FASHION RETAIL
Fast-moving fashion needs a solid supply
A stitch
in time
The turbulent global climate is forcing companies to reconfigure
their supply chains. To stay ahead of the game they must
develop a culture that responds better to unexpected events.
We can learn a lot from the fashion industry, says Omera Khan
F ROM THE GLOBAL RECESSION’S
impact on trade, to political tensions
in the Middle East and catastrophic
natural disasters, organisations are
competing in volatile times. And the
ripple effects are being felt in international supply
chains too. Yet fashion and textile companies have
proved the most resilient when responding to
recent problems.
MARKS & SPENCER; NEW LOOK
And the problems are substantial. Cotton prices
are at their highest levels in decades as a result of
expanding worldwide demand, floods, poor
harvests and speculative buying. Discount fashion
retailers have alerted investors about squeezed
margins, higher prices and increased holding costs.
Last year’s Icelandic volcanic eruption caused the
38 SUPPLY MANAGEMENT | MAY 2011
RetailSupply•4•kw.indd Sec2:38
chain: Marks & Spencer (left); and New Look
cancellation of hundreds of flights, reducing the
ability of “fast fashion” producers to deliver goods
to various parts of the world.
And we have only just begun to understand the
impact of the Japanese tsunami. Japan, the world’s
largest consumer of luxury goods, is likely to exhibit
DR OMERA KHAN is
a senior lecturer in
logistics and supply
chain management at
the Logistics Institute,
Hull University
Business School
at least a short-term drop in demand for high-end
fashion, which could result in an excess inventory
of short-lifespan products.
The fashion retail industry has seen an
unprecedented shift from product-centric to
customer-centric strategies. It’s a move that has had
a major impact on the risk profile and
responsiveness of fashion retailers. Customer-
centric businesses are designed to close the gap
between supply chain planning and execution,
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 enabling suppliers to match demand and reduce the The unpredictability of supply chains, shorter
risks inherent in supply chain execution. From
source to store, the supply chain is not just about product life cycles and product proliferation
the distribution of the finished product but the make time-to-market critical
supply of raw materials too. Typically, it has been
concerned with the last mile of the supply chain,
from distribution to store or consumer.

Timing is everything
However, the growing unpredictability of supply
chains, shorter product life cycles and product
proliferation make time-to-market critical.
Businesses have had to take a more co-ordinated
approach to supply chain management. This
end-to-end perspective forces organisations to break
down the traditional functional ‘silos’ in favour of a
greater degree of cross-functional working. It will
speed up response times to market and reduce risk –
through better alignment and communication across
functions and by increasing visibility of demand
upstream in the chain (see case studies, p40).
This change requires businesses to rethink both
the processes of managing design and the ways in
which they communicate the strategic value of
design to the success of their extended enterprise.
It’s an important approach – reports show that up
to 80 per cent of the total costs are determined early
on at product design stage.
For the fashion industry, it means having the
competence to identify what the customer wants
but also the ability to work with suppliers to ensure
that they can deliver at the right time, to the right
quality and at the right cost. The implications of
product design cascade through the supply chain,
so the importance of this function in designing
appropriate strategies can’t be underestimated.
There are significant benefits to designing
products and supply chains in an integrated process
to improve performance and competitiveness. Early
supplier involvement reduces product development
times, improves quality and uses suppliers’ product,
process and technical expertise early on – a vital
factor, as it’s difficult and costly to make design
changes later on.

A ROAD MAP TO RESILIENCE AND RESPONSIVENESS FOR DESIGN-CENTRIC BUSINESSES

FROM
Design as a standalone function
Supply chain as an afterthought – for
a design-orientated business
Designers “design”
Free “unconstrained” design
Design for manufacturing/assembly
TO
Design as part of a cross-functional
approach
Supply chain starts on the
drawing board
Designers integrate across the
“concept to delivery” process
Constrained design
Design for supply chain
HOW DO WE GET THERE?
“T”-shaped skills, training,
organisational change
without boundaries
Supply chain involvement at
product design stage
Designers lead and
orchestrate a product’s
development process
Range architecture takes account
of supply chain constraints
and possibilities
Establish appropriate decoupling
points – how far do we make a
vanilla product before we stop?
Balance design strategy against
supply chain impact.

