Imagine the scenario: Taylor Swift wears a red dress on Instagram that receives a flurry of likes, and the entire supply chain is triggered into motion. A digital sample of a similarly likeable item is produced within hours; it’s posted on the retailer’s website and promoted to consumers before a physical sample is even made; clickthrough velocity allows predictions about how many can be sold; and the design goes to a pre-approved factory with available fabric and is shipped from the factory to the consumer within a handful of days.
“This is what’s going to be possible,” said Spencer Fung, CEO of Li & Fung, “when you create the supply chain of the future that is all digitally connected, with speed, run by data, where there’s an ecosystem of partners that work seamlessly together.”
Historically, talks about supply chain have been about cost. That often has meant moving farther and farther out, which can make the production cycle even slower. But what if, Fung asked, a production cycle could go from 40 or 50 weeks to, say, 15 or 20?
With today’s speed of change, “You can no longer really have this really long supply chain where you have to make a decision today for what might sell or might not sell in 50 weeks’ time,” he said. “We’ve seen this huge shift in the last 12-18 months where almost every one of our customers is talking about speed rather than cost.” And most of the low-hanging fruit in speeding things up, he said, is found in the supply chain.
As part of the Monday afternoon session at NRF 2018: Retail’s Big Show, “Creating the Supply Chain of the Future,” Fung showed a cartoon that stays in his consciousness: It pictures a rabbit and turtle racing toward the finish line. Here, however, the turtle is wearing a jetpack, flying overhead.
There are obvious questions about whether each company is a turtle or a rabbit, he said. Consumers are rabbits. Some tech companies are rabbits. But more traditional companies, as turtles, are having trouble keeping up.
The ultimate question, however, is this: “Is it enough to be a faster turtle?”
Fung, who began his career at PwC in Boston, spent time as a rabbit while starting his own ecommerce company in Silicon Valley. He then joined the more than 100-year-old family company, the Fung Group. That organization, engaged “end-to-end in the consumer value chain,” has a variety of areas, from distribution to retail to venture capitalism. As for Li & Fung, the company is a global supply chain manager; it connects about 8,000 retailers in over 100 countries to about 15,000 suppliers in 16 countries, Fung said, and is growing its rabbit ears in a couple of different ways. There are efforts in digital design, for example, as well as a speed playbook that helps customers decrease lead time and increase speed to market.
Fung sees the digitalization of the supply chain as an inevitability — and wants to be first when it comes to end-to-end. It’s already happening in industries such as automotive, aerospace and electronics. The benefits? A lot of data, better decisions, fewer markdowns and less inventory, for a start.
In his view, speed, innovation and digitalization will be the hallmarks of the supply chain of the future. He considered the design, development and sampling phase as potentially the “biggest bang for the buck,” as it can take up many months of the 50-week lead time.
Li & Fung partnered with retailer/crowdfunding platform Betabrand to make 3D designs of shoes that were then superimposed on a real model; Betabrand began co-developing with consumers and pre-funding. The shoes were then produced when the company collected the orders, without a single physical sample being made.
“This is already possible,” he said.
Apparently, it’s time to keep a closer eye on Taylor Swift’s wardrobe choices.
Photo by Jason Dixson Photography.