, our tool for production tracking and visibility allows brands to streamline production processes and make timely delay interventions. 

To know more about our other supply chain solutions, click here, or book a demo with us.

How Brands Can Create a More Resilient Supply Chain
Deniz Thiede (CMO, Triple Tree Solutions)
Published 26 December 2022

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