Brands with strongest end-to-end supply chains will rule
Digital supply chain and automation are increasingly becoming the core part of every organisation's functioning. Kurt Cavano, Founder and President of GT Nexus, an Infor company, speaks to Fibre2Fashion about digital transformation in the textiles and garment industry and its effect on manufacturers.
Tell us about your collaboration with HSBC and how will it simplify finances for customers.
Financing capabilities from HSBC are integrated directly into the platform, easing the access to funds along the line and helping companies to free up working capital. While supply chain finance is an area where HSBC sees a big potential for growth, the bank is also looking to offer pre-shipment finance through the platform. Operating via a cloud-based solution means services can quite easily be added as market needs continue to evolve. With the opportunity to leverage the data of the platform, HSBC is also investigating how to develop other products to the benefit of its clients.
Cloud, IoT, AI, Bitcoin, Blockchain-new terms, much connected, that seem to be changing businesses globally. What will be the textile technology landscape say five years from now?
These technologies will affect businesses in very different ways. Some of them are well established and should already be part of any organisation's technology landscape. Other technologies are still in their infancy, and we have yet to see their full potential. Cloud technology has been readily available for well over a decade and is a proven approach to handle scalability needs and interoperability across organisations and industries. IoT and AI are on the rise and showing a lot of promise as they are being leveraged more in supply chain applications. In order to develop useful artificial intelligence scenarios however, organisations need access to a large volume of consistent high-quality data. IoT will generate an incredible amount of new data points which can be used as input for AI; but it also comes with a challenge around how to store and categorise this new information. In a business setting, and for the time being, Bitcoin is nothing more than a new, incredibly volatile, currency which is mainly used for speculative investments and for ad hoc transactions. The rise in popularity for Bitcoin has however helped drive a healthy discussion around monetary structures. Blockchain (distributed ledger technology) on the other hand is an interesting new technology which will likely have many impacts on business processes and supply chain practices. Blockchain is still surrounded by a lot of misperception and the public discussion is somewhat distorted, delaying many feasible applications from reaching any broader adoption. The textile technology landscape will be affected by all these new technologies as they become immersed in the overall supply chain practices. As we increase the amount of data we can capture and process, these new technologies further emphasise the importance of a digital supply chain and subsequently the need for foundational system landscapes that can make sense of this new input. If companies are still emailing purchase orders and using spreadsheets to run their operations, they will not be in position to take advantage of these new technologies as they evolve. The supply chain has become a strategic advantage and those that don't stay in front of technological innovation will find themselves being disrupted before many of these technologies become reality. Connecting with your trading partners on a common network sheds light on to what is actually happening in the supply chain and enables visibility, collaboration, and transaction automation between trading partners.
These processes would also track the supply chain with respect to sweat shops, chemicals used, etc. How easy are these for small and mid-sized players to weave it into their processes?
There is no need to wait for new technologies to become available to start tracking social and environmental aspects of supply chain practices; several programs are available already today using digital collaboration network technologies.
How is the supply chain situation among textiles and garment manufacturers in Asia?
Digital supply chain transformation and advanced automation is going to continue to expand and increasingly will become a core part of any supply chain. Textile and garment manufacturers must continue to evolve, or they will lose out to more IT-fortified competitors. The good news is that the technology has become much easier to attain over the past several years as solutions become more cloud and mobile enabled. Companies can now get supply chain automation technologies that would have been out of reach just a few years ago.
What solutions would you propose MSMEs that dominate the textiles industry in India for better supply chain efficiencies?
Digital transformation will affect all levels of supply chains. By digitising their processes, large organisations are aiming to improve assurance of supply and increase agility. Digital supply networks will help align supply and demand, enable postponement strategies, orchestrate supplier packing & shipping, and reduce processing and lead times. By embracing the digital transformation, MSMEs can align themselves with these ambitions. With administrative obstacles removed from the business process and with increased visibility and cash flow certainty, organisations have the opportunity to continue to grow while maintaining a stabile cost base. This provides a competitive advantage for any organisation that has started or completed its digital transformation journey.
What would be your 5-step roadmap for small and mid-size players to adopt this new path?
- Make digital transformation a priority. Organisations should critically evaluate and assess what transformation opportunities there are both internally and with their partners using readily available technologies. Connect with your supply chain partners in a common network to shed light on to what is actually happening in the supply chain.
- Digitise supply chain processes around procurement to payment, supplier collaboration, shipment management and visibility. Create a single source of truth and a shared system of record for everyone involved to create more accurate and compliant transactions.
