How to Design a Successful Apparel Supply Chain
Apparel is an exciting and rapidly changing industry. Planners need to contend with inconsistent consumer buying behavior, the need to satisfy multiple channels, complex sourcing options and proliferating “sub-seasons,” collections and assortments. These are just a few of the challenges apparel manufacturers and retailers must overcome to operate at peak performance and compete in today’s dynamic market.
How can you achieve exceptional planning at the store level, a greater ability to react to in-season replenishment signals and develop a streamlined sales and operations planning (S&OP) process? Here is a four-step approach to help you jumpstart your supply chain results.
Step 1. Create a Timely and Accurate “One-Number” Plan
It is quite common to create a long-range forecast that can stretch out 12 to 36 months. The further out you plan the more difficult it can be especially for those that still rely on legacy systems or spreadsheets. Changes in fashion trends, weather patterns or even regional events can change the output of a long-term forecast. On the business side, fragmented or siloed departments often focus on their individual goals and not the success of the overall business. According to the most recent BRP Merchandise Planning Survey, 42 percent of companies still plan separately within each channel. The result is a fractured supply chain with disconnected forecasts created by different departments. Brand owners need a plan that uses both top-down and bottom-up inputs to create a “one-number plan” the entire organization can trust and use.
Step 2. Establish In-Season Excellence to Maximize Sell-through
Despite the proven technology available, many companies still rely on spreadsheets to perform complex, multi-faceted planning. To reduce stock-outs and markdowns apparel manufacturers and retailers must improve their in-season performance. Industry experts continue to show that reducing stock-outs and markdowns leads to an increase in profits. The rewards are great for companies that improve in-season performance by increasing the availability of fast-moving items and reducing quantities for slow movers. And, your consumers will feel a sense of urgency to buy now instead of waiting for a mark-down.
Step 3. Segment Customers to Develop a Synchronized Supply Chain
A reliable “one-number plan” combined with maximized in season sell-through sets a strong foundation for a synchronized supply chain. Apparel companies that segment customers and localize assortments are able to maximize full price sell through. Segmentation places more emphasis on the supply chain as apparel companies look for the most intelligent way to design, source, manufacture and deliver increasing varieties of merchandise to more consumers. Companies that struggle to efficiently manage their supply chains need to go beyond spreadsheets and optimize their planning, sourcing and replenishment.
Step 4. Integrate the Three Steps into a Sales & Operations Planning Process
In steps 1-3 we created a unified “one-number plan” to be used by all departments and we developed processes to better understand demand patterns and synchronize inventory investments with supply and sourcing needs for increased visibility. The final step is to combine steps 1-3 together to drive a competitive advantage and improve sell-through while decreasing overall inventory.
To manage the integration of all departments and core competencies, such as revenue, allowances and gross margin return on investment, apparel manufacturers and retailers need a robust and consistent sales and operations planning (S&OP) process that presents forward-looking plans in both volumetric and financial measures. This allows you to understand exactly the volume of merchandise needed to make your revenue plan by channel. Successful companies place equal emphasis on the people, process and technology.
How are you driving innovation across your organization and designing your successful apparel supply chain?