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Going Back to the Source to Better Serve Customers
Bryan Nella, GT Nexus
At the RVCF Annual Fall Conference this month, Linda Sarentino from PVH and Kurt Cavano from GT Nexus delivered a discussion on going back to the source as a strategy to better serve customers. The topic should be top of mind for retailers and brands today for several reasons, but there's one stand-alone challenge that makes it worthwhile to plan a strategy around doing more at the source - omni-channel. The omni-channel challenge remains an unsolved puzzle. Much investment and emphasis has been put forth on the front of store, but the supply chain is not up to the task.
Omni-channel is being widely embraced because it is clearly more profitable. There's rapidly growing consensus that supply chain is essential to this profitability. Supply chain is being viewed with a new level of importance - and urgency. Supply chains have to be fast, accurate, agile and flexible. Timely data and visibility are essential. But where do brands and their retail partners begin on this journey?
The concept of doing more at the source provides direction to business leaders, leading them toward a series of opportunities to become omni-channel-ready. Throughout the order to delivery process, major opportunities exist to generate agility, efficiency and cost savings in the supply chain by taking a closer look at how things are being executed at the factory level.
Going back to the source means obtaining supply chain information earlier - from the source - and at a level of information that is actionable. Tapping into factories and collaborating early in an automated environment allows for flexibility and adjustments to be made. As demand signals change from the start of the production lifecycle until the end, collaborating in factory or at source enables brands and retailers to proactively reach into the production pipeline and reconfigure orders so that when goods emerge from production, they move to the optimal destination in minimal time, with minimal cost and sold at the highest possible margins.
Taking First Steps
Consider all of the steps involving the factory: supply planning, raw materials management, WIP tracking, scan and pack, and shipment building. Retailers and brands that partner with suppliers at source to get better and smarter at these processes are taking the first steps toward being omni-channel-ready. Here are a few ways how:
- Prior to placing an order, a brand sends a signal informing its supplier of its intended upcoming order and volume. The supplier confirms capacity and materials that it can access and deliver on. It identifies likely shortages and the brand is informed if it will need additional suppliers to fulfill capacity. When the PO is finally issued, all of the materials and supply plans are in place. The plans are more accurate and predictable due to earlier collaboration at the source level.
- After starting an order, raw materials providers, manufacturers and logistics providers confirm completion of key steps in the transaction lifecycle in a central online hub. The brand has a cloud-based dashboard indicating milestone events that have occurred for all products, such as dyed, cut, sewn, assembled and shipped, on water. More importantly, the brand has a broad view of inventory and where it resides: how much is on the water, how much is in a warehouse, how much is in factory, how much is available to expedite. This dashboard of inventory provides more actionable data to adjust goods to align with consumer demand.
- Inside the factory, packing, scanning and shipment building is done on-site using the same set of data appearing on orders and invoices. Factories are provided with packing and labeling instructions - which can be adjusted or tailored at the last minute to ship direct-to-store, direct-to-consumer, or to ensure goods are pre-packed and marked for store.
RFID at the factory level is the latest move in the "do more at the source" movement. Applying RFID at source is more cost effective but it also improves compliance and visibility coming out of the factory.
Doing more at the source is a broad strategy across the production lifecycle. It is an approach that poses the question, "How can we better collaborate and execute at the factory level to generate speed, efficiency and data accuracy to drive responsiveness and visibility." Once all of these are obtained, brands and retailers have a fighting chance of delivering on the omni-channel promise to consumers.
Bryan Nella is Director of Corporate Communications at GT Nexus, the world's largest cloud-based supply chain network. He has more than 12 years of experience distilling complex solutions into simplified concepts within the enterprise software and extra-enterprise software space. Prior to joining GT Nexus, Bryan held numerous positions in the technology practice at global public relations agency Burson-Marsteller, where he delivered media relations and communications services to clients such as SAP. In previous roles he has worked with clients such as IBM, MasterCard and U.S. Trust. Bryan holds a BA in Mass Communications from Iona College and a MS in Management Communications from Manhattanville College.