After COVID-19 stretched supply chains to breaking point and beyond, the task of piecing them back together is not one that can be done blind. Brands and retailers who rely on complex, global sourcing and production networks now have no choice other than to take greater control over how – and how effectively – their products are being made. And in a world where international travel and in-person factory inspections have been indefinitely paused, digital monitoring of those manufacturing and distribution networks and effective analysis of the resulting data has become essential.
It’s important to remember, though, that obtaining insights into key manufacturing metrics like compliance, quality management, and capacity has been a key objective for retail businesses for some time. That information is some of the most valuable that a consumer-facing business can gather from its upstream partners.
Why? Because so many important success metrics and KPIs have their roots in the supply chain. Low return rates, good fit, rapid time to market, confident transparency and compliance declarations, profitable margins, and overall brand reputation all hinge on knowing and controlling your supply chain. And by the same logic, having a lack of visibility and a lack of control is a source of considerable risk, and a constant threat to the value your business offers the end consumer.
That risk has, of course, now been compounded by the coronavirus pandemic. The stress points built into offshore manufacturing and logistics have become more pronounced, and only the most tightly-integrated verticalised businesses are properly equipped to address them – creating the need for a new, digital-native, way of understanding supply chains, mitigating risk, and using the data they generate to improve decision-making.
Take the example of a typical (but fictional) direct to consumer brand that is trying to overcome the unprecedented challenges of COVID-19, without having the proper tools to do so. This brand is headquartered somewhere in Europe and sells in the EU and the USA. Its sourcing and manufacturing network extends through China, India, Bangladesh, Vietnam, and a scattering of countries in North Africa. It is publicly traded, and accountable to both the open market and institutional and retail investors.
In March – an entire season ago now – both the upstream and downstream components of that network ground to a halt. The brand’s own retail premises and department store concessions were closed and only reopened in June, factories were shut for a similar length of time, and shipments in transit had to be paid for and then either left in port or brought into distribution centres or stock rooms and left standing.
Today, with retail channels (especially eCommerce) reopening downstream, our brand needs to populate those channels with new products. And the performance of its next range is going to be critical, with aggressive margins and cost-cutting required to meet the financial targets it needs to stay afloat.
But at the same time, the company cannot afford to compromise on quality or on-time delivery: everything from fit and colour accuracy to defect rates must match its usual standards. Crucially, as a COVID-19 outbreak at a factory in the UK is making headlines, the company also has to be confident that all of its suppliers are operating safely by enforcing social distancing and safeguarding the health of their workers as well as complying with pre-existing codes of practice in other areas such as overtime, living wages and environmental standards.
This brand has, until now, relied on traditional tools to gather information on the performance and risk profile of its supply chain, but the heightened levels of speed and scrutiny now needed are demonstrating how unsuitable those tools have become in the digital era:
- Factory inspections are performed on paper in a non-standardised way. Every supplier has its own format, and every third-party inspection firm adopts a different approach, making it essentially impossible to compare one supplier to another – even if they share identical specialisations. With paper records, the trail of documentation produced by regular inspections is inaccessible to the sourcing and development teams who actually need to order samples and sign-off on production. And where those records are digitised after the fact, errors and interpretation in the data are common.
- The sourcing and compliance teams that typically try to consolidate and analyse this data have had their headcounts reduced. So while consumers and shareholders are demanding greater insight than ever into supply chain practices, the brand’s ability to collate, understand, and present compliance information has been reduced.
- Supplier handbooks and codes of practice are being shared in unsuitable systems, making it difficult – if not impossible – to know if they have been fully read, kept up to date, or disseminated to the right staff in the factory environment. This undermines any hope of real accountability, since handbooks are not aligned between suppliers and therefore discrepancies are difficult to detect. And while in-person training and validation are ruled out by COVID travel restrictions – and that lack of resources I mentioned – identifying and correcting non-compliance is impossible.
- Quality assurance processes and audits are recorded in ad-hoc and disconnected ways, with the data being entered into different non-integrated systems. From lab tests and fabric inspections to distribution centre Quality Assurance and retail return rates, only partial pieces of the puzzle are available for analysis and action. And as the brand knows from experience, small sample sizes of data that cannot be correlated or reconciled with other information lead to delays in making critical choices at best, or misinformed or half-blind decision-making at worst. Coupled with reduced staffing levels and the constant disruption of COVID-19, this incomplete picture prevents the business from undertaking any true performance benchmarking of its supply chain.
