Communication and Coordination

Are you in control of your processes?

Good communication and coordination are two vital elements of a successful, fast moving business.

It’s generally accepted that that these are key ingredients in making sure departments run smoothly and work together effectively, but in an industry as volatile and fast paced as fashion, how achievable is this?

Every season the challenge is growing. You need to protect profit margins, whilst facing increased fragmentation and style complexity, aggressive price pressures (cost and selling), shorter lead times and also the challenge of ensuring that you only work with suppliers that are fully compliant.

Many fashion businesses acknowledge the need to achieve:

?????Better coordination and clearer visibility of the latest priorities, across the business.

?????Faster access to accurate status information for buyers.

?????Better internal management level visibility and reporting.

?????A more streamlined and less manual processes, both internally and with suppliers.

However, a combination of existing habits, a frantic working environment and not yet fully understanding how best to make changes, may mean that you haven’t made as much progress as you would like.

Why are communication and coordination increasingly important?

The short answer is market trends.

There are a huge number of variables to manage in all departments from design and new product development to buying, merchandising and other areas such as finance. But, it’s the constantly changing requirements and the fact that these typically now happen later in the buying cycle that provides the biggest challenge for many businesses.

Why is that?

?

Fast Fashion is a concept originally pioneered by companies like Zara, but today lead times are getting much shorter for virtually all businesses. Inventory = risk, so retailers understandably want to reduce that risk, by buying less up front, as late as possible and then replenishing styles that sell well. That inevitably creates a more reactive environment where speed of response and flexibility are increasingly important.

Many retailers have a growing element of ‘speed’ programs, where the buying decision is not always ‘all about price’. Achieving replenishment product into store quickly can be worth a premium. Capable suppliers, who are not necessarily able to be the cheapest, are in many cases re-inventing themselves to offer a much faster, reliable ‘service led’ business model. To achieve this, improved supplier collaboration and reliable relationships are crucial.

Of course the ‘fast fashion’ and ‘speed’ programs don’t apply to the whole industry, but the vital point is that wherever your business currently sits, the trend in terms of available time to get product to market is reducing and that trend DOES apply to the whole industry.

Certain major retailers already foresee in excess of 50% of their total production on a responsive, short lead time model in the near future. Inevitably, lead times in general WILL therefore continue to reduce.

Having acknowledged these distinct market trends, it is then vital to consider how you can work more collaboratively with suppliers. This may involve rationalising the number of suppliers that you work with and building stronger relationships with those selected partners. You need to consider how to communicate your latest priorities quickly and effectively and establish the latest status of your orders. You also need to know that you can rely on your suppliers not to over promise. This is where coordination plays its part. There’s much less room for surprises and ‘nobody told me…’ scenarios when lead times are shorter!

What does that mean to fashion companies?

It’s important to realise that the above observations aren’t just minor happenings, but very distinct trends.

It means that existing, often heavily manual processes are strained to breaking point, both in terms of workload and effectiveness.

Symptoms include:

?????A lack of clear priorities in new style development, resulting in severe pressures on or around buy dates. If you’re a Brand, this may mean that buy meetings are delayed. If you’re a trading company, it may mean that some of your designs are, by default, not adopted because samples aren’t ready on time for the selection meeting.

?????Lack of transparency in costing and/or cost comparisons between suppliers. Also potential errors due to use of spreadsheets (no audit trail of costing history/changes).

?????Lack of visibility of supplier compliance status when placing orders.

?????Poor delivery performance due to supplier overbooking (or risk to compliance when suppliers then subcontract to non-approved factories).

?????Pre-production critical path issues resulting in delays to ‘production start’ at your supplier, due to lack of materials/approvals on time.

?????Managing constant changes to styling and order details throughout the pre-production phase.

?????Excessive fire-fighting and staff ‘wear and tear’ to fix problems.

?????Excess costs, such as air shipment, inventory write-downs etc.

Inevitably, all business will continue to experience challenges in new style development and supplier management. However, if the majority of routine activities can be handled with clear visibility of priorities, including inevitable changes to requirements as part of a well-structured process, then the 20% of more challenging items can be the focus of specific attention and action.

In that case, the decision of ‘when to implement change’ is a question of how long a business can sustain the additional costs associated with existing methods, which can include excess design and sampling, costing errors, inventory write downs, airfreight charges and late delivery penalties before actively searching out an improved process.

What can you do about it?

The good news is, quite a lot! Here are a few things to consider:

1.??Firstly, it’s important to recognise that visibility and coordination are important across the whole business, not just within individual departments.

2.??Then, look at the tools you currently have available. Most fashion businesses, even if they have an existing business/ERP system, still rely heavily on numerous manual (word documents, email, telephone) and spreadsheet based systems for a wide range of activities such as, new style development, costing, critical path and purchase order tracking.

3.??Take on board that to yield significant benefits you have to break the cycle of existing habits. Accepting that the industry is volatile and ‘there’s nothing you can do about’ or ‘it’s never the right time’ is not a solution. The only way to move forward is to make change and that change has to be management led, but it doesn’t necessarily need to take up a lot of management time.

By their very nature, these systems are fragmented, leading to coordination challenges and management level visibility is typically very poor. At the same time, the demand from buyers for fast, accurate and up to date information has also increased significantly.

Fortunately beyond that, it’s relatively easy to achieve a much higher standard of visibility and communication by embracing appropriate business solutions, which inevitably these days are driven by technology (software).

Perhaps the most important questions to ask of any solution at that point are:

?????Is the proposed solution specifically designed for fashion, is it flexible and able to provide a good fit to our requirements?

?????Is it delivered by people who will take the time to understand our business and who we believe can actually help us to achieve better visibility and a more streamlined process, i.e. real business benefits?

?????Are numerous existing clients happy to provide positive testimonials?

The Coats Digital (CD) approach

Many market solutions are over-complicated and can therefore be ‘heavy’ to implement. As a result of previous experiences, people are often wary of new solutions, with some good reason.

?????As a general approach, we (CD) believe that complexity should only be introduced if necessary (Keep It Simple wherever possible).

?????A modular and often a phased project approach (in stages) can improve uptake of the solution dramatically.

?????System design and ‘ease of use’ are also hugely important in terms of how your users will take to the solution.

Summary

The fashion industry has increased in complexity over the last few years and especially so recently. Ever- growing pressures on price and lead times, causes companies to search hard for the best buying options.

Sourcing strategies must be robust and mitigate risk of either cost or compliance failures through good visibility and control. The cost of failure in either of these areas is becoming increasingly unacceptable and unsustainable.