Supply Chain Strategy Post COVID-19

The Ascent team is acutely aware that retailers are now striving to cope with unexpected and unprecedented disruptions across People, Process, and Technology in their businesses. One segment that has been hit particularly hard is the Fashion Retailer, who judiciously times merchandise arrivals with meeting seasonal consumer demand, then has an urgent need to transition out of product as the next season commences. These companies are now faced with unique challenges as a result of the impacts on their supply vs. demand by the COVID Pandemic.

While we acknowledge that not every apparel retailer has identical Supply Chain challenges, the goal for everyone is to emerge from this as-whole-as-practical, which will be difficult at best. Due to the critical nature of each retailer’s Supply Chain, with seasonality and product lifecycles, each business will need to formulate strategies for returning to profitability.

A call to action for resuming "the new normal” within Fashion Retail business necessitates adoption of short-term steps, such as:

• Analytical skills assessment: Identify within your team those resources who have the ability to analyze data, understand business impacts, and synthesize findings into short-term actions. Additionally, team these resources with strong decisive leadership to enable and expedite actions. 
• Inventory analysis: Understand status of product. Has COVID resulted in delayed/cancelled supply, OR was inventory productivity impeded by location closings and other business issues?
• Recap inventory analysis  findings into product categories that are most relevant to your Supply Chain operations for actionable quick fixes to be defined and executed.
• Re-evaluate “normal” Seasonal selling curves, including Regional variations, commonalities and intersections.  Look for impacts from: COVID-related closings (including duration), pent-up demand, on-line tradeoffs, and cross-channel shifts. Review history, and cleanse/ adjust sales basis to a more normalized curve.
• Enable your customers to continue to receive product during store closings, and proactively communicate to them how this will work.
• Provide documentation, and educate your business teams, on your current systems. Include how the mechanics work, calculations and system-driven parameters, and levers that are currently available which can be used to effect necessary changes.
• Analyze Supply Chain availability, from current on order through receipts. Include all DCs and 3PLs, as well as other internal or external sources that have available inventory. Review and re-align ETA windows where necessary - activities may include vendor negotiations, order quantity reductions and/or cancellations. Where feasible, re-purpose orders originally intended for stores to be cross-channel accessible. Reset Plans and OTB for both current and future seasons.
• Mitigate risk of severe hits to profit from carryover inventory, such as deep markdowns. Look for alternative exit strategies (e.g., move-to-online-outlet, place in holding DC). Define strategies to liquidate (e.g., RTVs, Jobbers) aged and/or end-of-season product.

• Develop strategies that will support “the new normal”:
  • Metrics - Are new KPIs needed (Metric/Product/Location/Timeframe)? Are some current KPIs no longer relevant?
  • Frequency - Are dashboards, reports being delivered on an updated/revised basis.
  • Should a RACI evaluation be done, across the organization?
  • Revisit automated processes, particularly in regard to product distribution

In order to emerge well-prepared for post-COVID growth in the evolving economy, retailers should look to refine future state processes, systems, and people, improving efficiencies in a fluid yet stable way.   We hope you stay safe in your businesses and with your families, and  we will be here to support you as you work to bring your supply chain into "the new normal".  For more information, visit us at www.ascenterpsolutions.com.

Co-Authored by:

Donna Lekites and Claudia Ferrell
Ascent Enterprise Solutions