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These Tools Help Brands Reduce Supply Chain Waste and Costs

Footwear firms are at a crossroads: Consumers want to receive shoes faster but in a way that’s environmentally responsible. Earlier this year, Amazon said it would offer not only free two-day shipping, but same-day delivery on millions of items. That put pressure on shoe manufacturers and retailers to keep up — or risk losing sales.

Yet speedy delivery times can be harmful to the planet, particularly as supply chains grow and become more complex. Even well-intentioned companies can struggle to enforce ethical standards without clarity in each stage of the production process.

“To have a truly responsible supply chain, it needs to be vertically integrated and all stakeholders need to be digitally enabled,” said Dhruv Kapoor, CTO at global fashion technology platform Zilingo. “This has been a space that a lot of entrepreneurs and technology companies haven’t really focused on.”

For many footwear brands, supply chain management has meant using legacy systems or simple tools such as spreadsheets to track production. While this can work for small operations, when done on a larger scale, holes in communication between factory and brand become apparent. If a brand doesn’t catch and resolve an issue at the source, they risk losing money and also damaging their reputation with retail partners.

“Without a digital supply chain, brands are making decisions too late and using outdated information,” said Mark Burstein, president and chief strategy officer at NGC, a cloud-based supply chain platform for the fashion industry. “Companies that have siloed systems that rely on email and Excel are not quickly identifying problems. And it’s not just problems; they’re not quickly identifying opportunities that can improve their businesses.”

Stacked container casting long shadows, China Shipping Line container ship on the river Elbe, Hamburg, GermanyVARIOUS
When a brand can keep up with its overseas partners in real time, shipments can be rerouted as needed with minimal delay.
CREDIT: Holger Weitzel/Shutterstock

As consumers demand shorter production times, the companies that react quickly are rewarded. Through a platform such as NGC, brands can link all of their supply and production partners within one database and communicate with each facility within that interface. That ensures all parties have access to the latest information and can respond to new developments in real time; if one market is understocked, the brand can reroute an order from the factory.

Zilingo also addresses speed, particularly for brands striving to capitalize on the current market and its short window for trends. Using data from its 6,000 sourcing partners, the platform provides users with predictive analytics that can identify popular styles that can then be produced and be on-shelf in as few as 21 days.

But its main advantage is helping brands to connect with its network of trusted supply partners, then facilitating that relationship within its digital infrastructure. The database includes fabric mills, factories and manufacturers, with the majority located across southeast Asia, India and Bangladesh.

“One of the most damning errors, and one that many U.S. brands can sympathize with, is limiting one’s manufacturing base,” said Kapoor. “We enable a connected and transparent view of supply and demand on our platform. In doing so, we unlock margins and optimize production timelines for all customers of all sizes.”

Ethiopian factory workers make shoes at the Chinese company Huajian's plant in Addis Ababa, Ethiopia. Workers from at Ganzhou Huajian International Shoe City Co., a southeastern China factory used by Ivanka Trump and other fashion brands, say they've faced long hours, low pay and verbal abuse. Huajian, meanwhile, has been moving production to Ethiopia, where workers make around $100 a month, a fraction of what they pay in China, according to Song Yiping, a manager at Huajian's Ethiopian factory, who spoke to the Associated Press in JanuaryChina Ivanka Trump Factory Life, Addis Ababa, Ethiopia - 05 Jan 2017
The majority of footwear production occurs in factories outside the U.S., which can be harder to track without digital support.
CREDIT: AP/Shutterstock

The emergence of this type of technology has come at the right time. Recent global political developments, such as Brexit and the U.S.-China tariff wars, have exacerbated the need for brands to get it right should they choose to diversify their manufacturing network. While moving production to a new country might work for some brands, it should not require compromising on quality.

“There are three [vendor] considerations: speed, quality and price — in that order,” said Burstein. “Customers want the right product with good quality at the right price. Tariffs only affect price. If I cannot get the right speed and the right quality, price doesn’t matter.”

For brands seeking to partner with new suppliers or scale into new regions, Zilingo’s platform can proactively match them with suitable partners that have been prescreened for quality. But brands with established networks might want to use a platform such as NGC. VF Corp. and BBC International both use the software to monitor factory compliance and product quality, ensuring that production meets company standards.

Neither platform enforces ethical or sustainability standards with its suppliers. But they provide a framework of visibility that allows brands to investigate areas that are important to them, such as factory wages or recycled materials. As consumers request transparency, these tools can help brands better understand the entire supply chain.

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