Global uncertainty seems to be the only certain thing lately, and it seems difficult to secure resilience in SCM but some solutions and technologies can help. Let's discuss the unified view of demand and take a look at SheIn's on demand business model and what lessons we can learn from their success.
But first, let's get some misconceptions of supply chain resiliency out of the way. The three objections our team at eSquared usually face are:
Costs millions
Take 3-5years
It's really hard to deploy
Our answer to that is, we work with you so you don't even have to lift a finger, except maybe for picking up the phone to call us. We have demo units and software partners you can try out and deploy to a pilot team. We'll guide you and your teams throughout that entire process.
Now let's take a look at it from a macro perspective. With so much uncertainty in the global economy, building resilience in your supply chains isn't a nice to have but a critical business need. Here's a list of uncertainties SCM leaders have to face:
Hot wars
Trade wars
Slow economic growth in vulnerable economies that make the stuff we consume
Bottlenecks in transportation
Political uncertainty
Interest rates
The list goes on...
How can we build resilience in supply chains? Let’s face it the knee-jerk reaction has been either reshoring or offshoring to friendly democracies and some of our stable neighbors to the south. That’s a good start but let’s see if we can take it further by deploying technology solutions.
Unified view of demand
In short, modernize internal processes and leverage real-time data. Well ok Karolyn, wdym by that? I mean stop looking at data that’s weeks or even months old, don't just rely on projections, and start looking at real-time data. Take the data from your POS, macroeconomic data, search data, social media data, data from your e-commerce platforms, operational teams, and a plethora of other data points.
"Why is it so granular no team in the world can manage and reconcile all that data." We say aren’t you glad AI is a thing now?
"Well that’s too expensive." Not if you start now and scale slowly.
Here’s what you’ll need to start:
A mobile-first strategy
A segmented strategy
The correct predictive and prescriptive tools
A small team that's already agile but lacks a technological backbone
Every marketer out there must be collectively screaming "YES" with the second one. I’d like to share what this looks like for our SCM counterparts. Real-time data means agility, agility means less time forecasting and more catering to real-time consumer demand. Let’s take a look at a disruptor in the global fashion industry SheIn.
Fashion trends come and go almost overnight, SheIn's on demand model is a masterclass in using predictive and prescriptive tools to stay ahead of the trend and to drive explosive growth. How? If you’ve ever shopped on their app, the first thing you notice is an endless catalog, the next is their small inventory and new items when you re-visit the app.
It's true that labor is expensive stateside and we can’t beat cheap labor in SheIn’s factories but we don’t have to with the right systems and automation.
Winning in small, scaling on the big
SheIn produces small batches, markets them to its customers, and tracks the demand in real-time. The more influencers promote an OOTD (outfit of the day), the more demand there is for that item. As demand grows, SheIn produces more of that item.
It’s a symbiotic relationship aside from the low prices. SheIn designers and 3rd party partners use the data and make similar outfits in different colors, prints, and styles to capture a segment of customers who didn’t buy because they simply didn’t like the color until they fully saturate that audience.
Translating trends in FMCG is difficult. Middleware systems that connect growing trends to designers in real-time help speed up that process to where you can catch a trend on time or even start one. That’s data your marketing teams have. Fortunately, we've got the perfect software partners to help solve this challenge.
Beyond the influencers
SheIn winning in the small allows them to scale based on the demand. Small batches of 100-200, from a marketer’s perspective, are real-world multi-variate tests. Allowing SheIn to keep costs under control and reduce waste. Producing in smaller quantities means less dead stock, and as we mentioned trends in fast fashion come and go overnight. And making sure the correct predictive and prescriptive tools are deployed works to further reduce the guesswork.
What about the minimum order? We’re not suggesting that economies of scale aren't relevant, far from it. SheIn survives from its ability to scale. But they can scale on a trend a lot quicker than their competitors thanks to how connected their entire business is including their ghost factories to other manufacturers in China and South America.
We’re not in fast fashion
You don’t need to be, SheIn’s business model isn’t entirely good for the environment but their ability to be agile, to test small and scale, and repeat this across the entire business is the secret sauce to their success. Figuring out the right systems and tools for your business starts by reaching out to us.
