The Path to Recovery for Broken Apparel Supply Chains
Social life as we knew it is coming back. Consumers are leaving their homes, tossing their beloved pandemic sweatpants, and refreshing their wardrobes, allowing the apparel, fashion and luxury (AFL) industry’s sales to reach pre-pandemic numbers. Although the recovery is undeniable, it will not only be largely uneven but also costly. Uneven performances will vary both from a geographic standpoint as well as a sector perspective. For example, areas such as the U.S. and China are driving the growth, whereas Europe is lagging. Discount and luxury segments will outperform, while the mid-market could continue to perform poorly. The recovery will be costly due to global supply chains disruptions, as well as rising raw material and shipping costs.
While the main industry challenges are driven by volatility on the demand side with the need for risk management and resiliency on the supply side, the current environment presents big opportunities for growth in digital transformation and sustainability. Implementing cutting-edge merchandising and supply chain planning processes will allow greater flexibility and keep products flowing with ever-changing demand and supply capacity constraints. By investing in next-generation platforms, powered by artificial intelligence and machine learning (AI/ML), AFL companies will not only be able to bridge the gap between demand and supply, but will also be able to sense demand and predict consumer preference shifts.
Data Visibility: Supply Chains and the Digital Twin
Understanding trends and consumer behavior has been the utmost concern for the longest time for many industries. This is especially true in the AFL industry, where trends are temporary and products aren't a necessity. Consumer and market data, sales and shipments, product and supplier information, and inventory and purchasing data are in separate applications, resulting in a tremendous number of disconnected data sources and datasets, and a clear lack of visibility preventing companies from reaching any type of consensus or cross-functional collaboration. But more importantly, it prevents companies from anticipating upcoming issues and reacting in a timely fashion.
Next-generation platforms provide a tremendous advantage by being digitally native and offering open architectures, ingesting and displaying all types of data and data sources (including various homegrown Excel tools). By gaining real-time visibility across their entire value chains, companies are now equipped to better monitor demand and supply chain signals and detect problems. This allows them to reduce the time needed to identify, react and decide. In a world where disruptions are the new norm, having a digital twin that identifies market and supply signals will be an incredible competitive advantage.
Digital Transformation and Demand Planning
These platforms help organizations better predict demand and adapt to market volatility by taking into consideration the end-to-end value chain's historical, current and future data, as well as internal and external drivers, and applying AI/ML algorithms. They streamline cross-functional collaboration by acting as a single source of truth. The most powerful AI-powered platforms can help companies sense, analyze, plan, and even shape demand to optimize both short- and long-term sales and margin performance at various levels of granularity and by geographic areas.
Digital Transformation and Supply Planning
Although having the most accurate demand forecast is a requirement to build an efficient and resilient supply chain response, one of the key elements is to balance demand and supply. Capacity and flow planning powered by high-performance solvers, what-If scenario planning capabilities, inventory optimization, and supplier collaboration enables organizations to make supply chains more agile and cost effective to respond to market demand. With better demand forecasts, optimized demand/supply planning, supplier collaboration, real-time data visualization, and problem-solving capabilities, companies improve their P&L results, but more importantly improve their use of the Earth’s resources.
By investing in next-generation platforms, powered by AI/ML, companies in the AFL industry will close the gap between demand and supply by getting visibility into their end-to-end supply chains and will gain greater capabilities to sense demand and predict consumer preference shifts, while also incorporating sustainable practices that reduce environmental impacts.
Vikram Murthi is vice president, industry strategy at o9 Solutions, a leading AI-powered platform for transforming planning and decision-making. Jake Laurent is a senior strategic account director at o9 Solutions.
Vikram Murthi is vice president, industry strategy at o9 Solutions, a leading AI-powered platform for transforming planning and decision-making. Murthi has extensive experience developing strategy, designing and deploying large-scale supply chain improvements and SaaS solutions at some of the world’s largest retailers.
Jake Laurent, a senior strategic account director at o9 Solutions. He has worked in retail or for retailers for more than 15 years, specializing in planning and supply chain for fashion, apparel and footwear.