Around 73% of consumers shop on more than one channel, a survey has found

Around 73% of consumers shop on more than one channel, a survey has found

Lean supply chains built on securing the best quality, the lowest price, and the shortest lead time are out of kilter with the demands of onmichannel, where agility is key.

"The customer is what our industry has embraced over, the last few years," Kevin Townend, non-executive director of Advanced Supply Chain, the UK based provider of supply chain and logistics services, told delegates at the Association of Suppliers to the British Clothing Industry (ASBCI) conference 'The Digital Revolution – virtually taking over fashion' in Leeds last week.

"Omni-channel is very much a new type of soft supply chain. Over the last 15 years it's been on a lean methodology. Get the best quality, get the lowest price, and the shortest lead time. All of these things have developed a lean supply chain that can service bricks and mortar, e-commerce and multi-channel outlets," he explains.

But the marketplace is changing dramatically. Global marketplaces like Amazon, eBay and Alibaba, are expected to own almost 40% of the online retail market by 2020.

A study of 46,000 shoppers carried out last year by Harvard Business Review found 73% shopped on more than one channel, with only 7% shopping online-only, and 20% in-store only. It also found that when shoppers did research online in advance, they spent 13% more in-store, proving that more channels equals more revenue.

In the face of this, how can a retailer succeed and what is the failure of going omni-channel? "The success is agility and unfortunately agility is not built into the lean supply chain model," Townend explains.

"We try to eliminate waste. We have long-term sustainable relationships. We measure output of productivity, we put standardisation into the way we work and we have logistics plans that are fixed and stable.

"Unfortunately this doesn't work for omni-channel because you have to be agile. It's customers and markets that are important. You have to be fluid in the way you build partnerships and you have to measure capabilities. You have to focus on operator self management but have the compliance systems and visibility to make sure it is being done."

The see-now-buy-now mentality is instantaneous, and as Townend explains, the supply chain channels for bricks and mortar are different to those for omni-channel.

"Some of the problems that companies like Asos and even Amazon have, is that they go to the origin manufacturers, they ship product back, they process it to make it compliant, and then they send it back to various markets around the world. Why not send it from the origin to your markets? We believe if you do that at origin you could save up to 90 pence per item – a phenomenal saving."

The key to achieving an agile supply chain, Townend explains, is orchestration: Having the technology and systems in place to move products through the supply chain seamlessly, while still being in control at the origin.

The rewards for achieving this, he says, are substantial, such as the chance to exploit growing markets.

Top 10 middle class consuming countries in 2020

 
1. India US$12.8 trillion 6. Russia US$1.4 trillion
2. China US$10 trillion7. Germany US$1.3 trillion
3. USA US$4 trillion8. Brazil US$1.2 trillion
4. Indonesia US$2.5 trillion9. Mexico US$1.2 trillion
5. Japan US$2.3 trillion10. France US$1.1 trillion

Source: Advanced Supply Chain

"These are phenomenal figures," Townend says. "But what do these actually mean to the fashion industry? There is a massive opportunity to tap into these massive marketplaces. Never has the opportunity for our industry been so great. And it's all technology based."