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Omninomics – Is your supply chain ready for millenials?
Posted on by gocretail
You must be sure that your value chain is ready to meet the challenges of omnichannel retail.
It’s likely that your supply chain has evolved from a linear push into a global value chain network of different companies, sometimes hundreds of companies, that are working together to innovate, respond to orders, fulfill and deliver on customer commitments, and react to disruptions in supply.
How can these companies collaborate to create a seamless experience for shoppers? How should omnichannel customer insights fuel this network?
The retailer used to be the end point of the value chain—where the product met the consumer. Today, new channels and online tools have given the consumer the freedom to choose where they make purchases from anywhere along the value chain and using a myriad of new touch points. This presents a host of new opportunities—and challenges—for fashion companies. For some, it could mean using the brick-and-mortar store as a showroom where customers can discover the styles and sizes that work best for them before they make purchases online. A third-party logistics provider could then fulfill the order using one of your distribution centers or work directly from your manufacturing plant—and drop ship. Or you could use your online channels to drive customers to your stores through loyalty programs, discounts and other promotions or offer them the opportunity to complete their transaction online and choose home delivery or one of a number of different pickup locations. It all comes down to knowing what your customers want and how to get it to them.
How a new breed of consumers is changing the value chain
According to Accenture, there are roughly 80 million millennials in the U.S., spending approximately $600bn each year. They aren’t just teens—millennials are young adults in their ’20s and ’30s. As they note in the report, Who are the millennial shoppers? And what do they really want?, “Many have careers, are raising kids and live in their own homes. While millennials are already a potent force, they will truly come into their own by 2020, when we project their spending in the United States will grow to $1.4tr annually and represent 30 percent of total retail sales.
To meet the needs of millennials and other generations of shoppers who are adopting this omnichannel mindset, organizations need to:
Collaborate in real time with your value chain
Connected global commerce across your value chain network is the real key to success. You can always find a cheaper solution to meet your needs, but the lowest-cost supplier is likely to be the slowest as well. Not only does geographic distance add lead time, but manufacturing centers in low-cost countries often compensate for low margins with full capacity utilization. That’s risky behavior. Instead, source your components where they can be created best—at the best cost and with flexibility and reliability. Collaborate with your value chain to bring these components together for assembly in a place close to your markets. Gaining 90 days advance knowledge of what the customer wants is worth the airfreight, if you’re selling out in minutes—especially if you’re actually getting your products into customers’ hands, not just to the distribution center or retailer. Look for suppliers that are willing to be connected into your network. Inventory visibility and timely information are key to meeting demand and satisfying consumers.
Treat your inventory as one single body to match merchandise to demand
To supply all of the right channels, you must look beyond the traditional notions of fulfillment. Make-to-stock or make-to-forecast aren’t going to cut it when consumers want so much more. To make your inventory flexible, you need to factor in your fulfillment rates, service levels, airfreight costs and more. All parties along your value chain need access to the same information across all of your interaction touch points, from print catalog, to web, to order entry screen, to manufacturing and distribution center—and even social media. Capturing and analyzing high volumes of data in near real time is vital. With an omnichannel presence, you can optimize the connection of demand to supply by using customer data to inform your manufacturing processes. This pipeline data can offer up-to-the-minute inventory accuracy—and dramatically improve your speed of delivery, demand planning, stock replenishment, and price competitiveness.
Get closer to the consumer, so you can see what they see and react how they want you to react
In omninomics, the consumer determines what you’re doing, not the other way around. By listening to the consumer—getting closer to them—you can create better strategies for meeting their needs. Just as Zappos knows there’s no one-size-fits-all approach to retailing shoes, there is no one approach to building an omnichannel business strategy. If you’re truly engaging with your customers, you can use this data to inform your operations. One strategy is to start with common items for the line: fabrics and trim elements. Design a style around them and put it out there. Your customers can lead you to better designs. With the technology to capture and analyze social media feedback and a flexible value chain, you can adjust your manufacturing processes in real time to satisfy new demands—and get closer to the consumer. Another strategy is to utilize 3D design and sampling technologies to ensure the proper fit of a garment. You can shorten the time to the consumer, reduce the number of physical samples, and save on your costs.
Use Big Data to help you create the next new thing your customers are after
Sometimes all it takes is a change of color, fabric or trim to catch a trend or extend the run of a flagging style. How can you know? The operational data you need is likely already there, but perhaps you aren’t using it as well as you could. To fix this, create a central data repository for your entire organization. Track, collect and analyze the data generated between your design teams, among product developers and sourcing managers, suppliers and buyers. You should also create a growing library of reusable designs, together with the specifications, BOMs, sourcing, costing and construction details to minimize the lead time for introducing variations on a style or bringing an extra contractor up to speed when you need added capacity.
By: Bob McKee, Fashion Industry Strategy Director, Infor | May 23, 2016
Want to know more about preparing your supply chain for the millenials?
- The Future of Wearable Tech
- Reshaping the Retail Supply Chain at Intersport UK
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