ITadviser Winter 2009 35
supply chain
fashion retail
All over again
Fashion businesses have unique
complications built into their business
models that reflect directly on the
supply chain. Trends must be identified
quickly, products designed, samples
created and then presented and tested in
the market, only then does large-scale
manufacture begin. At this point, fabrics
need to be sourced, perhaps from Europe,
sent to the place of manufacture, most
likely in Asia, and then delivered to
strict schedules and deadlines. To
complicate matters further, the
seasonality of fashion means the whole
process of redesigning new product lines
from scratch starts all over again on a
six-month cycle. All of this combines to
make the fashion retail supply chain one
of the most complex and demanding in
the retail sector.
Come together
Almost all the famous fashion brands
started out small and have typically
grown organically and therefore
incrementally, acquiring diverse IT
systems for merchandise management,
mail order, EPoS etc. However, while
these solutions may support initial
requirements, the challenge of
maintaining and integrating software
and business information as the
organisation changes and moves into
new sales channels can add
significantly to complexity, cost and
potential unreliability. And more
important, it often reduces visibility and
control at the very time in a fashion
company's life cycle when better
intelligence about business performance
across all channels is vital.
The stock problems
For a successful fashion retailer, good
stock merchandising and management
is second only to good product design.
Yet, today, most fashion businesses are
ring-fencing stock by channel. Goods
that could have been sold at full price
through one channel end up being
marked down in another, whilst sales
opportunities in one channel are lost
despite stock availability elsewhere in
the business.
The result of this siloed approach is
that the retailer is effectively running
several separate businesses, and losing
the economies of scale and flexibility
that multi-channel retailing can bring.
The purchasing process is inherently
inefficient as buyers focus on individual
channels rather than the collective
business needs, while the warehouse
has to pick for each channel separately,
adding cost and complexity to the supply
chain process.
True multi-channel retailing means
concurrent support for all sales
channels (eCommerce, own store,
wholesale, franchise etc.). However a
large proportion of fashion retailers are
still experiencing significant problems
in the effective management and
allocation of stock across multiple
channels.
If retailers are to improve stock
availability across every channel, they
need to take a radical look at the
existing supply chain and stock
management processes. For example,
many retailers allocate stock to an
eCommerce or mail order channel as if it
were another shop: the stock is either
available in that "shop" or it isn't. This
approach is simply not sophisticated
enough to maximise either profitable
sales or the customer experience.
Barrier to future growth
Some commentators have suggested
that point-solutions can deliver
flexibility, but this does not appear to be
the experience of businesses in the
fashion sector. Software integration is
notoriously difficult and time
consuming, especially when it involves
systems that communicate in real-time �
for example, a website that displays
stock currently available in a store.
Furthermore, the time and resources
required to improve the integration
between point solutions can make such
initiatives unfeasible or cost
unjustifiable. This inability to support
innovation may start as a minor
irritation, but it can become
increasingly frustrating as the business
strains to improve efficiency, develop
new channel strategies and ramp up
customer service.
While adding a new channel to the
business may be a sound strategic
decision, the supply chain and
supporting systems can be overwhelmed
by the increased complexity, and the
number of directions new demand comes
from.
Integrated approach
In our view an integrated single
database approach delivers the real
business agility that a modern fashion
multi-channel business needs. This
approach delivers a consolidated view of
stock across every channel of the
business and can transform operational
performance, for example as
warehousing staff pick for multiple
channels simultaneously, significantly
reducing costs and improving efficiency.
Similarly, with aggregated and
immediate information across every
channel, merchandisers make better
decisions and gain efficiency benefits
from consolidated purchasing and
maximising the flexibility of each
product consignment.
Another key to streamlining supply
chain processes and driving up the
customer experience is the use of real-
time, automated decision-making. For
example, if stock is unavailable in the
eCommerce channel, rules can be set
that check stock levels in alternative
channels and re-allocate in real-time to
fulfil immediate customer demand.
Retailers can then match rules to
business objectives, for example
prioritising orders placed over the
telephone or via the website without
jeopardising availability at stores.
Business flexibility
In the past, the own-store channel might
have represented most, if not all of the
sales, but as fashion retailers
increasingly plan to boost the
proportion of revenue from home-
shopping, overseas franchises and
wholesale channels, it is becoming
critical to improve and integrate stock
and supply chain management across
the entire business. This is more
complex than the old single retail
channel model, but it brings huge
benefits in terms of flexibility, increased
margins and improved customer
experience.
With an integrated channel retail
solution that delivers an aggregated
and flexible view of stock across every
channel, fashion retailers can ensure
stock is allocated across channels to
maximise sales and minimise end-of-
seasonal mark down. Furthermore,
with a stronger supply chain, these
businesses can confidently embark on
new business initiatives � adding a
franchise channel or concessions for
example � without compromising
stock utilisation across existing
channels.

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