Investing in supply chain analytics makes business sense. Why? Because supply chains produce large amounts of data that could enable fashion businesses to generate accurate demand forecasts and improve operational strategy. To understand its importance, you only have to look at fashion brand Zara. The Spanish fashion chain has been rethinking its manufacturing and supply chain strategies. It is a move that led them to successfully use data insights to help them manage their tight supply chain.
Turning the Fashion Industry on its Head
Fashion businesses need to understand the value that data-driven intelligence can bring to their business to thrive in today’s market. Supply chain analytics allow fashion businesses to gain a significant return on investment, better understand risks, increase accuracy in planning, achieve the lean supply chain, and prepare for the future.
No longer about data stored in spreadsheets, experts have identified four different types of supply chain analytics. They are descriptive analytics, predictive analytics, prescriptive analytics, and cognitive analytics. When it comes to the fundamental features of effective supply chain analytics, they include businesses being able to access unstructured data from social media and insights being comprehensive and fast.
Helping the industry cut through all the data noise is companies like IBM and Suuchi Inc. They have come up with software products designed to increase the effectiveness of supply chain analytics to help companies anticipate the need for changes in a smarter, quicker, and more efficient way.
Exploring Zara’s Buy It Now or Never Approach
No longer thinking about operating on a seasonal basis, more fashion companies are exploring how they can make data-driven decisions. Taking a page out of Zara’s playbook, more and more apparel retailers are finding ways of using sales data and analytics to understand what their customers need. The high street store is doing this by tagging every item of clothing with an RFID microchip to collect data about the sale of each SKU. They are also using RFID technology to track inventory levels in each store so they can better understand, in real-time, the speed at which a particular SKU moves from the shelf to the POS.
Breaking up with what Iranian born editor of Tank, Masoud Golsorkhi, described to the NY Times as a century-old biannual cycle of fashion, Zara focuses on improving forecast accuracy and delivering growth. Relying on inventory data, the clothes company tailors to stores in real-time. The fast-fashion brand customizes its collections based on the exact zip code and demographic that a given location serves.
Zara’s end goal has always been to give customers precisely what they want quickly and cost-efficiently. They have done so by relying on a quick replenishment cycle that allows them to easily stock popular trends and pull what the customers aren’t buying. By gathering information, Zara has found a way to develop an efficient, agile supply chain that assures full flexibility and agility. It is an approach that has led to fashion retailers looking for ways to replicate Zara’s practices.
Are You Ready to Usher in a New Era of Supply Chain Management?
If you are still wondering, “Why should I invest in analytics?”, Noha Tohamy, research vice-president at Gartner, explained it best when she said in a report: “Your company must adopt analytics. You can make that argument easily, citing big numbers of zetabytes of data, the number of connected devices, or the ubiquity of the Internet of Things.” The VP Analyst continued: “But there is also a very strong positive argument for why it is in the best interest of the organization to adopt analytics. This is because of analytics support business growth.” The main takeaway from what Tohamy is trying to say is analytics are crucial, especially when it comes to running a successful supply chain.
Although there are, admittingly, steps that still need to be taken to implement analytics, the potential to help fashion businesses cope with today’s complex supply chains is essential. So what should be the next step? Well, according to a Gartner survey of supply chain strategists, when it comes to ROI in analytics, 29% of organizations have said that they have achieved high levels of ROI by using analytics in comparison to 4%who made no ROI. So if you are looking to make a case for analytics, it’s worth remembering that investing in supply chain analytics will help you make better decisions and keep your business agile in the world of fashion.