Flight to value prompts greater sourcing efficiency
The success of fast fashion has prompted a subsequent need for speed in the apparel supply chain. But it also seems that complex critical paths are in many cases slowing down the sourcing process, as just-style news editor Joe Ayling finds out.
Recessionary pressures in the past few years have triggered a flight to value on the retail market, according to a recent Industry Forum Services seminar on 'Essential Sourcing Skills'. But it also seems that complex critical paths are in many cases slowing down the supply of fashion goods.
"Your sourcing strategy has to reflect consumer behaviour. The consumer wants to buy in a certain way and that might require us to change the way we source. But above all we need to be faster," explains Ken Watson, managing director at Industry Forum Services.
Watson says that while the fashion industry historically had two to four seasons, it is now becoming closer to 10-12, with fast fashion suppliers such as Zara bringing out 14-26 fashion ranges per year.
"Now we've got a completely different flow of merchandising going through, and this has a fundamental impact on how we source," he adds.
"When we were doing two to four seasons we had a way of sourcing which was about perfection, and big batches twice a year. We could take a long time and the technical department could take a long time to look at everything.
"We don't do that anymore and we have to think 'where do we compromise' and how do we get people to compromise without taking risks because the technical department are required to get things to a standard."
Time is money
Speaking to delegates from retailers including Tesco, Long Tall Sally and Monsoon, Watson went onto say that with fast fashion becoming the norm, companies need processes that allow them to make more introductions and innovations, but in smaller batches.
The critical path of garments from factory to shop floor is often a complex one, with decisions related to quality parameters, approvals, logistics, specifications, documentation, submissions, sampling and test reports made along the way.
However, Industry Forum Services finds that items that fail once they reach the shop floor have often been passed backwards and forwards due to problems during sourcing.
"We are often spending more time on a product which loses us money, and that doesn't make any sense at all," Watson says.
And while sorting out the critical path of a product is essential, so too is finding the right partners to source from.
Sourcing as a strategy
"Sourcing isn't just a functional activity, it is part of strategy. It isn't about negotiating with suppliers to get the right prices, it's about which of those suppliers we really want for each particular customer we are buying for, and how in doing it we reduce risk," says Watson.
But while efficient sourcing strategies from the offset can reduce the risk of unsuccessful products and markdowns further down the line, preventing markdowns is not an exact science.
"When we forecast our demand it is not certain,"Watson says. "Most of the time there is going to be a discrepancy between demand and supply, when we forecast 100,000 units it could be 80,000 or it could be 120,000. There's nothing wrong with that, that's life."
However, Watson says that gross margin reviews within sourcing teams have helped to keep tighter control of costs in recent years.
He also says that modern day sourcing needs a mix of direct sourcing, buying offices, sub-contractors and "middle-men", using Zara as a case in point. Each of these operations requires a close watch though.
"Some suppliers perform well and others badly, so we need a formal review process for all our suppliers," Watson adds.
The net outcome is that delivering fashion products quickly requires a flexible and mixed approach to sourcing, and one which is built into overall business strategy.
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