Technology Helps Companies React to Industry Trends
Apparel companies should employ technology-based business models called “adaptive supply networks” (ASNs) to compete in a global marketplace, according to Navi Radjou, senior analyst for Boston-based Forrester Research Inc. Radjou spoke during a March 17 seminar at Material World’s Technology Solutions Expo in Miami Beach, Fla.
ASNs are collaborative networks, formed by companies and their trading partners, that react to glitches and trends using software and other electronic technologies. ASNs are a step up from the current technology models many apparel companies use because they are quicker and more aggressive, Radjou said.
“They sense, interpret and act,” he explained.
Most apparel companies have focused on improving efficiency, but ASNs are more agile than technologies used today, Radjou said.
Instead of relying on historical data for input, ASNs use leading indicators and decentralized problem-solving systems that employ software and risk-management analysis. These features allow companies to avoid cost-cutting measures and “crystal ball” forecasting, according to Radjou.
The need for these technologies arose several years ago when companies began outsourcing components to offshore suppliers. While the outsourcing was meant to save money, it has also been the root of delays and costly mistakes, Radjou said. He cited a case study in which a four-day delay caused by a thread manufacturer’s broken machine snowballed into a 10-day delay for one apparel company.
The analyst broke down ASN technology applications into six categories: product- life-cycle management (PLM), supplychain management, enterprise asset management, continuous-demand management, order fulfillment and after-market servicing.
He further separated the categories into levels of collaboration that focus on monitoring, managing and optimizing operations. Companies can successfully implement technologies by figuring out which areas they need to improve, according to Radjou.
“You have to obsess on having the right product at the right time and right place, or you’ll never make it,” he said.
But regardless of what type of technology companies are using, standards of success must originate from upper management, Radjou said.
“You need top management support, and these managers must make responsiveness part of their corporate strategy to make it work,” he explained.
Radjou pointed out that apparel companies have been at the bottom of the consumer price index for the past 8 years as a result of years of relentless deflation. But there are exceptional businesses—and they are using technology to react, he added.
“Companies like Zara of Spain don’t believe in the traditional four-fashion-seasons- a-year calendar,” he said. “Any whim in fashion can be a season. They can bring in new designs twice a week and have styles from concept into stores in 15 days.”
Zara uses technology-enhanced pointof- sale data to react to market changes. Old Navy uses price-optimization software to help retailers trim markdowns and enhance bottom lines by “microsegmenting” their businesses. J. Crew, Wal-Mart and the Benetton Group employ other point-of-sale technology tools, such as radio frequency identification (RFID) tags, to track sales and inventory trends.
RFID tags identify items, replacing SKUs that bar-code scanners read, so retailers can gauge whether items are sitting on shelves or selling through.
Radjou said that Wal-Mart and Proctor & Gamble are carrying the concept over to electronic product codes, which may eventually replace standard UPC codes.
He cited a number of ASN companies that have been working with apparel vendors, including SAP for resource planning, Manugistics for profit optimization, Planetfeedback.com for consumer preferences, Viewlocity for event management and Freeborders for PLM. Radjou expects big technology investments will continue as major retailers, such as Wal-Mart, continue to use technology to enhance and set operational standards for their trading partners. —Robert McAllister
