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The Fashion Supply Chain Playbook Is Changing Fast · Speaking of Supply Chain

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  Speaker 1: The visibility the data allows to normalize that volatility and
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  Speaker 1: enable better demand sensing, better demand forecast, end to end visibility,
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  Speaker 1: which ultimately supports the overall head of the fashion commons.
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  Speaker 2: Hello and welcome to Speaking of Supply Chain. We're meebox
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  Speaker 2: experts from around the world unpack real stories, strategies, insights,
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  Speaker 2: and innovations shaping the future of supply chain. I'm your host,
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  Speaker 2: Ellen Wood. Fashion supply chains are under intense pressure to
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  Speaker 2: evolve cut between the demand for speed, sustainability and profitability.
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  Speaker 2: In this episode, we're joined by the authors of Meebox's
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  Speaker 2: North American Fashion Benchmarking Study to unpack what hundreds of
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  Speaker 2: industry leaders are doing differently and what's coming next, from
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  Speaker 2: returns management to omni channel fulfillment. We're going to explore
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  Speaker 2: the supply chain shifts that fashion brands can't afford to ignore.
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  Speaker 2: So joining me today we have Carlos oropesa director in Mibak, Mexico,
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  Speaker 2: and Julian Asorio, head of Retail Fashion and Apparel Distribution
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  Speaker 2: business unit in the US and Canada. Welcome, gentlemen, Thank you,
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  Speaker 2: Hi you leam. All right, So let's get into this.
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  Speaker 2: The report, the study report that just came out all
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  Speaker 2: about fashion and the supply chain's benchmarks for North America.
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  Speaker 2: So this really focused on the US, Canada, and Mexico
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  Speaker 2: and what is happening in this sliver of the world
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  Speaker 2: right now. So what are some of the things that
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  Speaker 2: are happening. How are brands balancing the cost of visibility
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  Speaker 2: and value that that can unlock because visibility has been
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  Speaker 2: a big topic in supply chains as of late, sure.
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  Speaker 1: Ellen, as you mentioned, visibility disability has been one of
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  Speaker 1: the top items pointed out in this study. Companies in
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  Speaker 1: the fashion space are treading visibility as a foundational capability,
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  Speaker 1: not a nice to have anymore. And they're also sequencing
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  Speaker 1: their investments to modernize data pipelines, focusing on the digitalization
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  Speaker 1: first and then using these data across different functions within
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  Speaker 1: the organization and different functions within the supply chain to
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  Speaker 1: improve planning, to implement capabilities on orchestration, compliance, diversification, even
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  Speaker 1: sustainability in many cases. So the visibility that this data
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  Speaker 1: enables is reflected in better decisions and fewer disruptions, and
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  Speaker 1: they can improve their decision making process.
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  Speaker 3: I agree on that. According to our study is that
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  Speaker 3: the companies are investing in select actively. They are selecting
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  Speaker 3: a certain technologies related to IoT, for example RFID that
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  Speaker 3: had been in the industry for long time, but as
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  Speaker 3: well digitalization and as particular investments on traceability. So with
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  Speaker 3: this study, it says that the idea is to reduce delays,
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  Speaker 3: improve accuracy as well. And with these selective investments, I
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  Speaker 3: think you can make value except in the cost.
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  Speaker 1: I think.
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  Speaker 2: Okay, one of the other things that came through on
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  Speaker 2: this study and we're just coming out of it out
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  Speaker 2: of the holiday season, but that's the demand volatility, and
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  Speaker 2: it came through as one of those the bigger pressures
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  Speaker 2: that the fashion supply chains are facing right now. So
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  Speaker 2: what are leaders doing today that is different from what
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  Speaker 2: they've done historically in order to stay responsive. We've talked
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  Speaker 2: about the visibility of the information, but what else are
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  Speaker 2: they working on in regard to that volatility.
