This quarter, CGS (creators of the BlueCherry suite of enterprise solutions that have featured in several recent case studies here) released the latest in their long-running “Supply Chain Trends & Technology” reports series.
Once again, the CGS team set out to document the market forces, the risks, the opportunities and the solutions that are shaping the global supply chain across fashion, retail, and consumer goods. The full report is now available to download directly from CGS, but the team at The Interline also wanted to share our thoughts on some of its key findings, themes, and ideas.
Assembled from direct industry feedback (more than 300 companies were surveyed) and analysis, and coloured by perspectives from companies like Tommy Bahama, Bollin Group, Confetex, and Hatley, this 2024 instalment captures a particularly difficult climate and trajectory for retail, as the title “Steering Through The Straits” suggests.
This characterisation won’t come as a surprise to our regular readers – especially in the USA, UK, and Europe, where economic stability is currently in short supply. For fashion brands and retailers in particular, CGS’s heading captures the need to thread a careful needle between navigating looming obstacles, and still acknowledging and preparing for new opportunities (a growing number of them supported and enabled by technology and transformation) that exist just on the other side of these uncharted waters.
Although many of those obstacles are visible downstream, where the levers of domestic and international fiscal policy have the direct effect of catalysing or depressing consumer spending, this year’s report underlines just how deep the roots of these challenges lie in the supply chain. And, as a consequence, the report also showcases how supply chain-focused applications and technology solutions are having a measurable impact on retailers’ and brands’ overall ability to survive and innovate in a difficult climate.
As a case in point, the vast majority of the companies CGS surveyed listed margin pressure and excess inventory as significant problems. And many have also been wrestling with a fraught push and pull between shrinking order volumes and increasingly broad product portfolios. These forces are felt most keenly downstream but tackling will require brand and retail businesses to rethink their upstream processes. Because, taken together, these forces are challenging the core objective of fashion – creating products and collections that sell through as close to their target price as possible – in potent new ways, with brands often facing an ongoing squeeze to the profitability of new styles, needing to address a backlog of existing products, and having to deliver newness at the expense of predictability.
At the same time, the data captured for this report demonstrates just how strong and enduring the ripples of supply chain disruption can be.
In 2023 the CGS report documented the widely-talked-about “bullwhip effect” that was occurring as capacity-constrained post-COVID supply chains rebounded faster than consumer markets could keep up with, leading to a glut of inventory across retail channels. This year that same effect is still being felt, but it is also joined by new economic and political uncertainty that’s impacting production, shipping, and consumption in unpredictable ways.
From the ongoing war in Ukraine and the attacks on shipping routes through the Suez Canal, to the potential for political upheaval elsewhere, uncertainty in the global balance of power is something that weighs heavily on organisations’ minds:
“It’s one of our greatest concerns — the potential supply chain impact of this political uncertainty.”
That’s the opinion of Stephen Cann, CEO and Director of Bollin Group, which both directly owns and distributes for brands like Mountain Equipment, Ronhill, Mondaine and many more. Stephen is interviewed in much more depth in the full report, along with senior representatives of major brands, retailers, and suppliers.
As this year’s report takes pains to point out, though, geopolitical uncertainty is becoming pronounced at both ends of the value chain – not just in consumption markets.
For readers in the USA or UK, it’s impossible to avoid discussion of the potential risks and divisions that could be stoked by 2024’s general / presidential elections, and the impact these could have on trade policy, currency stability, and much more. But for sourcing professionals and the partners they work with, similar elections in Bangladesh, India, and Mexico also have the potential to upend expectations.
Against this backdrop, brands like Tommy Bahama (whose Executive VP of Supply Chain & Sustainability, Jennifer Spoljaric is interviewed at length in the full report) are placing a huge amount of importance on both supply chain diversification – the brand has moved from a heavily China-focused sourcing strategy to a supplier base distributed throughout Southeast Asia, India, Sri Lanka, and Peru – and tighter partnerships with suppliers and manufacturers:
“We have very strong long-term relationships with our vendors,” Spoljaric is quoted as saying. “We have weathered Covid and other storms together, and our close partnerships will continue to be key to our success in 2024.”
