Our industry is the midst of a time of massive change on all fronts. Looking back on my 35 year career, I can honestly say I don’t think I’ve ever seen this magnitude of change. On one side, there’s been a tectonic shift in consumers and their shopping habits — their expectations of newness and how they view, receive and influence product. On the other side, the supply chain has been stuck in the system that was developed 30 years ago, when everything fragmented all over the world, leading to long lead times and batch processes that forced designers to make decisions a year to six months in advance of when the consumer get the product. Taking bets, if you will.
On top of that, we’re in an exciting new world that provides a new tool set: social media, data oceans of consumer insights, artificial intelligence, Machine Learning, Neuro Networks, 5G speed and quantum computing. We’ve moved away from anecdotal, gut, views on what consumers want, to data-driven information. It doesn’t take away from the creativity of design. It informs and focuses Designs efforts and gives pure clean data that can be applied to the supply chain. Yet the underlying system is one of 20 to 30 years ago.
Supply chain is at an inflection point. The industry needs to be thinking about what the supply chain should look like in five to 10 years and start building it now. We can’t wait or do it incrementally. But it’s important to note that the supply chain of the future will not be one-size-fits all. We need to maintain a cohesive brand vision while incorporating all of the new tools that are coming to bear, utilizing them to make sure we respond quickly to trends and the customer’s needs without over or under buying.
To do this, the supply chain needs to be stratified across a minimum of three layers: The first is the “low-slow” model, which applies to consumable product like the classic Calvin Klein white dress shirt, for which there will always be demand. Efficiency is critical here but speed is not. It can continue to operate in offshore production environments where cost is important. But it’s not the Old “low slow” of months but a new “low slow” of weeks.
The second layer is a “high-fast” model that maybe slightly more expensive to operate but is required to be more responsive to fashion trends, deliver consumers only what they want while buying less of the wrong stuff. It demands, same supplier, nearshore capability, which is dependent on geography. Nearshore for Europe is North Africa, Turkey, the Middle East. Nearshore for North American is Mexico, Colombia, Central America and the Caribbean.
The third layer is an “Express” onshore capability. An example of that for PVH Corp. would be Made in America, a program that we’ve been looking at for the last five years and is relatively self-explanatory. We tried it with Calvin Klein jeans and had them completely, vertically made in the U.S. from the yarn to the finished product. It is more expensive than the other two models, but will allows us to design, develop and deliver products to stores or directly to consumers very quickly, get the feedback from the customer and respond once they have voted on winners. It’s ideal for customized, personalized, small batch goods. What once took months will now take days. This requires new and advance manufacturing processes. This also eliminates the need to air small batches or units of one from offshore locations, which has negative impacts on the environment.
Another daunting issue in the state of supply chain is that it’s not just thinking about single companies. PVH has its own retail stores, but we also work with wholesale partners, we work with manufacturers and material suppliers. We are a cog in a vast value chain of making product happen. The journey of redefining supply chains demands that every single player in the chain come to the table. We have continually made improvements over the years but all too often the way we’re working and the skill sets we’re using today are based on incremental improvements. What we need to do is ask ourselves if we have the practices in place for the world we imagine five years in the future. In reality it won’t take five years to build it. If everyone comes together to reimagine the supply chain of the future now, we could see the start of Step change in six months and have a new operating model in two years.