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  Speaker 1: Well, Ellen, I believe the leaders, based on the responses
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  Speaker 1: of this surveying study and the results we obtained, leaders
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  Speaker 1: are mainly focused on building responsiveness in their operating model
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  Speaker 1: through data driven decision, data driven visibility, looking at lead
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  Speaker 1: time reductions, predictive analytics, and improving the cross functional execution
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  Speaker 1: on the planning side, so the visibility the data allows
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  Speaker 1: to normalize that volatility and enable better demand sensing, better
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  Speaker 1: demand forecast, end to end visibility, which ultimately supports the
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  Speaker 1: overall health of the fashion companies.
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  Speaker 3: If you remember and ju learning in the study, the
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  Speaker 3: participants mentioned as well the upgrading of the processes related
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  Speaker 3: to as an OP and IBP and of course, as
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  Speaker 3: you mentioned, connecting with the different forecasting, not the traditional
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  Speaker 3: but including certain AI it's important as well, as you
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  Speaker 3: mentioned demand sensing. In my mind, I think this shifting
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  Speaker 3: from forecasting or traditional forecasting to real time sensing is
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  Speaker 3: one of the trends using these market signals that are
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  Speaker 3: really important and the social data that it's part of
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  Speaker 3: important understanding on the behavior of the customers, but as
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  Speaker 3: well including micro fulfillment for example, that this is something
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  Speaker 3: that can help to adjust and react in a productively
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  Speaker 3: KEEPLI manner on the for the market. I think that's important.
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  Speaker 1: Yeah, yeah, that's right. Another another big component of the
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  Speaker 1: actions taken to improve demand volatility is related to dynamic
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  Speaker 1: stock adjustments or inventory optimization. In dynamic inventory management, that
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  Speaker 1: allows the companies to reduce their you know, working capital
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  Speaker 1: amounts and be more responsive to changes in demand and
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  Speaker 1: customer requirements.
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  Speaker 2: One thing that was interesting that I saw in this
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  Speaker 2: study was in regard to automation. So obviously, you know
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  Speaker 2: there's the digital transformation that's taking place, you know, utilizing
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  Speaker 2: the data that these these companies have in order to
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  Speaker 2: uh have that visibility and and really dial into the
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  Speaker 2: details of what's happening within their supply chain. But when
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  Speaker 2: it comes to the automation that is helping to facilitate
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  Speaker 2: a lot of the work that's taking place, there's a
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  Speaker 2: bit of a mixed bag there where companies are not
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  Speaker 2: investing in these large fully automated solutions, but when they
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  Speaker 2: do automate, they are being very intentional and very specific
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  Speaker 2: about it.
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  Speaker 3: So what types of.
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  Speaker 2: Automation are delivering those strong returns on investment that are
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  Speaker 2: able to support these supply chains.
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  Speaker 3: In our study, many companies mentioned that they are focusing
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  Speaker 3: on or their assortation. This is one of the things
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  Speaker 3: that they focus I think a full automation is really
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  Speaker 3: not this gain, but focusing on certain technologies related to
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  Speaker 3: goods to person to enable these autonomous mobile robots that
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  Speaker 3: can help to vocalize these investments in a specific processes
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  Speaker 3: and or for example, automated pick packaging that is something
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  Speaker 3: that can enable flexible handling on the pigs for example
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  Speaker 3: with lower capex not really a huge capex that can
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  Speaker 3: help to have the payback really quick.
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  Speaker 1: Ecoing your point there, Carlos study points out the order's
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  Speaker 1: sortation has a clear ROI and score the highest in
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  Speaker 1: terms of automated processes. Also, as we know, sortation sometimes
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  Speaker 1: is pretty manual or or also very convey your MG driven,
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  Speaker 1: which we don't have that luxury anymore of a space
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  Speaker 1: or capex available availability in some of the companies to invest,
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  Speaker 1: so ortation is one of those. We also see trends
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  Speaker 1: on on strategies around modular, right size and semi automated
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  Speaker 1: solutions mostly goods to personal solutions, whether they are each
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  Speaker 1: peaking or case peaking or utilizing toads. Many of the
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  Speaker 1: fashion companies that are implementing omni channel strategies are are
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  Speaker 1: are mainly investing in module right size semi automated solutions.