Formalise design integration in supply chain risk

MAY 2011 | SUPPLY MANAGEMENT 39

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 FASHION RETAIL
The following three studies by Hull University Business School aimed to develop
an understanding of how companies in a fast-paced environment manage the
1. New Look
High street retailer New Look can
transform an idea to clothing in a little
over eight weeks, and its aim is to
shorten this even further.
The third largest women’s fashion retail
brand in the UK (behind M&S and Next),
New Look reached this status by making
major changes to its supply chain and
design. Improving product design
capability in-house and aligning it better
with the supply chain has been vital to its
success. The design team is now
considering the logistical implications of
designs and identifying efficient modes
of transport. Sourcing of raw materials
and manufacture are also considered at
design stage, but cross-functional teams
make the final decisions. The approach
has increased New Look’s ability to react
to market volatility, while reducing
inefficiencies in the supply chain, such as
excessive inventories at the points of
interface between supply chain and other
operational functions.
New Look has adopted a fast and
flexible approach to fashion, reflected in
its ability to quickly transform the latest
trends on the catwalk into affordable
Improving product
design capability in-house
and aligning it better
with the supply chain
has been vital to
New Look’s success
clothing for the masses. Because the
company is able to introduce new styles
fast, and at low cost, it can maintain
stock that is in tune with the latest
fashion trends. As a result of the
restructure, New Look’s financial
performance has been steady, enabling it
to pursue growth opportunities and to
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RetailSupply•4•kw.indd Sec2:40
CASE STUDIES
product design–supply chain interface.
finance expansion. This includes a new
distribution centre in the UK,
consolidation centres in Turkey and
Singapore and a number of new stores
across Europe.
2. Johnstons of Elgin
Scottish cashmere specialist Johnstons of
Elgin has also adopted proactive
measures to prepare for supply chain
turbulence. For example, to mitigate the
spiralling cost of raw cashmere,
Johnstons has increased options for
customers to buy blended products (eg,
cashmere mixed with less expensive
extra-fine Merino wool). Similarly, as
cashmere is a dollar-based commodity,
company designers collaborate with
worldwide sales agents to lessen the
impact of exchange rate fluctuations.
For example, designers develop products
for a specific season with a geographic
focus on regions where prevailing
exchange rates are likely to make
Scottish products more attractive.
Johnstons has also explored new
technology that prints patterns digitally
onto scarves after weaving a “generic”
cloth. This enables the company to
introduce new styles while taking
advantage of the rapid production
benefits associated with simplified dying,
weaving and finishing of generic cloth.
3. Marks and Spencer
Marks and Spencer has demonstrated
that in-house product design is central to
the company’s ability to manage risk.
M&S’s formal risk management process is
not standalone, but is embedded within
and supported by a range of other
initiatives that contribute to the
company’s ability to deal effectively
with risk.
These include seeing design as a core
competence; making the product
development process more agile; use of
direct sourcing; and increased
communication and collaboration in the
supply chain. If M&S had allowed its
suppliers to control the design process, it
might have increased the risk of over-
dependence on suppliers and inability to
respond in a timely and appropriate
manner to customers’ changing
preferences. By treating design as a core
competence, M&S has been able to
assemble the resources necessary to
When design is given its
rightful place at the centre
of the supply chain, costs
and lead-times can be
reduced and turbulence
met with preparedness
create a cutting-edge design function.
This has given M&S the status and power
necessary to lay down and control the
key elements of its approach to
managing its textile and clothing
supply chain.
These three fashion companies view
product design as an essential
component of effective supply chain
management. When design
considerations are given their rightful
place at the centre of the supply chain,
costs and lead times can be reduced.
Equally important, supply chain
turbulence, albeit inevitable, can be met
with a higher degree of preparedness.
To this end, we have developed a road
map for a design-centric business (see
p39). The framework shows that several
transformations are required by
companies in order to: better manage the
product design/supply chain interface;
reduce the time necessary to deliver the
innovation to customers, according to
actual demands from the marketplace;
and improve supply chain
responsiveness and resilience.
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