The model has worked very well for Zara, so why haven’t more fashion retailers adopted it?
“It adds a lot of operational complexity, and many retailers simply don’t want to invest the time and capital to build a capability like that,” LaHowchic says.
But some retailers are making great progress. At LaHowchic’s former employer, The Limited Brands, the previous week’s sales data by store are crunched each Monday. Teams look at the data and, by Tuesday, are sending out plans to each store for changes in pricing, promotion, signage, etc.
“It can be like a whole new store,” LaHowchic says. “This is a pretty advanced capability.”
Longer Lead Times Complicate Execution
LaHowchic agrees that the growth in offshoring and resulting longer lead times can make integration of planning and execution and the development of sense and respond supply chains more difficult in any industry sector.
“Lead times are an issue for everybody. Obtaining the products that you want at the price points you want, either you will have to live with being less responsive or you will have to add some supply chain complexity, capabilities and skills to operate a long supply chain more like a shorter one,” he says.
Ditto with building systems and capabilities that can really understand demand at a granular level, he says.
For example, he says that in many consumer goods companies, demand is actually collected at a local or retail store level, but then simply “aggregated back up” to a regional level, losing much of its potential value.
“They are just throwing it back into old systems, not really clustering it in a way that makes sense,” LaHowchic says.
Again, however, getting to that next level requires investment.
“Having the ability to look at every store, every class of trade – that can be very challenging,” he says. “It can be a substantial undertaking, with investment in technology, people and supply chain processes to leverage the data. But the benefits are real.”
What’s your reaction to LaHowchic’s perspectives? Why don’t we have more Zaras? Are many companies getting closer to sense and respond? Let us know your thoughts at the Feedback button below. |