FN Insights
With margins and waste product at stake, transparency in the supply chain has never been more important. New technology is helping industry players see where they can improve.
Technology solutions that can streamline the sourcing process.
Footwear firms are at a crossroads: Consumers want to receive shoes faster but also in a way that’s environmentally responsible.
Earlier this year, Amazon said it would offer not only free two-day shipping, but same-day delivery on millions of items. That put pressure on shoe manufacturers and retailers to keep up — or risk losing a sale.
Yet speedy delivery times can be harmful to the planet, particularly as supply chains grow and become more complex. Even wellintentioned companies can struggle to enforce ethical standards without clarity into each stage of the production process.
“To have a truly responsible supply chain, it needs to be vertically integrated and all stakeholders need to be digitally enabled,” said Dhruv Kapoor, CTO at global fashion technology platform Zilingo. “This has been a space that a lot of entrepreneurs and technology companies haven’t really focused on.”
For many footwear brands, managing their supply chain has meant using legacy systems or simple tools such as spreadsheets to track production. While this can work for small operations, when done on a larger scale, holes in communication between factory and brand become apparent. If a brand doesn’t catch and resolve an issue at the source, they risk losing money and also damaging their reputation with retail partners.
“Without a digital supply chain, brands are making decisions too late and using outdated information,” said Mark Burstein, president and chief strategy officer at NGC, a supply chain platform for the fashion industry. “Companies that have siloed systems that rely on email and Excel are not quickly identifying problems. And it’s not just problems; they’re not quickly identifying opportunities that can improve their businesses.”
As consumers demand shorter production times, the companies that react quickly are rewarded. Through a platform such as NGC, brands
can link all of their supply and production partners within one database and communicate with each facility within that interface. That ensures all parties have access to the latest information and can respond to new developments in real time; if one market is understocked, the brand can reroute an order from the factory.
Zilingo also addresses speed, particularly for brands striving to capitalize on the current market and its short window for trends. Using data from its 6,000 sourcing partners, the platform provides users with predictive analytics that can identify popular styles that can then be produced and on-shelf in as few as 21 days.
But its main offering is helping brands to connect with its network of trusted supply partners, then facilitating that relationship within its digital infrastructure. The database includes fabric mills, factories and manufacturers, with the majority located across southeast Asia, India and Bangladesh.
“One of the most damning errors, and one that many U.S. brands can sympathize with, is limiting one’s manufacturing base,” said Kapoor. “We enable a connected and transparent view of supply and demand on our platform. In doing so, we unlock margins and optimize production timelines for all customers of all sizes.”
The emergence of this type of technology has come at the right time. Recent global political developments, such as Brexit and the U.S.-China tariff wars, have exacerbated the need for brands to get it right should they choose to diversify their manufacturing network. While moving production to a new country might work for some brands, it should not require compromising on quality.
“There are three [vendor] considerations: speed, quality and price — in that order,” said Burstein. “Customers want the right product with good quality at the right price. Tariffs only affect price. If I cannot get the right speed and the right quality, price doesn’t matter.”
For brands seeking to partner with new suppliers or scale into new regions, Zilingo’s platform can proactively match them with suitable partners that have been pre-screened for quality. But brands with established networks might want to use a platform such as NGC. VF Corp. and BBC International both use the software to monitor factory compliance and product quality, ensuring that production meets company standards.
Neither platform enforces ethical or sustainability standards with its suppliers. But they provide a framework of visibility that allows brands to investigate areas that are important to them, such as factory wages or recycled materials. As consumers request transparency, these tools can help brands better understand the entire supply chain.