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  Speaker 3: Let's remember that in the for the audience that we
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  Speaker 3: help a lot of companies on implementing the technologies box.
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  Speaker 3: In this specific study, we raise questions related to this,
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  Speaker 3: So that's the way in which the market is going
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  Speaker 3: for the investment that are really good.
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  Speaker 2: So you'd mentioned earlier returns management being a focus, and
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  Speaker 2: that came through. So not only for returns but also personalization.
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  Speaker 2: We're differentiators for a lot of these organizations.
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  Speaker 1: Why.
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  Speaker 2: I mean, obviously, the customer is key, and the customer
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  Speaker 2: wants what the customer wants, and the way that the
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  Speaker 2: online ordering is is working these days, you know, the
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  Speaker 2: returns management has to be handled well in those organizations
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  Speaker 2: because that's that's just the nature of shopping online shopping now,
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  Speaker 2: So what are some of those those capabilities that are
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  Speaker 2: enabling this to become such a key differentiator for organizations.
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  Speaker 1: Yeah, as as we know, apparel customers or fashion customers
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  Speaker 1: jog brands through the lens of friction less rest return
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  Speaker 1: tailor tailor fulfillment. Uh, those capabilities now depend on data
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  Speaker 1: reach execution processes, right, so be clients being able to
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  Speaker 1: trace returns digitally through web or apps is becoming again
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  Speaker 1: a norm. It's not a it's not a nice to have,
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  Speaker 1: it's a norm now. Clients are always looking for better visibility,
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  Speaker 1: personalized packaging, relabeling. Also, we've seen some increase in how
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  Speaker 1: clients are trending or willing to pay a bit more
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  Speaker 1: for recyclable packaging or green last mile delivery channels or
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  Speaker 1: last mile delivery methods. So that's that's super important for
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  Speaker 1: fashion companies to understand how how potential clients and clients
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  Speaker 1: are looking for personalization as well as again, return management
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  Speaker 1: requires a lot of efficiencies not only on the client perspectives,
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  Speaker 1: but but internally on how to move those products back,
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  Speaker 1: how to incorporate those products back into their networks and
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  Speaker 1: the distribution, so they minimize the waste and they minimized
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  Speaker 1: you know, getting rid of product or potentially disposing some
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  Speaker 1: of that product, which is ultimately impacting costs and parking profitability.
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  Speaker 3: And I think Helen Julian and I reverse logistics and
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  Speaker 3: personalization are really emerging since are really logistics differentiators that
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  Speaker 3: are really tied to the customer experience. So the post
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  Speaker 3: port chase experience is now a loyalty battleground, I would say,
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  Speaker 3: in which if you avoid these frictions, then you will
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  Speaker 3: have these really customers with a really good experience. And
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  Speaker 3: that's why the driving of the trendy is this pushing
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  Speaker 3: on improvement on these specific processes that are not one
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  Speaker 3: hundred percent of the flows. For the flows of these
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  Speaker 3: are really important to have really a differentiator on the
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  Speaker 3: full value chain and of course help the companies to
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  Speaker 3: reduce the margin loss. If you are not handled properly
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  Speaker 3: these type of services, of course you will have some
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  Speaker 3: certain loss of margin as well.
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  Speaker 2: This study focused solely on the US, Canada and Mexico.
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  Speaker 2: How are some of the sheriffs and trade policy and
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  Speaker 2: geopolitical disruptions, how are they shaping that sourcing network and
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  Speaker 2: diversification of some of these fashion networks in North America.
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  Speaker 1: Yeah, I think we couldn't avoid this object specifically to tariffs.
