Why supply chain risk management is so vital for innovative retailers

  • Written by Peter Needle
  • Published on 26 July 2018
  • Our Voice

The Association of Suppliers to the British Clothing Industry (ASBCI) hosted a major industry conference in Leeds last year, discussing what was next in store for fashion’s new frontiers. Professionals from throughout the garment industry examined the supply chain risks associated with developing markets, and considered whether technology could help to balance the odds.

A balancing act

Just Style recently looked at the conference in detail, and shared the standout discussions and points.

When managing supply costs, retailers typically focus on location, suppliers, costs and technology. However, Lorna Ward, director of retail and consumer products at PwC Consulting, contended, “you also have to consider risk, complexity, quality and value.” This makes supply chain management a delicate balancing act – so how can any garment retailer hope to keep track of all these disparate qualities?

The importance of sourcing expertise is growing in modern supply chains, as various elements begin to overtake pricing as the top consideration. Supply chain risk management in the garment industry has been pushed into the spotlight by unrest in Bangladesh, Cambodia and Myanmar, which has brought an unwelcome focus on these popular sourcing destinations.

Supply chain risks inherent to innovation

Being innovative “inherently increases risk… doing something no one else has done before”, states Jeremy Opperer, European technical operations director for product intelligence at Intertek. The continued expansion of global sourcing brings new supply chain risks to the garment industry, and while no brand wants to be late to the party, entering a new market in a developing country can be dangerous.

For example, Adrian Elliott, president of apparel and footwear at Coats Plc, believes that Myanmar may potentially export $5-10 billion in garments over the next decade. Earlier in 2014, Gap announced plans to source from the country, becoming the first major US garment retailer to use the ‘made in Myanmar’ label. However, the country is still struggling with political instability, labour disputes and strikes, leaving many potential obstacles in the retailer’s path.

Professor Tony Hines, chair of Marketing at Manchester Metropolitan University, has an Iceberg Theory of Cost Comparison. He argues that despite the ‘seen’ cost savings which can be made through global sourcing, ‘unseen’ risks and additional considerations such as overseas transport and storage add to the total cost. Just as unseen parts of the iceberg move under the water’s surface, “cost structure is a moving target”, with the majority of it invisible to the naked eye.

Solving the problem with supply chain technology

With so many factors at play, garment retailers are becoming increasingly reliant on digital and online technologies to manage supply chain risk management. “We live in a connected world”, says Ward, “therefore we need to work in a connected way. Technology can help encourage a seamless flow of communication, trust and transparency, thus reducing the possibility of unforeseen costly risks”

Opperer argued that in order to manage supply chain risks, a retailer must focus on supply chain and sourcing strategies, “looking at the processes behind a product”. He explained, “you need to have trust in your supply chain… but you also need to have a system in place to verify this.”

Luckily, such systems already exist. Supply chain technology can help retailers to achieve clarity over what may be a sprawling global network of facilities, providing a comprehensive view over the complex retail supply chain. For example, Segura can be used to monitor the secondary supply chain of garment trims and packaging, and provide a framework in which all orders can be tracked from start to finish.

Originally published 23/07/2015

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