This more collaborative approach to sourcing and production is also emblematic of how brand and retail businesses are thinking about sustainability and transparency. No longer an optional consideration, that shifting spectrum of supply chain risk must now be counterbalanced against the need to comply with different regional sustainability regulations and provide historic levels of openness and disclosure.
According to the results of the CGS survey, around 60% of organisations see environmental and social governance (ESG) as a top business initiative. And while many organisations would historically have placed the responsibility for addressing it on sourcing and supply chain teams, there is now a broader recognition that unlocking transparency, traceability, and radical sustainability will require value-chain-wide collaboration as well as robust, shared technology solutions.
“If you don’t know where you stand, you can’t measure improvements. Sustainability programs must be maintained for the long term as a way of doing business,” Fernando Galan, CEO of Confetex, is quoted as saying in the full report.
But at the end of the choppy river that continues to characterise the fashion supply chain as we enter the second quarter of the year, the CGS team’s research – and the opinions of the brands and suppliers they interviewed – also finds reasons for optimism, providing brands, retailers, and suppliers are properly prepared, with the right technology foundations, to take advantage of it.
From The Interline’s perspective, the report provides further evidence of the importance of technology in overcoming short-term challenges and capitalising on both immediate and strategic, longer-term opportunities. While it may feel logical to pull back on investments in software, hardware, and process transformation during a difficult transition period, the reality is that real-time visibility, automation, data centralisation, AI-enabled insights and surfacing of risk are all likely to be critical components of a successful toolkit for recovery.
To substantiate that sentiment, of the companies CGS surveyed, around 80% had either planned, embarked on, or completed digital transformation strategies that were either designed to overcome current supply chain challenges, or that will tackle them organically.
As further evidence, more than 70% of the organisations that took part identified digital transformation as being either “important” or “very important”. The survey data behind the report also reveals a particular emphasis on supply chain visibility initiatives, analytics, and eCommerce solutions – with the latter being seen by respondents as foundational to growth and expansion through digital retail channels, which was identified as the all-round top priority for 2024.
Providing the CGS perspective in the report is Paul Magel, President of the company’s Applications Solutions Group, and a seasoned expert on the relationship between technology and the ability for fashion and retail organisations to weather difficult times. Magel is also interviewed in detail in the full report, but high on his list of priorities for digital transformation are transparency and artificial intelligence.
“You need real-time supply chain visibility,” Magel says in his interview, referring both to the mandate for sustainability and to the need for resilience and agility in a difficult climate. “If you know where your products and orders are at any given minute, then if there are disruptions or unexpected challenges, you can reroute or make other changes to your plans. It’s crucial to connect all of the links in the supply chain.”
This is the kind of visibility that CGS has specialised in catering for with its broad BlueCherry enterprise software suite, which contains ERP, PLM, direct Shop Floor Control, B2B eCommerce solutions and more. But as Magel mentions in his interview for the report, established solutions like these and many others are set to be transformed by integration of AI in the very near future.
“AI will continue to be seamlessly integrated into the current tools companies use,” he says. “There will be more AI-driven prediction, scenario modelling and natural language processing.”
As well as the likely use of AI in business intelligence, analytics, trend capture and decision-making, revealed in the report is CGS’s ongoing work in developing an AI-enabled ESG platform – bringing together two of the most important strands of supply chain strategy and technology.
Finally, Magel and the team at CGS clearly do not take technology investment for granted, and they recognise that at a time of uncertainty and disruption, every new or expanded initiative requires a clear and concrete return on investment. “Our team is focused on delivering solutions that are justified technology investments, delivering clear business benefits,” Magel says.
For more than 35 pages of data, analysis, and recommendations, consider downloading the full report directly from CGS. Or for more information on the company’s fashion solutions for enterprise visibility, speed to market, and more, explore the BlueCherry portfolio.
About our partner: For nearly 40 years, CGS has enabled global enterprises, regional companies, and government agencies to drive breakthrough performance through business applications, enterprise learning and outsourcing services. CGS is wholly focused on creating comprehensive solutions that meet clients’ complex, multi-dimensional needs and support clients’ most fundamental business activities. Headquartered in New York City, CGS has offices across North America, South America, Europe, the Middle East, and Asia.