Supply chain models have shifted in the last decade. Not by design, but through shifts in consumer and supply landscapes.
No news there.
How much they have changed however, becomes apparent by comparing the current status-quo with: a) ‘visionary’ research results released in 2008 (just as the European economic crisis hit), and b) the contemporary visions on how consumer markets are expected to change in the next 10 or so years.
2008 perspective on the 2016 supply chain
Future Supply Chain 2016: Serving Consumers in a Sustainable Way. Source: FutureSupplychains.comIn 2008 the following key areas of major progressive change were identified by the ‘Future Supply Chains‘ report:
- In-Store Logistics: Add value for the consumer, through things such as: in-store visibility, shelf-ready products, shopper interaction.
=> 2013 status: Has largely happened. Packages have been redesigned in many cases, physical layout of shelves has improved, so has the layout of many grocery stores. In particular interaction with consumers – in all types of retail – has become more pro-active through a variety of means. Brands such as Innocent are game leaders in this. - Collaborative Physical Logistics: Sharing of physical infrastructure such as warehouse storage and transportation vehicles, which optimise physical footprint, are used to consolidate flows and improve service and asset utilization.
=> 2013 status: Is certainly happening. Many fashion brands – specifically also online retailers – have outsourced their warehousing to professional companies and have gained productivity and momentum in this way. - Reverse Logistics: Solutions including product recycling, packaging recycling and returnable assets.
=> 2013 status: Recycling has been mainstreamed to a large degree, and the material flow is continuously optimised, both in terms of recyclable materials as well as how to manage them most effectively. Products made entirely or to a large degree of recycled materials have become mainstream, and economies of scale have started to play a relevant role. - Demand Fluctuation Management: New models to smooth the demand signal coming from customers; solutions will include joint planning, execution and monitoring.
=> 2013 status: On demand re-ordering systems have become common. Also in fashion. Short lead times – as low as 7 days even for overseas orders – are reality. Orders are now being placed daily, not monthly or seasonally anymore. More localised production has started to appear to smooth peaks and reduce lead times even further.
RFID tags, barcodes and QR codes are entirely common place, even in small, around the corner mum-and-pop stores. - Efficient Assets: Optimising equipment to obtain process efficiencies will be common – not the least for their environmental impact.
=> 2013 status: We are starting to see this, very specifically in terms of vehicle design, in store cooling units layout and design etc. However, in comparison to all of the above mentioned points. This is an area that at the time of writing still encompasses a huge underused potential. - Intimate trading partner collaboration: Design and roll out of tools will be available that allow optimisations in collaboration with trading partners across the entire supply chain. Including metrics.
=> 2013 status: In principle available and feasible. Challenges remain in terms of trust – much of the data that would need exchanging as consequence of the collaboration is regarded as business relevant, and hence agreement and trust on sharing it is only achieved with difficulty.
Next generation supply chains: 2013, envisioning the future
Future logistics and supply chains. Key note speech by Dr. Patrick Nixon,Observing what is going on in commodities industries, certainly – but not only – apparel is a fairly accurate measure on what is happening and where all indicators are pointing towards.
Global supply chains will be even more efficient, fast but – importantly – tailored. Flexibility thereby is key in all its facets, from tailoring supply chains to specific consumer/customer segments, to mitigating risk and increasing shipping speed through decentralization. This applies not ‘just’ for warehousing, but literally across all members of a given supply chain: from raw material to manufacturing and even retail.
All these developments are clearly visible in fashion:
Production is re-located back closer to target consumer markets in order to save on cost of transport, reduce lead times, run smaller production runs closer to in-time retail demands, is just one of many examples.
The application of latest-generation technology (e.g. Shima Seiki’s WholeGarment Technology allowing for straight forward and automatised masscustomisation while saving around 20% on raw material) is yet another example. In this context, also think of the potential contained in 3D printing in combination with distributed production …
De-risking is the key words, and indeed in this context sustainability is at the forefront. New legislation around carbon footprinting, transparency of country of origin and ingredients will be state of the art. While this initially could be considered a challenge, the resulting improvement in quality control processes etc. will by far outweigh the draw backs.
The demand for ‘greener’ solutions, the integration of true (full) cost calculations, and the pressure to get ever closer to zero-overproduction will be at the root of yet another shift resulting in ever more integrated consumer integration with order schedules and metrics.
While on the technical side virtualisation (sampling, mixed reality etc.) will bring new opportunities to do things ‘better’, – as in more streamlined in every sense of the word, specifically also in terms of sustainability credentials -, a focus on design capability development and roasters for suppliers is another strong area of development (example: Rolls Royce, collaborating with the Design Council to transfer their design process knowledge to British SMEs).
Conclusion
Supply chains, as a discipline of expertise, have come out of the hiding and recognise their role in reducing corporate risk. This is notably and specifically the case in fashion and textiles. At the same time, ‘design’ – not just in the creation room, but in all facets where it impacts the making, delivery and use of a product or service, is increasingly recognised as relevant.
