The retail fashion industry is among the best examples of how an agile supply chain can keep pace with fast-changing customer demand, as Miya Knights discovers
Zara, the retail fashion brand of Spanish multinational clothing company Inditex, arguably introduced the concept of “fast fashion” with its goal to closely couple trends and customer demand. This enables Zara to manage greater product variety over short lead times and introduce tens of thousands of new items a year compared to the 4,000 or so items of some of its competitors.
Posting 16 per cent growth in the group’s turnover last year, Inditex chairman Pablo Isla recognised the importance of supply chain and logistics investment for greater business agility. In its annual report, Mr Isla highlights work to launch a ninth logistics platform for Zara and Zara Home this year, as well as a new logistics centre for its brand that he says could be considered “to be at the forefront of technology applied to this area”.
Neil Saunders, managing director of retail consultancy Conlumino, says: “Vertically integrating the manufacturing process into the retail business, as Zara has done, allows maximum control to be exerted over the supply chain.” But this is only suited to large-scale businesses. “Zara makes products in bulk, but quickly switches from one design to another,” he adds. “This means there is flexibility to adapt to fashion trends. It also means that the stock turnover in Zara’s stores is fast and there is always something new to see.”
The success of the Inditex model has permeated the rest of the fashion retail industry, helped in no small part by the explosive growth of online shopping, adding to the need for speed and agility expected of customers for their offerings to be “on trend”. “Given that fashion is a fast-moving market subject to very rapid change, having an agile supply chain is a distinct advantage as it allows a retailer to bring ‘hot’ products to market quickly and capitalise on demand,” says Mr Saunders.
According to Saverio Romeo, principal analyst at technology consultancy Beecham Research and author of the recently published Future of Fashion Retail: “Agility in this sector means responsiveness and staying close to consumers’ changing shopping modes in a scenario where channels are morphing due to the increasing and diverse use of digital technologies.”
Having an agile supply chain is a distinct advantage as it allows a retailer to bring ‘hot’ products to market quickly and capitalise on demand
But achieving agility requires a number of operational components. “The first one revolves around data from consumers, online and physical stores, and from various steps in the supply chain,” says Mr Romeo. This data is a critical source of information in order to take rapid and informed decisions, which feeds the second most important agile requirement – insight. But he adds that insight is not possible without the information that comes from better integration across the various business operations, from product manufacturing to logistics, from store operations to relationships with consumers, and the management of the various channels.
A mixed sourcing strategy, between local and international as well as in-house and third-party manufacturing, is becoming increasingly important for fashion retailers looking to achieve agility as they expand both online and in overseas markets, according to Steve Davis, retail consulting vice president at supply chain software and services company JDA. “Top Shop, for instance, is now sourcing goods from local manufacturers in order to bring in the latest designs more quickly,” he says. “If fashion retailers are to achieve agility, they need complete visibility of where inventory is at, in any point in the supply chain, so they can better understand lead times. Key to delivering this successfully is ensuring that your people, processes and technology are all working in harmony.”
ONLINE AND READY TO GO
A home-grown fashion success story, embracing both agile technology development and integrated operational processes, is the NET-A-PORTER GROUP.
NET-A-PORTER has grown from humble beginnings in a Chelsea flat 14 years ago to a leading international luxury fashion retailer. Founded by executive chairman Natalie Massenet, it has taken agile working methodologies into the heart of its supply chain operations in pursuit of its goal to become “the world’s premier online luxury fashion destination”.
Having a predominantly digital presence, Rachel Cartmail, head of business change at the NET-A-PORTER GROUP, says agility is part of the company’s DNA: “It is of paramount importance to us that we have continuous delivery and innovation at the heart of everything we do,” she says.
The need to scale its growing digital and supply chain operations led the company to adopt agile project management methods and the JIRA software project. It uses tracking software tools to manage projects, quality assurance and compliance as well as efficiently track workloads. It has also adopted “scrum” as an iterative and incremental agile software development framework for managing product and application development, and service-oriented architecture as a way to decouple IT architecture from its processes.
David Lowe, agile project manager at the NET-A-PORTER GROUP, says embracing agility in both cultural and methodological terms has supported successful growth. “Scrum was a framework that enables different teams to tailor their ways of working to different requirements,” he says. Cross-functional teams work together in a way where all barriers to success are removed.
The inventory management systems developed and maintained by NET-A-PORTER enable its buyers, planners and merchandisers to make sure the right product is available for its customer at the right time. “Having regular delivery, which is one of the core values of agile, means that we can focus on whatever is of the highest priority or of greatest value to the business,” says Mr Lowe. “And then it’s also, of course, key to getting feedback from customers, which helps us make sure we are working on the most important things.”