In the face of growing e-commerce expanse, consumers these days expect larger product collections, faster product launches, and at cheaper prices. All of these factors have put immense pressure on supply chains to deliver not only the desired product, but also at nominal cost and at the desired timeline, at the same time, adhering to sustainability guidelines. Such surmounting complexities have only accentuated the need for an agile fashion supply chain, backed by a strong technology support. Leading global fashion companies and retailers have already realized the gap and have started taking the tightrope walk. Our Cover Story presents first-hand insights of supply chain leaders of leading fashion & lifestyle companies in India, who removed precious time amid such a crucial heavy festive period and graciously agreed to give us their exclusive take on what lies ahead in the Indian fashion landscape…
How has the fashion & lifestyle supply chain shaped over the recent years with fast shaping up trends?
Rachit Rungta, Head – Supply Chain Strategy & Network Planning, Reliance Retail
- Emergence of assisted commerce: B2B and B2B2C models, COFO stores are leveraging physical retail network of local merchants or stores to improve penetration awareness & exposure to aspirational products in tier II, III, IV & rural towns, especially where internet usage or adoption is low and logistical challenges for delivery high.
- Leveraging customer Data and Analytics: Fashion & lifestyle companies are leveraging customer data and analytics to make informed decisions about product assortment, inventory, pricing, merchandizing and promotional strategies.
- Localization: there has been an increasing preference for localization to tailor the product offerings as per local preferences and tastes.
- Local and Hyperlocal Sourcing: There is an increasing preference for local and hyperlocal sourcing to reduce lead times, lower inventories, and lower transportation costs.
- Multi-Channel and Omni-Channel Retailing: Expansion into multiple sales channels, including brick-and-mortar stores, e-commerce websites, mobile apps, and social commerce has led to reconfiguring of supply chains to enable integrated inventory management, fulfilment, order management and supply chain processes in ensuring consistent customer experience agnostic to channel.
- Inventory Management: We are witnessed increasing use of advanced technologies like RFID, planning engines, and data analytics in reducing overstocking & working capital deployment, reduce stock outs and improve fill-rates.
- D2C Brands: Proliferation of D2C brands has led to increasing requirement for courier/express delivery/hyperlocal delivery.
- Private Label: Introduction of private label brands by retailers; managing the supply chain for these private labels has become a significant part of retail operations.
- Warehouse expansion & Automation: Retailers & Ecommerce companies are investing in smart warehousing solutions, such as automation, robotics, and IoT technology, to improve efficiency in order picking and packing processes.
- Last-Mile Delivery: New challenges & complexity in last mile deliveries include increasing customer expectations such as hyperlocal delivery, same-day delivery services, COD operationalization, high returns & reverse logistics.
- Just in time/Direct to store or customer/Drop ship operations: Companies are reducing inventory stocking by operationalization of JIT/ DTS/DS operations.
- Serialization: Counterfeiting is a big issue for branded fashion industry where authenticity of the product is a critical component. To counter this, companies are going in for serialization in a big way.
What are the sustainability initiatives being taken in your companies?
Ranjan Sharma, CIO & Head - Supply Chain, Bestseller India: To meet our targets on climate, water, and circularity, our products need to be consolidated in suppliers that are willing to move forwards with us on this journey. By 2025, we have committed in our Fashion FWD strategy that 75% of all product orders will be placed with suppliers that are highly rated in our Sustainability Evaluation. A supplier’s environmental performance is a very important part of this criteria. We use data from the Factory Standards Programme, Higg FEM, BHive, and the IPE to create the Supplier Environment Rating.
Bestseller uses the Higg Facility Environment Module (FEM) tool as one part of its environmental performance evaluation for factories in our supply chain. All key factories of Bestseller need to adopt the Higg FEM so we can measure environmental performance across seven impact areas: environmental management systems, water use, wastewater, chemical use, waste management, energy use and greenhouse gas emissions. The use of Higg FEM means this data is consistently recorded and tracked across all sourcing markets.
Bestseller has been using Maersk ECO Delivery's low-emission biofuel solution for the past two years. The biomethanol that powers the new vessel is sourced from bio-mass waste, resulting in a lower carbon footprint than traditional fossil fuels. Since partnering with Maersk two year ago, we have been able to avoid 37,000 tonnes of CO2 emissions compared to using traditional fossil-fuel based ocean transport.
