Sudarsana was elated when she found her favorite brand offashion item in the shop, and she purchased it. After a fortnight, she wassurprised to receive fabulous offers from the same brand at discounted rates,that too on her pet accessory items! She was truly amazed to find how thecompany knew her tastes and choices.
This is not a fantasy. It has become a reality withe-retailing in apparel and accessory supply chain. Wal-Mart, K-Mart, Target,Barnes and Noble, Sears are some of the few click-and-mortar giants. Forexample, if a woman spends a certain amount on her favourite lingerie at Sears,the world-famous retail joint, she will receive notices of any sales on otherfashion costumes. The trick is that when a customer shops using a Sears Card,details about the purchase and the customer are stockpiled electronically. Thisdata warehousing permits Searss marketing people to target promotions to amore receptive group of customers.
True, promotional marketing in the apparel chain hasattained a new dimension with e-tailing, the electronic counterpart ofretailing. Manufacturers and retailers now target consumers directly withattractive offers. Using credit or charge card to buy clothes triggers clockworkof activity in retail. These activities range from automatic stockreplenishing, which refills the stores shelves, to alerting a distant manufacturerto turn out more clothing. However, as manufacturers and retailers more closelyscrutinise individual customer tastes, habits, and buying patterns, they optfor a direct route to consumers. Instead of waiting for consumers to visittheir stores, retailers may simply send them target e-mails, offering deals toogood to refuse. The rise of automatic customer replenishing as retailersbegin to restock consumers closets, instead of their stores.
Wal-Mart, the worlds largest retailer, successfully incorporatesthis e-retailing in its supply chain through electronically enabled stockreplenishment. The result is dramatic. It offers shoppers more than a 98 percent chance of finding a complete selection from its diverse collections!
Supply chain strategy is also redefined as a result of goingonline. Click-and-mortar retailers have changed their strategy of stocking intheir various warehouses. High volume products, that is, basic apparels whosedemand can be accurately matched with supply based on long term forecasts, arestocked in local stores. And low volume fashion items are stocked centrally foronline purchasing. The latter products have highly uncertain demand levels andthus require high levels of safety stock. Centralised stocking in this caseeffectively reduces uncertainties by aggregating demand across geographicallocation and thus reducing inventory levels. As e-retailing has pushed theboundary of apparel and fashion business in the forward direction to establishdirect links with consumers, it also integrates the back-end manufacturing andsourcing operation with real time information sharing about what consumers arebuying. This enables vendors and suppliers to plan proactively in response toreal-time demand. The upshot is that orders are filled quickly; stock is madeas it is needed, and there is no need to waste revenues, as stockpiling unsoldgoods in physical warehouses is avoided.
Consider Wal-Mart, who uses Retail Link, a software system that provides vendors with up-to-date access to point-of-sale price and volume information and highlights Wal-Marts inventory positions and forecast of future needs. As a result, Wal-Mart improves fill-rate and customer satisfaction. Implemented in 1991 as a closed network only for large suppliers, Wal-Mart transferred the system to the Internet in 1997. Retail Link now processes tens of thousands of supplier queries per week. The fact that Wal-Mart is the worlds largest retailer brings natural advantages to the job of e-retailing management. Michel Lapierre, president of Claudel Lingerie, a Montreal manufacturer of womens apparel echoed the success of e-retailing We dont have to wait to find out whats selling... Our designers know what our customers are looking for, and they can create new designs based on his information. No prize for guessing the impact of this innovative approach on Claudels sales. Within two years its top-line grows by 100 per cent! Nygord International, a manufacturer and retailer of womens fashion lines with global sales well over US$ 300 million annually, also follows the trend. Nygord runs an automatic reorder sales system. Called ARTS2, it links all Nygord stores and retail accounts, with each sale of pre-selected staple items, such as pants, reorder forms are instantly filed on computer. Once or twice a week, a bundle of these reorders is flashed electronically to the Nygord central plant. A kind of high-tech workshop for womens wear, the center fills new orders for Nygord brand labels in a day. As clothes are shipped out of the plant, replacements are already being manufactured. Same for Sears, the celebrated retailer. In a similar fashion, information about sales are collected daily from all stores through electronic linkages and contained in the sales data warehouse. Using this information, Searss buying staff can quickly learn if a particular raincoat along with its colour, size, and style is selling well in one store or region. Further, it permits suppliers to compare sales among stores or regions and estimates needs for future buying. Todays apparel customers are significantly reducing their supplier bases, providing the opportunity for the most capable suppliers to seize huge market share. The win factor in gaining these new avenues is a new business model built around inter-company supply chain innovation. E-retailing is certainly the new entry to apparel business paradigm, pushing the business frontier closer to actual consumer.
About the Author:
The author is senior supply chain professional with experience in leading multinationals like Arvind, Raymond and KDS group. He is currently with KDS Group, Bangladesh as vice president, supply chain & operation for its accessory business.
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