Phil Bacon, Senior ERP Consultant at Xpedition believes brands no longer have to choose between profits or ethics. He explains why advancements in cloud-based automation are opening up new opportunities to achieve sustainable business success. The multi-billion-pound fashion business comes with a significant environmental health warning. Statistics from the United Nations reveal that the fashion industry produces 20 per cent of global wastewater and 10 per cent of global carbon emissions – more than all international flights and maritime shipping.[i] [i] UN Environment Programme (ENEP) https://www.unenvironment.org/news-and-stories/story/putting-brakes-fast-fashion .
Beware the ‘sustainable’ clothes tag
According to McKinsey & Company, “sustainability” is both a challenge and a significant opportunity for the fashion industry in the coming years. Interestingly, it is customers with their collective ethical conscience who are driving sustainable transformation in the fashion industry. What today’s savvy shoppers also realise is simply labelling a garment with the word “sustainable” is not enough. True sustainability goes far beyond the fabric itself, a message that was loud and clear when brand fashion consultant Elizabeth Stiles addressed a packed audience at this year’s Drapers Sustainable Fashion event. She urged retailers and brands to look at specific areas of sustainability such as “small-batch production, lifetime guarantee with a mending service, using recycled or organic materials, and paying fair wages for workers in their supply chain.”[i] [i] https://www.drapersonline.com/news/dont-call-yourself-a-sustainable-brand/7039749.article
Profit or ethics?
The problem is fashion companies themselves are playing a game of catch-up because they are operating in a highly competitive industry and in a bid to make a profit, encounter an additional set of challenges along the way. It’s a constant battle: first there are lost sales from unexpected stock-outs, then there are high inventory and storage costs from an unplanned overstock. Fashion brands and wholesalers need to identify demand patterns, cater for supply chain management, plan and schedule accurately. Sound familiar? The good news is that today’s younger generations in particular are willing to pay more for fashion that has the least negative impact on the environment – 31% of Gen Z’ers versus 12% of Baby Boomers[i] While taking the pressure off stressed-out executives focused solely on the bottom line, the question still remains: how does the fashion industry achieve all-round efficiencies and profitability in a way that appeals to the growing number of fashion-conscious consumers with a conscience? [i] “The State of Fashion 2020” – McKinsey & Company https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/The%20state%20of%20fashion%202020%20Navigating%20uncertainty/The-State-of-Fashion-2020-vF.ashx .
3 ways to create a sustainable fashion eco-system
The secret lies in technology. The latest all-in-one business management solutions are designed to meet the specific challenges of the fashion industry. Through automation, they build sustainability – less paper, less water, less waste – while increasing efficiencies, customer loyalty and profitability. In addition, the visibility provided by technology enables organisations to collaborate much more easily with partners and supply chains to create sustainable, circular business models. Let’s take a look at three critical areas to see how technology can be applied to create a commercially attractive and sustainable fashion eco-system:
After completing the designs, the next stage is to cost and produce the garments. Samples are often manufactured in small quantities in local factories. This is also the case for well-known global brands where their entire collection might be produced in a country that is close to the customer to reduce time to market and ensure a new collection can be released every month. Pricing follows the usual business model of target price versus expected profit split into labour, materials, duty, freight and insurance. Of course, inaccuracies can lead to fabric wastage along with unnecessary or expensive journeys that negatively impact the environment. What prices don’t reflect are labour-intensive activities such as tanning, dyeing and laundering in unhealthy conditions and this is where brands have a duty to ensure their suppliers and factories share ethical processes. What the latest software solutions can do is effortlessly track the cost of garments by size, quantity, fabric, manufacturing process and delivery fees, to give companies greater control over their operations with faster decision-making and effective cost management. With the ability to capture and analyse copious amounts of data, today’s technology quickly identifies extraneous garments such as unsold seasonal store or outlet items that can then be put back into the manufacturing supply chain, a vital step forward that vastly reduces raw materials production and the global carbon footprint. It can even identify the composition of a garment and highlight specific fabrics that could be recycled into future fashions. It’s a growing trend that’s already been adopted by Adidas – a USP of their Futurecraft Loop product is that it can be recycled and made into new trainers.
2. Logistics and fulfilment
A major area of concern for fashion companies is their lack of visibility over stock movement especially if there are multiple warehouse locations and a variety of omni-channel processes involved. Little clarity over transport, delivery dates and stock levels versus customer demand can wreak havoc, leading to spiralling transport costs, delayed customer orders and over-or-under-stocking situations. Through automation, organisations are able to gain tighter control over their end-to-end logistics and fulfilment processes. They should also expect to yield tangible improvements of at least 30% in stock control, better planning and increased accuracies. .
3. Stock management
This is particularly difficult when stock is stored and controlled within various fashion brands’ warehouses as opposed to a third-party logistics (3PL) organisation. Stock counts are frequently inaccurate, incorrect items are despatched, overstocking and increased transport costs are common simply because there is neither the visibility to see where stock is held nor the ability to calculate the most cost-and-time-effective delivery methods. By providing a complete, single view of all stock management activities, intelligent software solutions are proven to realise time and cost savings of at least 25%. What is more, powerful integration capabilities link stock management systems seamlessly with other critical business applications to provide better cash control, increased profitability, improved warehouse, 3PL and supplier performance while reducing overall carbon footprint and enriching customer relationships.
Xpedition is holding a webinar about to how fashion businesses can build sustainability into their processes on 20th May. To register, click here.
With 20 years as a Microsoft Gold Partner and more than 630 successful Dynamics 365 projects delivered, Xpedition is one of the UK’s leading and trusted Microsoft Dynamics 365 implementation partners. Whether you’re looking to move to the cloud, implement a new business application, enhance your existing Dynamics 365 system, or need support, we’re here to help businesses transform and grow. Our Microsoft certified consultants have deep experience of implementing Dynamics 365 CRM and ERP across a range of industry sectors and types of business: helping ambitious organisations reimagine their business with modern cloud technologies. We provide expert guidance and support in buying, implementing, and optimising Dynamics 365 applications. And with a philosophy of coaching businesses to achieve the digital transformation that’s right for them, you can rest assured you’ve found the ideal Dynamics 365 partner.
For more information, visit www.xpedition.co.uk
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