As transport represents 3% of the fashion company’s total CO2 emissions, this is just one small step forward. Going forward, Bestseller will make greater efforts to reduce its indirect emissions from the production of raw materials and manufacturing, where its largest impact is.
Rachit Rungta: Circular fashion concepts, including clothing rental, upcycling, and recycling programs, are becoming more popular in the fashion & lifestyle space. Retailers are encouraging customers to return old clothing for recycling or upcycling into new products. Retailers are focusing on sustainable packaging, such as using recycled and recyclable materials. Some brands are opting for minimal packaging or innovative reusable packaging solutions. There has been an increased focus on reducing miles travelled & carbon footprint by optimizing the supply chain network: Sourcing/ manufacturing products closer to the point of sale, regional sourcing, optimal no. of warehouses & stock keeping points. Retailers are also looking for more sustainable transportation options, such as electric and hybrid delivery vehicles, and optimizing delivery routes to reduce emissions. In warehouses, they are utilizing eco-friendly building materials and adopting energy-efficient facilities, transportation and last-mile delivery practices to enhance green expanse.
What are the key issues in fashion supply chain management?
Rachit Rungta: There are several issues that companies are facing in managing supply chains. These include:
- Short lifecycle of articles: New product introductions every season, long tail and difficult to forecast in a reasonably accurate manner due to lack of historical precedence.
- SKU complexity: Size & colour complexity, ratio packs & large number of SKUs across different categories
- Omnichannel complexity: Different SKUs, suppliers, product/article preferences, price & fulfilment requirements across different channels
- Fast changing customer preferences and choices: Irregular buying patterns, regional preferences and variations
- High seasonal variability: Less harsh winters will impact sale of winter clothing, relatively cooler climate impacts sale of summer clothing.
- High supply lead time from design to display: This leads to low forecast accuracy and higher inventories to be maintained.
- Premium, luxury or mass premiums discretionary spends: Macroeconomic & other factors lead to demand volatility.
- Last mile delivery especially in e-commerce and B2B channels: High cost of delivery, small shipment size, volumetric weight product
- FTL movements: Low vehicle utilization, loadability by gross weight is low due to light weight of material.
- High returns % specially in e-commerce channel: Reverse logistic supply chain design and related costs
- Counterfeiting & Theft: Copy of design, counterfeiting of branded products, pilferages from warehouse Besides, there are other challenges such as maintaining quality and hygiene of returned goods; high dependence on imports, exposure to risk of raw material shortages; product quality variations, timely delivery of shipments especially for non-branded clothing; branded vs non-branded vs private label clothing, that have a greater impact on fashion supply chains.
What are some of the key enablers of omnichannel and how is technology playing a key role?
Ranjan Sharma: One of the important aspects when we started working on omnichannel was to ensure real time store inventory and to ensure that there was enough buy-in from store operations for the same, it has been a long journey for all of us. This has been the topic of discussion since long, a lot of work has happened and still there is so much more to offer and so much left to explore and solve the customer centricity puzzle. It’s like a complete circle. We solve one problem and something else crops up, which makes it exciting. One fundamental question that we must address when we are operating omnichannel retail business is ‘What is it that we want to solve for “OUR” customers’. The biggest demand from the customer is the speed at which we can fulfil their orders.
Another important criterion is the seamlessness for the consumer to buy anywhere, return or exchange anywhere or get alteration done or solve any other post purchase problem anywhere.
Now let me turn this around and ask – what is it in for us to deliver such an experience. When we started our omnichannel journey, our first emphasis was on the speed at which we can reach customers. We analyzed locations from where we can deliver products to our customers at the fastest speed. After zeroing-on the locations, we started building capabilities around that. We can’t have many distribution centres, but we can locate stores closer to customers.
This essentially entails that the store must not only serve the walk-in customers, but also act as the micro fulfilment centre for the company. This involves accepting the order, packing the product, shipping it, handling the logistics, and managing the returns.
