This is not a test: It’s time to digitize your demand chain
Imagine boarding a flight to an exotic destination. You catch a glimpse of the cockpit and are surprised to see very few instruments, not the usual panoply of buttons and lights. When you ask why it looks so…retro, the flight attendant answers “because the pilot believes he is better at maneuvering the plane on his own, without the help of any instruments."
You would immediately turn around and try to get onto another flight, right? This is perhaps an extreme example, but today’s old-fashioned fashion retail supply chain causes otherwise smart executives and merchants to literally fly blindly into upcoming seasons. There have been so many innovations in technology to allow merchants to produce and buy exactly what the customer wants. So why are we still designing, manufacturing, and selling clothes, shoes, and accessories like we are stuck in the dark ages?
Digitizing the entire supply chain—from pattern making to last mile—using predictive analytics and the Voice of the Customer is no longer science fiction. The COVID-19 pandemic has made it abundantly clear that companies ignore the digital transformation at their own peril. According to McKinsey, COVID-19 has pushed companies over the technology tipping point – and transformed business forever with accelerated digitization of customer and supply-chain interactions.
The future is here, now, and it is faster, easier, more accurate, more profitable, and much more sustainable than the past’s legacy systems. Even the idea of a supply chain is antiquated. Why? The most customer-centric companies focus on a demand chain, which flips the paradigm. Instead of just making “stuff” with a wink and a prayer that customers will buy it, items that customers truly want to purchase are produced. In order for this to work, brands must be close to their customers and use the data to pull demand through the whole system.
Understanding consumer demand and leveraging data will help retailers win with higher performing merchandise assortments. As Sean Coxall, CEO of 707 International and a seasoned product development retail expert noted, “All you have to do is get close to the customer. They already know what they want to buy. With a company like First Insight, you can create that customer relationship, understand the price they are willing to pay, the colors they want and more. When you have all that data, you’ll make products that have a higher margin and fewer markdowns.”
The old ways of working—which many companies still employ—involve a 9- to 12-month product development cycle that starts with looking at historical data… last year’s numbers adapted for this year. Then a designer starts to look at fabrics, patternmakers make patterns, samples are made, revised, reviewed… then the product either makes the cut or is discarded. This happens countless times with even more items.
Designers travel to fabric shows, trade shows, fashion shows, and then put their stake in the ground. Meanwhile, hundreds of millions of consumers have already seen the trends on Instagram and Facebook and really don’t want to wait 6 – 9 months to make that purchase. They want it now. Experts agree that It takes a mere 20 hours to make a garment… yet months and months are spent in the design and development process. And if you’ve made the wrong product, what’s the point?
The pandemic accelerated so many new ways of working. We know that doing the same thing the same way over and over and expecting different results is a form of madness. When we place orders blindly, without the Voice of the Customer, real-time data, and predictive analytics, is it any wonder that many legacy stores are in trouble? They are filled with leftover product at the end of the season, achieving increasingly lower margins, yet they then employ the exact same buying and manufacturing processes again for the next year.
Anyone who thinks the world hasn’t changed needs to wake up. The competition—online platform companies—are highly connected to the consumer. They know exactly what he or she wants. With their lean infrastructure, they rely on end-to-end design, 3D sampling, production, manufacturing, and shipping, often without ever touching the product. This cocktail of customer-centricity, speed, and skillful use of data is their secret weapon. Legacy retailers need to adopt a more flexible and diverse way of thinking and operating in order to compete… and survive.