Most importantly, though, these different tools and processes do not share or contribute to a common source of data. For this brand and many others, it would be clearly beneficial for PLM users to have access to accurate supplier scorecards at the time they issue technical specifications, but with those two processes and systems being unlinked, there is no way to ensure that effort made in design and development is not undermined by faith-based decisions in production.
When I and my team introduced Pivot88, we set out to close these loops and make sure that brands like my hypothetical example can pass orders to their supply chains with confidence. Because as I’ve explained, traditional supply chain tools and processes cannot support businesses’ need to understand and improve production performance.
The other founding principle behind our tools was that I recognised that brands and retailers had the will to change, but not the opportunity. Anyone who has sat at a desk amongst growing mountains of paper knows the feeling of wanting to become better organised, and better able to find and act on the information they need, but not knowing where to start. And in a rapidly-moving industry like fashion and retail, not being able to take action today means that it’s going to be even harder tomorrow when more paper has piled up.
That feeling of being overwhelmed is perfectly natural – especially today, when the sheer disruption of the global health crisis means that digitising your processes from design to distribution is both more pressing than ever, and more difficult to find the time to actually deliver. You may have heard the world’s biggest brands saying that the accelerated timeline for digital transformation that COVID has forced on the industry is a positive thing, but trust me when I say that most apparel and footwear companies are currently wrestling with what it means to create a more efficient and compliant supply chain quickly.
Today, Pivot88 is working with more than 18,000 companies in 112 countries, and our pool of pre-pandemic experience shows that quantifiable success can come quickly – in as little as four weeks.
Solving the supply chain visibility and control crisis is, as I see it, a two-step process. First, our imaginary brands needs to replace the disconnected data gathering processes that are working against transparency and insight; second it needs to integrate and aggregate the data those jobs and tools generate so it can be used to deliver new insights in a meaningful timeframe for decision-making.
In the first step towards empowering the brand to take charge of its post-COVID supply chain, we encourage replacing paper-based and disconnected tools with a dedicated and integrated cloud-based software. Our customers have seen strong results by simply introducing mobile devices in-factory, in transit, and at the point of QA checks – all of which can instantly digitise the output of inspections and audits, and transmit that data directly to our centralised system.
From there, our brand can take the second step by analysing the information that has been correctly logged and consolidated in a single platform, allowing them to identify trends, quickly respond to deviations from centralised compliance standards, and take corrective action based on an overview of their entire production network – giving a smaller team the ability to make big decisions with the support and security of accurate data.
Over time, though, that data will start to pile up like the proverbial paper I mentioned earlier. So-called “big data” has been talked about at length in the fashion and retail industries, but the resulting push to collect as much information as possible has – like traditional supply chain tools – not always translated into results, since analysing huge volumes of non-normalised information is beyond human capacity.
This is where artificial intelligence comes in. But unlike other software vendors that promise AI in a vague sense, we offer what we call “Applied AI”, which has concrete business applications, and is therefore the perfect foundation for the post-COVID-19 reboot kit we have put together for our brand and others like them. We employ a series of virtual agents – called Dolly, Molly, Polly and Jolly – who put an approachable, useable face on complex pattern recognition and machine learning models that operate in the background. Together, these agents can rapidly identify where vendor production bottlenecks exist, where risk is arising, where sourcing could be better allocated for a particular product – and much more. And while these insights start as recommendations, as the brand learns to trust Dolly and her digital colleagues, they will soon begin taking prescriptive action in real-time.
And of course the benefits of working this way won’t just be for our brand. Every order they commission can benefit the production controller, who can use the same tools and insights – securely shared – to improve efficiency, production planning, and other factory-level metrics.
Today it may seem difficult to look beyond the pandemic. Risk appears everywhere, upstream and downstream, and the crisis can seem to have no end. But I can say with confidence that if the brand we pictured – or any other brand or retail business model with a multinational production network – takes the two steps I’ve set out here to integrate, consolidate, analyse, and act on the intelligence that already exists in their supply chain, they will be prepared for the new era.
About the sponsor: When transparency and sustainability are embedded into manufacturing processes, they are automatically embedded into the products. Pivot88 is a quality and compliance platform enabling 360° supply chain transparency from raw material sourcing to customer delivery and beyond. 100% digital, dynamic and intelligent, it offers instant actionable data analytics for smart and fast decisions. Our stories make us unique: over 18,000 companies, including some of the industry leading brands and factories, chose us as their trusted partner.