Returns management is the most complex part of omnichannel retailing. A forward fulfilment is comparatively easier to manage, but the returns management, especially in fashion retail, is highly challenging. This is where technology has been taking the centrestage. Technology enablement ensured in simplifying the process, training the employees quickly, be it store managers or the back-end support staff and empowering store managers so that they can deliver a seamless customer experience to ensure that the customers keep coming back to our stores or the digital channels. In all of these, the speed at which one accepts the order, finds the right product, ensures that the product is rightly packed and gets shipped out fastest remains the key. We must train the people working at the shopfloor or the warehouse in doubling up for packaging and shipping the right merchandize. Even if we have new person, he / she needs to be at the same pace with others. This is where continuous training plays a big role.
Another complex task is to identify the right location to ship from. Necessarily, it might not be the nearest store. Over time, as the process matures, we will also need to analyze the most profitable place to ship a particular order. There are several parameters that we need to look into to make this whole complex process a simple and seamless one. One of the biggest problems even to reach any of these stages was having a real-time inventory visibility of the stores. Around 5-7 years ago, none of the retailers could even think of achieving that. All of us were trying to solve for real-time store inventory, synchronized across and then being able to proliferate two different channels and the complexity surmounts when it’s about omnichannel, when you must serve various marketplaces as well. Technology is bringing all these complex pieces together. It has enabled retailers to be able to run this business in a seamless fashion. Without which, I think, omnichannel would have never been a possibility.
In ensuring all of these, if the inventory is not optimized, everything else fails. The fundamental of supply chain – having the right inventory at the right time and the right place has become more critical today. Inventory must be identifiable. There lies the importance of traceability and that is where technology has been enabling companies like us.
How can technology aid in streamlining supply chain efficiency?
Rachit Rungta: There are umpteen scenarios in which technology is streamlining supply chain efficiency.
Companies should strive for an agile inventory management by implementing a technology solution that allows for dynamic allocation and allocation of inventory based on real-time data. They should also utilize demand-driven replenishment strategies to ensure products are available when and where they are needed.
- RFID (Radio-Frequency Identification): RFID technology helps track inventory in real-time, reducing the chances of overstocking or understocking.
- Inventory Planning Software: Advanced analytics and AI-powered software can provide better way to plan, classify and store inventory.
- Big Data and Analytics: Data analytics tools can analyze customer behavior, market trends, and historical sales data to provide accurate demand forecasts.
- Blockchain: Blockchain technology enhances transparency and traceability in the supply chain, allowing stakeholders to track products' origins and movements.
- IoT (Internet of Things): IoT sensors can monitor temperature, humidity, and other environmental factors in transportation, ensuring the quality of products in transit.
- Order Management Systems (OMS): OMS software centralizes order processing, reducing errors, and streamlining order fulfillment.
- Automated Order Routing: Algorithms can automatically route orders to the nearest fulfillment center, optimizing delivery times.
- Automation and Robotics: Robots and automation systems can handle tasks like sorting, picking, packing, and even loading, improving efficiency and reducing labor costs.
- WMS (Warehouse Management Systems): WMS software optimizes inventory placement and movement within warehouses.
- Route Optimization: Route planning software uses real-time data to optimize delivery routes, reducing transportation costs and improving delivery speed.
- Fleet Management Software: These tools help manage and maintain delivery vehicles efficiently.
- Sustainable Sourcing Tools: Technology can assist in identifying eco-friendly materials and suppliers, supporting sustainable fashion initiatives.
- Eco-friendly Packaging Solutions: Packaging software helps design and source sustainable and recyclable packaging materials.
- Returns Management Software: These systems streamline the returns process, optimizing restocking and refurbishing, and minimizing waste.
- Unified Commerce Platforms: Unified commerce software enables seamless integration of online and offline sales channels, ensuring consistency in inventory and order management.
- E-commerce Platforms: User-friendly e-commerce solutions enhance the online shopping experience, reducing cart abandonment rates.
What’s your take on new age technology solutions taking shape in fashion supply chain?
Ranjan Sharma: Bestseller is one of the first fashion retailers to scale a new blockchain solution and is thereby taking a remarkable step towards product traceability. Investments in traceability solutions are needed to make sure that consumers get products they can trust and simultaneously ensure compliance with expected EU requirements for digital product passports.