- Layer in IoT data for more real-time insights. Apply machine learning with the intent to drive normalisation, automation, and create a process of true exception management.
How cost-effective would these solutions be, and how would they impact bottomlines?
Companies cannot afford to sit on the sidelines and wait to innovate. In today's world, the brands with the strongest end-to-end supply chains will prevail. Many of these solutions are not complex nor expensive to implement and several of them have direct efficiency gains with a multiplication effect. The direct return on investment related to data accuracy and removal of human errors can be hard to calculate, but several of the digitisation improvements have ripple effects where the sum of all of them put together well exceeds the individual impact. Collaborating with your supply chain partners on a common set of data, providing visibility to what is going on in the supply chain, not only shortens the lead-time, but it also creates cash flow certainty which has an impact on borrowing cost. It creates an environment where standard processes can be automated and replaced with mere exception handling. It removes the need for manual follow-up, data comparison and reconciliation.
What are the latest features added in the cloud software at GT Nexus to monitor the state of supply chain affairs?
Where one or more 3PLs are in use with inbound supply chains, our transportation management system is uniquely designed to centralise shipment planning visibility across logistics service providers (LSPs) and carriers alike to spot inefficiencies, remove more uncertainty from lengthy, crossgeography transit times and costs, and improve fulfillment agility along with LSP performance management. Our GPS shipment tracking (IoT) and artificial intelligence-based Predictive ETA can work in tandem for greater precision and accuracy in delivery projections to improve receiving and fulfillment activities. With customer focus on sustainability and ethical sourcing, it's more important than ever to ensure goods are produced at authorised factories, and that these factories are meeting buyers' ethical sourcing requirements. Factory location certainty, electronically monitors and establishes processes check points to help ensure goods are produced and shipped from the factory you designate and authorise. Our multi-enterprise cloud network provides the ideal mechanism to enforce this, and also to maintain vendor requirement checklists and processes.
Which major political factors have a major influence on the global supply chain? What has been the impact of Brexit and Trump's emphasis on 'Make in USA' on the global supply chain?
If you look at the world economy today, globalisation is ubiquitous, but it's also changing. The free trade values of the early 1990s-2000s are giving way to policies favouring protectionism, greater domestic production, ethical and sustainable production, and personalised supply chains. You can indeed see emblems of this new cultural shift through the proposed renegotiation of NAFTA, the quandary over trade deals like the Trans-Pacific Partnership, and border adjustment taxes. Whether it's Brexit or something else, countries are reevaluating trade on a massive scale. No matter what the uncertainty is around specific policies and decisions, the more important question becomes: how do you, as a business, navigate the dynamic complexity of international supply chains? By viewing global trade management as an ongoing practice, businesses stand a much better chance of figuring out the tools and processes that work best for them, finding value by synergising their transportation, compliance, duty optimisation, and finance strategies.
Do you see major re-shore manufacturing happening in western countries?
The market economy will ultimately be the deciding factor for where manufacturing will take place. While access to raw material, cost of labour and shipping cost are all large contributing factors to the final cost of goods, other opportunities exist around supply chain visibility, agility and velocity. By digitising the supply chain practices, organisations are able to get better visibility into additional efficiency gains related to duty optimisation, selection of shipping lanes and reduced complexity around order accuracy. Business will follow the path of least resistance which can be affected by trade agreements and protectionism, but ultimately it is the sum of all supply chain obstacles.
What would be your top three predictions for the future of supply chain in the textiles and apparel sector?
- The pace of automation is going to increase, and buyers are going to lean heavily on their suppliers to be active, smart participants in their IT initiatives.
- The sector is going to develop in geographies which will put pressure on the 'core' regions in Asia. New markets and sourcing regions are getting closer all the time, due in large part to advancements in supply chain orchestration and mature technologies.
- Sustainability will continue to be a critical aspect of apparel brands, who will continue to pressure their suppliers around how they source raw materials, how they treat the environment and how they treat their employees.
What are the challenges facing today's manufacturing supply chains?
There's a lot of pressure on supply chains to perform at a high level. This is being driven largely by Amazon, which is resetting consumer expectations on product assortment, availability and delivery. This is no longer just a challenge for bricks and mortar retail. Technology is evolving so quickly in the supply chain, which puts pressure on manufacturers to evolve rapidly. As new innovations hit the market, there's always pressure deciding what is real, what is hype and what is going to make a difference. One thing is clear, the future is a digital.(HO)
