Fashion Supply Chains: a brave game (Cecilia Castelli)

Hi, my name is Cecilia Castelli and I have been working in the Supply Chains of Fashion/Luxury companies for over 15 years, mainly as strategic
advisor and transformation project manager but also contributing to academic research. My experience suggests to share with you one
of the most important things that I learned: what the perimeter of Fashion Supply Chains
is and why it requires not only technical competences but also great organizational
and people management skills. Hence, in this lesson we will try to figure
out the peculiar perimeter of operations of the Supply Chain of a Fashion/Luxury brand
and why it is so crucial to properly govern it and with full understanding of its major drivers. Indeed, at a initial glance, the fashion sector
could seem much more simple compared to other industries such as machinery, automotive,
electronics, while it is actually extremely complex. Huge mistakes would take place in case you approach it
with the arrogance to apply the same logics and methods which proved effective in other sectors. Let’s start from the definition. It has been said, also in the other lessons
of this course, that ”The Supply Chain is the whole network of companies interacting
to manufacture and move goods from raw materials to finished goods delivered to the end customer”. The first question is which goods? The object that Fashion Supply Chains have
to deliver is the collection, which is the whole set of products, models, styles, colors,
meant to be proposed in the physical and virtual selling channels within a precise
time window, which is typically the season. We have, traditionally and as a baseline,
two main seasons per year: Fall Winter and Spring Summer. I say «traditionally» because one of the major trends
is to multiply collection launches and events beyond the 2 main seasons. But, before entering in the strategic evolution
of the sector, it is necessary to step on its basic logics. It is important to remark that the collection
proposed by a Luxury Fashion brand includes items belonging to 3 different classes:
1) Permanent: they are mostly iconic products that are and will be available every season. These items have a very long lifecycle. 2) The Carry Overs: these are items that result very
successful, hence the brand decides to literally carry them over one or two (or more) further seasons. Carry over, hence, have 2-3 years lifecycle. 3) Seasonal (or newness) which are the truly
innovative part that characterises a certain season. They typically represent the biggest part
of the collection, in terms of variety. Taking into account – for instance – the
collection that will be in stores in the Fall-Winter 2020-2021, the Operations processes actually
started in Spring 2019 (more than one year in advance). We can simplify the path into 4 major macro-phases. The first one, Collection Development, is
a long and cross-functional process where the collection is organically designed, prototyped,
sampled and – finally – presented. This is the phase where most industrial decisions
are made, such as: types of materials, sourcing choices, manufacturing phases and cycles, industrialization, etc. The role of the Supply Chain is fundamental
in this phase in order to ensure the availability of sourcing and manufacturing capabilities
in the right timing and respecting target costs. Once the collection is ready, it is presented
during the sales campaign (which is the second phase). Here, both wholesale buyers and the brand’s
retail team place their orders, volumes per item. Once volumes are known,
the Production phase, three, can start. It is worth saying that, due to capacity and
technical time constraints, the Supply Chain cannot wait the end of the Sales Campaign. It is necessary to launch production orders
and – most of all – materials procurement, much in advance, based on forecasts. Finally, goods that are then produced and, fourth, are delivered to the Central Warehouse where they pass through Quality Control and are then picked&packed
to be forwarded to their final destination: retail stores, wholesale store or end customers. Hence, the task of a Fashion Supply Chain
is twofold: on the one hand, it has to ensure the on-time
development of the whole collection, respecting the target costs and setting up the manufacturing
and supply system for the following Production phase. On the other hand, it has to plan properly
in order to ensure on-time delivery of the quantities and variety requested by the market,
through the source, make and delivery processes. This would be enough to reveal the complexity
of managing a Fashion Supply Chain. But there is more! When entering the crucial moments of development
of the Fall Winter Collection, the Supply Chain has to launch and manage the Production
of the previous Spring Summer collection. And – at the same time – the previous
Fall Winter collection has to be delivered to the stores from the Central Warehouse. And the collection development for the next
Spring Summer collection will soon start. It means that – at the same time – the
Supply Chain of a fashion brand has to deal with at least 4 different main collections, plus all the specials and events that perturbate
the planned flows of activities. Hence, never underestimate the complexity
beyond managing a Fashion Supply Chain. The rhythm of seasons makes it much more difficult
than you could expect, mainly in two declinations: 1) The task is twofold: governing both Collection Development and the Source-Make-Deliver processes. 2) Governing 4 or more collections
at the same time. In conclusion, during this lecture we understood
why Fashion is different, also as regards managing the Supply Chain. This is a managerial field that requires not
only technical knowledge but, most of all, great coordination, organization,
adaptivity and other soft skills.

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