MHI Solutions Improving Supply Chain Performance
When it comes to material handling and supply chain in apparel, the systems may be as outdated as bell bottoms and paisley prints. A confluence of trends affecting retail more broadly may require a bit of a makeover.
Much of the change relates to omnichannel, a retailer’s ability to create a seamless experience for shopper in a bricks-and mortar store, online or mobile. That is becoming more important than ever. Retail sales generated online are expected to top $385 billion in 2016, according to the retail consultant Invesp. Apparel has more than its fair share, accounting for about 21 percent of the total sales. Customers have found ways to work around concerns about the fit of an item and retailers have found ways to make returns easier. But both of those only heighten the pressure on the apparel industry at large, and for those who work with them.
Omnichannel: Challenges and opportunities
The goal of omnichannel may seem a no-brainer. But look inside what that means practically: a customer who wants to buy a medium-sized green blouse should be able to find it online or locate the nearest store with the particular item in stock. If the purchase is made online, the retailer may have it in a warehouse, or it may already be in the store. But which store can fulfill the order fast and less expensively? That’s where omnichannel becomes complex.
“Most people in retail understand omnichannel as where they’re trying to chase margin to get the right goods in the right spot at the right time for the right demand,” said Patrick Sedlak, principal for MHI member Sedlak Management Consultants. “When you’re in a fashion business, your best margin is in the first couple of weeks. To get that shopper what they want, when they want, it is very important.” Pace is becoming even more important as retailers like H&M and Zara have business models that rely on constant churn. It’s called “fast fashion,” with products making it from design to stores within weeks. That has increased the pressure throughout the supply chain.