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  Speaker 1: There is a lot of exposure there and shifting policies
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  Speaker 1: and global trade impacting what fashion companies do specifically in
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  Speaker 1: North America. What we've seen is a trend on rethinking
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  Speaker 1: network designed and building operational flexibility within their distribution network,
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  Speaker 1: trying to understand multiple or dual paths to distribute products
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  Speaker 1: across different geographies Asia and North America, Europe, Latin right. Also,
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  Speaker 1: we've seen a greater regional integration and greater regional clustering
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  Speaker 1: for some of those networks highlighting Mexico as an example
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  Speaker 1: as a near shoring hub that is helping diversification and
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  Speaker 1: improving lead times. As you know, all the different tariffs
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  Speaker 1: and the shifting policies vary in and pretty much every
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  Speaker 1: week every day now right, we also seen many fashion
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  Speaker 1: companies trying to bypass us and trying to find an
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  Speaker 1: extremeline the sourcing or inbound process to make sure that
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  Speaker 1: they understand the cost to serve and by understanding their
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  Speaker 1: cost to serve, they can redefine the network to effectively
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  Speaker 1: deal with the variability and exposure to the tariff.
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  Speaker 3: Yes, as Julian mentioned, is that this dual sourcing strategy
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  Speaker 3: of creating the networks of these fashion companies in the
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  Speaker 3: industry help of course, combined with predictive analytics, helped to
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  Speaker 3: hatch this against started volatility. And I see that this
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  Speaker 3: grist balance sourcing. The main drivers are Asia and non
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  Speaker 3: distant sourcing for costs, but combined with Mexico Central America
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  Speaker 3: for speeds. With this selective new sharing help to be
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  Speaker 3: more agile and to have these stari is insulation to
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  Speaker 3: avoid or reduce the risks on the.
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  Speaker 1: Full supply chain.
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  Speaker 3: And I think these are the strategies that we see
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  Speaker 3: in the study, and of course we see in generally
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  Speaker 3: in the marketing, specifically for North America.
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  Speaker 2: Yeah, I spoke about the China plus one strategy multiple
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  Speaker 2: times early in twenty twenty five, and it looks to
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  Speaker 2: be like that is the direction that the market is going.
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  Speaker 2: So it's interesting to see that come to fulfillment. So
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  Speaker 2: to close this out for today, if you had to
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  Speaker 2: describe the state of fashion supply chains in one sentence,
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  Speaker 2: what would it be.
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  Speaker 3: I don't know, let me start. It's hard for us
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  Speaker 3: in one sentence, but I would say adata driven bevicibility,
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  Speaker 3: fears supply chains and if you allow me to extend
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  Speaker 3: the car, meant it helps to focus on resilience, digitalization
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  Speaker 3: and speeds, and particularly in my point of view, is
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  Speaker 3: that the fashion supply chains are becoming hyper connected with
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  Speaker 3: predictive ecosistence. That helps on transparency, speed and of course
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  Speaker 3: to be more competitive bents.
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  Speaker 1: Well, from my side, I'll try my best. I believe
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  Speaker 1: fashion supply chains are entering a new era of where visibility,
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  Speaker 1: speed and resilience are becoming non negotiable or a month
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  Speaker 1: half in order to compete in a very volatile environment.
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  Speaker 1: SKU heavy market as well as a global trade dynamic
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  Speaker 1: as well as different customer behavior and requirements for service,
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  Speaker 1: for personalization, for customization, for even pricing. So that will
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  Speaker 1: be my one phrase to describe or one sentence to
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  Speaker 1: describe the output of the fashion state side.
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  Speaker 2: Well, thank you so much, gentlemen for joining me today
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  Speaker 2: on the podcast and sharing your insights on this important
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  Speaker 2: study result and our viewers listeners can find that study
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  Speaker 2: report at mebok dot com. I'll have a link in
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  Speaker 2: the description. The episode description for you today. From the
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  Speaker 2: growing importance of visibility and personalization to the pressures of
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  Speaker 2: demand volativity and shifting trade policy, today's conversation shed light
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  Speaker 2: on how the fashion supply chains are adapting in real
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  Speaker 2: time and where the smartest brands are placing their bets
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  Speaker 2: for the future. Thank you for turning tuning into speaking
• 18:58
  Speaker 2: of supply chain. If this conversation station sparked a new
• 19:01
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• 19:03
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  Speaker 2: AI has shaped supply chains in twenty twenty five and
• 19:23
  Speaker 2: what to expect going into twenty twenty six