The big "Retail Reset" and its impacts on Supply Chain of Fashion companies

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The big "Retail Reset" and its impacts on Supply Chain of Fashion companies

Fashion industry was already struggling when COVID-19 appeared to restructure its operating models. Now that impacts on consumerism behavior are stable and pretty much evident, Supply Chain will face an existential crisis.

25/09/2020

The COVID-19 pandemic is forcing a global “reset” in society, propagating changes in consumer behavior within companies’ business models.

There are many key values that companies in Fashion industry are rethinking from scratch, including:

  • Value proposition
  • Customers
  • Financial models
  • Capacity

After an “initial triage” companies will need to review their business models and reconfigure them by asking questions such as “which are the temporary measures do we need to take, and which ones will also become permanent?”
At the same time underlying structures, operational model and mainly the Supply Chain, will have to be reconfigured or rebuilt.

The COVID-19 pandemic is forcing a global “reset” in society, propagating changes in consumer behavior within companies’ business models.
The first area in need for a real reboot was sales. This is why we talk about ‘Retail Reset’ and this is the starting point for a critical assessments in the Supply Chain.

Running through a hypothetical “cure” process, after an initial emergency response, the next step is a recovery period.
To then face a design that leads to REINVENT.
Luckily, we can say that we have passed the initial response phase which has had a potentially chaotic impact on companies. There will certainly have been extensive ‘shocks‘: negative, due to temporary business suspension as in the case of physical retail, or even positive, as in the case of online distribution activities due to a peak in demand.

Temera argues that this historic moment in the apparel industry is between the deployment of recovery activities and the start of renewal activities, capable of reinventing the business in the long term. A historic opportunity that may not reappear in the future, whose potential must be seized immediately.

Which are the more relevant problems for the Supply Chain of Fashion companies?

  • the ‘demand‘ concept will be temporarily redesigned using approaches such as zero-based forecasting, where demand is continually rebuilt from scratch until a new normal begins to establish itself
  • merchandising will require unprecedented levels of support from the supply chain to facilitate optimal product distribution and management of a continuously moving assortment to mitigate the risk of slashing operating margins

During this period of uncertainty, leaders of operations and supply chain activities must present reorganization plans, evaluating the key technologies that will allow operations to improve both during the crisis and once a new normal is established.

A concrete example of application is the latest transportation system for hanging apparel engineered by Temera in collaboration with MHART for ‘smart’ logistics with a high level of automation.

A brand new operational approach is needed. Anticipating innovative approaches perhaps often hindered by internal stakeholders for fear of change.

Temera recommends:

  • accelerate decision-making processes to introduce an adequate level of automation of the Supply Chain
  • establish a true ‘cross-channel integration‘ that can provide an integrated view of product inventory
  • implement orchestration tools capable to offer end customers an “endless aisle” approach by efficiently managing the fulfillment dynamics and goods dispatching, enhancing the capabilities of the Supply Chain

The business disruption imposed by the coronavirus pandemic can be used as a platform for change.

  • Identify optimized paths for supply chain operations
  • Enhance new business models
  • Rationalize the product portfolio and channel strategies

These are the key ingredients of a winning strategy to re-emerge even stronger and above all RESILIENT.