According to a recent report, developed by the World Economic Forum and Accenture, based on analysis of 62 supply chain disruptions from 2005 through 2011 reveals that supply chain disruptions reduces the share value of the companies by 7%. The findings say that share value starts falling about 10 days before the date the disruption is actually announced. Share prices generally dont start to bounce back until three months after the supply break has been announced. The takeaway, according to the report, is: The longer it takes to resolve a disruption, the more negative is its impact. Firms need to develop the ability to quickly resolve problems and prevent escalation and worsening of the situation.
In the apparel world, share value is only part of the story. Brands and retailers who work with seasonal merchandise have limited margin for error. The window to sell spring garments at full price is open for just a handful of weeks. A supply chain disruption that delays incoming seasonal merchandise has an immediate impact on business. The supply chain disruption factor is amplified beyond shareholders impacting sales, customer satisfaction, and overall brand identity.
Customers today are demanding, and they expect the items they want to be available anywhere in-store, online or in-catalogue. Theyre shopping the aisles with tablets in hand, comparing goods and prices. If they dont see the merchandise or price that fits, they will shop elsewhere. So a misstep that fails to deliver goods has a ripple effect.
Getting back to the key take-away from the World Economic Forum/Accenture report: Firms need to develop the ability to quickly resolve problems and prevent escalation and worsening of the situation. Apparel brands and retailers with vast supply networks in far0flung corners of the globe face significant challenges. But theres hope and opportunity.
Businesses everywhere are embracing cloud technology. Brands and retailers are finding that cloud-based solutions are a reliable and efficient means for managing the global supply chain. For example, instead of updating 10 or 20 trading partners regarding changes to the spring line order, a more collaborative approach, using the cloud, allows brands to post their updates in one place, where they are viewable by all relevant and authorised parties. Connecting the entire supply network in the cloud opens the door to new possibilities for speed, efficiency, savings, visibility and agility. Processes from planning to purchase order, through settlement and delivery can be streamlined better when all parties are connected in the cloud.
How does this mitigate risk and the impact of supply chain delays? Heres a potential scenario: A brand connects its entire network of manufacturers and trading partners on a cloud-based system to handle orders, production updates, delivery of goods and settlement. Each party interacts and fulfils its transaction obligation in a single cloud-based system.
A supplier receives an older, acknowledges receipt, submits important production updates and packs the goods to the retailers specifications. The supplier completes the job, and hands the garments off to the logistics provider handling the transport, the nest party in transaction lifecycle. These events are tracked in the system and this is easy to enforce if the supplier also gets paid through the same cloud system. The brands sourcing department is automatically informed in real time of any significant delays anywhere in the goods sourcing process. Raw materials were shipped 4 days late triggers a flag. Whether a delay originates in the availability of raw materials, during production or transportation, the brand is instantly alerted. The brand starts the work day with exception alerts, which require immediate attention. But not only is the nature of the delay identified to the brand, it has also already been routed to the person responsible for handling that type of delay. This ensures the best use of time for everyone involved and ensures enough time to find the best possible solution to preserve a full margin sale.
In the scenario above, the brand is better informed of its orders at each stage in the process. In an automated workflow environment where rule exceptions or delays are flagged and escalated to the appropriate parties, theres more time to react. This gives the brand or retailer the best chance to deliver goods on time and maximize profits for the season.
This article was originally published in the Stitch Times magazine, May, 2013 issue.