According to a recent report developed by the World Economic Forum and Accenture, based on an analysis of 62 supply chain disruptions from 2005 through 2011, it was revealed that supply chain disruptions reduce the share value of companies by 7%. Interestingly, the findings suggest that share value starts declining approximately 10 days before the disruption is officially announced. Share prices typically don't begin to recover until about three months after the supply chain disruption has been made public. The key takeaway from the report is that the longer it takes to resolve a disruption, the more negative its impact becomes. Therefore, firms need to develop the ability to swiftly resolve problems and prevent situations from escalating and worsening.

In the apparel industry, share value is just one part of the story. Brands and retailers dealing with seasonal merchandise have very limited room for error. The window of opportunity to sell spring garments at full price, for example, is only open for a short period of time. A supply chain disruption that delays the arrival of seasonal merchandise can have an immediate and profound impact on business operations. Such disruptions can affect not only shareholders but also sales, customer satisfaction, and overall brand identity.

Today's customers are demanding and expect the products they desire to be available through various channels, whether in-store, online, or in catalogs. They are often equipped with tablets and smartphones, enabling them to compare products and prices instantly. If they can't find the merchandise they want or if the prices don't align with their expectations, they are likely to take their business elsewhere. Thus, a supply chain misstep that results in delayed or unavailable goods can have a ripple effect on customer satisfaction and loyalty.

Returning to the central lesson from the World Economic Forum and Accenture report, firms must be equipped to swiftly address problems and prevent them from escalating. For apparel brands and retailers with extensive supply networks spanning the globe, this presents significant challenges but also opportunities for improvement.

Where can these improvements be found? Many businesses across various industries are embracing cloud technology. Brands and retailers have discovered that cloud-based solutions offer a reliable and efficient way to manage complex global supply chains. For instance, instead of individually updating 10 or 20 trading partners regarding changes to the spring line order, a more collaborative approach using cloud-based platforms allows brands to post updates in one centralized location, visible to all relevant and authorized parties. Connecting the entire supply network through cloud technology opens up new possibilities for speed, efficiency, cost savings, visibility, and agility. Streamlining processes from planning to purchase orders, through settlement and delivery, becomes more feasible when all stakeholders are connected in the cloud.

How does this mitigate risk and the impact of supply chain delays? Heres a potential scenario: A brand connects its entire network of manufacturers and trading partners on a cloud-based system to handle orders, production updates, delivery of goods and settlement. Each party interacts and fulfils its transaction obligation in a single cloud-based system.


A supplier receives an older, acknowledges receipt, submits important production updates and packs the goods to the retailers specifications. The supplier completes the job, and hands the garments off to the logistics provider handling the transport, the nest party in transaction lifecycle. These events are tracked in the system and this is easy to enforce if the supplier also gets paid through the same cloud system. The brands sourcing department is automatically informed in real time of any significant delays anywhere in the goods sourcing process. Raw materials were shipped 4 days late triggers a flag. Whether a delay originates in the availability of raw materials, during production or transportation, the brand is instantly alerted. The brand starts the work day with exception alerts, which require immediate attention. But not only is the nature of the delay identified to the brand, it has also already been routed to the person responsible for handling that type of delay. This ensures the best use of time for everyone involved and ensures enough time to find the best possible solution to preserve a full margin sale.


In the scenario above, the brand is better informed of its orders at each stage in the process. In an automated workflow environment where rule exceptions or delays are flagged and escalated to the appropriate parties, theres more time to react. This gives the brand or retailer the best chance to deliver goods on time and maximize profits for the season.


This article was originally published in the Stitch Times magazine, May, 2013 issue.