To date, the promise of digitalization in the fashion industry has not been fulfilled. Compared to other sectors, the fashion industry is currently in the first steps of its long journey towards digitalization, both in terms of purchasing and in the end-to-end product development process. As we have been expressing in the previous posts – The New Model of Fashion Sourcing and Digitalization, the Next Stop in Apparel Sourcing – fashion brands have to correct various inefficiencies in the current processes before structural and serious changes of digitalization can be applied.
Digitizing is much more than automating manual processes.
Despite this situation, executives cannot fail to recognize the tremendous future potential of digitization. The real potential lies not in applying digital solutions to manual sourcing processes, but rather in developing the industry’s approach to sourcing and the product development process. This involves using technology to generate transparency throughout the supply chain, adopting artificial intelligence and advanced analysis, redesigning and digitizing management, and making greater use of automation.
With this in mind, digitization opens up a new dimension and vision of the new sourcing model; something extremely needed in the apparel industry as it moves from a focus on supply to a focus on consumers. The industry’s traditional focus on supplier identification, transactional negotiations and manual order management will not be useful in the future. Instead, companies need to take an end-to-end perspective and enhance cooperation across roles and through strategic partnerships with suppliers. Greater versatility and flexibility are very important if fashion brands want to give today’s customers what they want and are looking for, when they want it, where they want it and with the right level of quality.
As a result, the digitalization of provisioning goes beyond the digital adaptations of current management and impacts the entire end-to-end product development system; from conception, creation and design, through supplier allocation and manufacturing, to distribution, sale and shipping.
The achievements of digitization: cost reduction and speed increase.
Those who are successful in using digitization to create this new model will reap great rewards, including greater speed, agility, flexibility, productivity and accuracy, and they will make a big step forward in lowering costs. Pioneering companies are already showing a vision of this future situation, making innovative technology-based experiences in on-demand production and localized manufacturing. In addition, the new customer-focused, digitally-driven system can create the end-to-end transparency; the clarity needed to increase accuracy and efficiency, as well as environmental and social responsibility throughout the supply chain.
Understood in this way, digitization can provide overall cost and resource efficiencies, optimizing sourcing processes and product manufacturing efforts. For example, 3D design can shorten the time for product creation, reduce the number of sample repeats by suppliers, support cost optimization through “design with value” and reduce the environmental footprint of manufacturing.
Reduction of costs and… of production times.
Through digitalized sourcing, the executives surveyed in the report ‘The Next Stop of the Apparel Sourcing Caravan: Digitization’ are not only inclined to the reduction of the FOB purchase price but also and fundamentally to that of the lead times for pre-production, production and delivery of the product.
This shows a unanimous and growing consensus that delivery times accepted in the past will no longer work in the future. Better assortment accuracy and planning is another important goal for sourcing optimization, given the increased market volatility and the shift to demand centrality. Digitized processes, such as the design and creation of different styles through predictive analysis, will play an increasingly important role.
For this reason, we affirm that in departments and areas where digitization can open the door to progress, the gain goes beyond the replacement of current manual processes. For example, advanced analysis-whether applied to production capacity planning, origin and supplier selection, or expenditure intelligence-will help achieve the perfect balance between speed, versatility, and cost.
Analyses can be a powerful means to drive accurate decisions about order size, volume flow and reordering based on real-time data from the demand and supplier side. If digitization is approached in close collaboration with suppliers, it can also enable automatic ordering and order renewal.
Digitalization is an ally to sustainability and CSR.
Whether it is to comply with sustainability or CSR instructions, digitization achieves greater transparency from the factory itself, including direct worker feedback and the tracking of necessary raw materials from their origin to the stores. Specific digital solutions include cloud-based platforms that track supplier compliance.
In the next post we will continue to analyze this exciting process and look at the four major opportunities of digitization.
See you soon!