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11.14.2017

Sourcing Journal: Supply Chains Not Built for Today’s Demands

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Sourcing Journal: Supply Chains Not Built for Today’s Demands

What’s happening in sourcing today could be likened to trying to play MP3s on a record player—it doesn’t work because what’s necessary now can’t be managed with a system that wasn’t designed to handle it.

That’s the message that’s been loud and clear from sourcing executives moving past the gloom and doom that’s been hovering over retail and now looking to retool their supply chains. And at the Mazars 2017 Consumer Products Forum in New York City Tuesday, Li & Fung executive director Rick Darling drove that point home.

E-commerce has continued to drive out brick-and-mortar, he said, and it has produce a consumer that now dictates what companies produce and how they source that product—and that’s led to an evolution across the board.

“Amazon quantities, Kohl’s quantities, Macy’s quantities, are all coming down per style and their SKU counts are all broadening, some more extreme than others. And that’s not being driven by their choice to control inventory, it’s being driven by consumers’ demand to get things faster, quicker and more unique than they ever had in the past,” Darling said. “And the reality is, while that’s happening and retailers buy less product and they need to do it faster and they need to do it in smaller quantities, none of us, and I will say none of us—including Li & Fung, who’s supposed to be the supply chain leader—really has a supply chain that’s been built for that.”

[…]

The supply chain needs to be radically reinvented
Innovation is in high demand these days when it comes to supply chain reinvention, and automation is leading the way.

Adidas, for one, will soon be making 800,000 T-shirts a day using solely sewbots.

Tianyuan Garments, a Chinese company that produces for Adidas recently invested $20 million in a factory in Little Rock, Arkansas slated to open in 2018. The factory will employ 21 robotic production lines, using automated technology from SoftWear Automation. According to Darling, those T-shirts could cost as little as 31 cents each.

Beyond bots, 3-D will be key to the whole product development process.

“Today, retailers are actually talking about demanding that wholesalers present their product lines through 3-D versions versus physical sampling…virtual fit, virtual sampling and virtual delivery of product,” Darling said. “Not for the feint of heart. You’re talking about layering significant amounts of technology to be able to do that.”

Those are the kinds of new realities that will divide winners from losers based on who can best adapt to demands and invest in the tech to get them there.

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