Together with a group of key suppliers, we are embarking on the first part of the platform's implementation phase. The project will require significant input from the suppliers, who will now have to use TextileGenesis’ new platform. The hope for them is that this becomes an industry-wide tool, equipping them with the capacity to deliver product level transparency in line with the expected EU legislation. Through this platform we can trace every step in the production process, giving us access to information we have not had previously, and enabling us to deliver stronger transparency to our company and customers. Focusing on complete fibre-to-retail traceability at scale, Bestseller is at the cutting-edge in the industry.
What are the factors that we must take into consideration before going for any technology solution?
Ranjan Sharma: Before we embark upon new technology journey, it’s all about getting the house in order. Though we keep talking about the connected enterprise architecture, at some points, things just don’t fall in place. The very first thing we must consider that whatever technology solutions we are working with currently, they all must be in sync. The biggest investment needed is on strengthening the ultimate consumer experience where the consumer is no more buying from your store or online platform, there are many more channels – social media, conversational commerce, marketplace, so on & so forth, from where your consumer can buy your products. The key lies in integrating all of them together.
Retailers need to offer the same experience across platforms to build brand credibility and carry the same experience from one place to another platform. When we talk about omnichannel, it has to be delivering the same experience across platforms. We also need to integrate all these technologies so that leakages are minimized.
Can you cite an example of successful implementation of tech tool in your supply chain…
Ranjan Sharma: We have recently successfully implemented large-scale, fully automated warehouse solution in Taulov, Denmark. This innovative offering resulted in increased warehouse efficiency, improved working environment for employees, minimised errors and reduced storage space. This large-scale automation solution focuses on the entire logistics operation – from when the item arrives until the item is delivered to the customer.
At the distribution centre, which serves customers all over Northern Europe, BESTSELLER invested in several technologies, including 79 new Skypod robots which are part of an Exotec system, which automates the collection and packing of products, potentially more than doubling productivity compared to a manual setup. The robots transport incoming boxes to their storage location, climb shelves, and deliver boxes of products to operators for packing and shipment to customers. Robots for depalletizing, box opening and palletising are also a part of the solution, ensuring a better and safer working environment for our colleagues.
How should Fashion and Lifestyle companies structure their supply chain to create the required responsiveness and speed?
Rachit Rungta: Companies should utilize advanced analytics and data-driven tools to accurately forecast demand. They must collaborate closely with sales and marketing teams to understand customer preferences and trends. They should establish multiple distribution centers in key regions to reduce lead times and shipping costs and implement a just-in-time (JIT) inventory strategy to optimize stock levels. Fashion companies should collaborate with manufacturers that can produce small batches quickly and adjust production schedules on short notice. They should utilize fast fashion production techniques, such as modular design and quick replenishment.
There is an increasing need to foster strong relationships with suppliers and manufacturers, including local and regional partners. Fashion companies must work together to streamline production processes, reduce lead times, and ensure quality standards. Technology will be the mainstay in achieving desired results. To harness its true potential, companies should implement digital tools for real-time visibility into the supply chain, including RFID, IoT, and blockchain for tracking and traceability. They should invest in advanced planning and scheduling software to optimize production and logistics.
Retail companies must seamlessly integrate all sales channels, including physical stores, e-commerce, mobile apps, and social commerce and utilize a unified commerce platform to manage inventory across channels. There are innovative last-mile delivery modes available, and retailers should explore innovative last mile solutions, such as crowdsourced delivery, autonomous vehicles, and hyperlocal fulfillment centers. To meet customer expectations for speed, they should look at experimenting with the same-day and express delivery options. To enhance reverse logistics efficiency, companies should streamline the returns process to reduce turnaround time for returned products and develop a refurbishing and recycling program to minimize waste.
Companies should strive for an agile inventory management by implementing a technology solution that allows for dynamic allocation and allocation of inventory based on real-time data. They should also utilize demand-driven replenishment strategies to ensure products are available when and where they are needed.
Besides all these, continuous improvement and innovation will only take us ahead. We must encourage a culture of continuous improvement, where employees are empowered to propose and implement process enhancements. We need to stay updated on emerging technologies and supply chain best practices to drive innovation.
Fashion companies also need to work closely with vendors, retailers, and logistics partners to align objectives and share information, reducing lead times and improving supply chain visibility. Lastly, strategic market expansion will aid in reducing shipping distances and in better serving local and regional customers.
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