SmartAdvice: ThinkPad Quality Should Continue Under Lenovo
Lenovo bought the IBM brand, so it should maintain features, The Advisory Council says. Also, RFID and Internet-based collaboration will help soft-goods companies develop nimble supply chains.
Question B:: What techniques and tools should we consider for optimizing a soft-goods retail supply chain?
Our advice: There are two platform technologies and five best practices that soft-goods companies must master for nimble and efficient supply chains. The platforms are radio-frequency identification and Internet-based collaboration. The best practices are item identification, item positioning, data synchronization, business-activity management, and business intelligence.
By now, most soft-goods companies have a pretty good idea whether 2004 was a profitable year. The Christmas shopping season and other seasonal windows drive performance for the entire year. Nimble supply-chain management is a critical success factor to put the right goods on the shelf just in time.
During 2005 about 1,000 companies will be piloting RFID to track items and collaborate over the Internet on supply-chain activities. The convergence of RFID and Internet-based collaboration makes it feasible to exchange accurate data in near real-time. Technology isn't enough, however. To transform performance, companies must focus on business processes.
What should be tracked, when should we track it, and how should the tracking information be structured? A company that produces high-fashion jeans might RFID-tag and track products at the item level across the supply chain to reduce counterfeiting and theft. A company that produces private-label work clothes might do the minimum to comply with retailer RFID mandates.
Using item positioning
Legacy material-handling processes assume that it's hard to identify and locate items. Consider how differently one would operate a facility if one could easily locate each specific item on demand. With automated product identification like RFID, it's feasible to create special stocking and shipping areas for seasonal items.
New products can't be introduced until the retailers' computer systems can accept the SKU, and each new style is a distinct SKU. With online synchronization, the introduction cycle gets compressed and errors are eliminated.
The previous practices are about creating accurate information that's accessible on demand. There also needs to be a real-time mechanism to spur activities to correct problems and capitalize on opportunities. The end-of-day inventory audit is too infrequent for fast-moving goods. Intra-day restocking for specific "hot" SKU's is a huge opportunity. Fast action on tactical merchandise adjustments is a powerful first step toward business optimization.
Advances will occur as predictions are deployed faster, and integrated more effectively with supply-chain execution systems. Don't be surprised when retail pricing for seasonal and fashion items begins to resemble airline pricing. As privacy questions around item-level RFID tagging are resolved, suppliers and retailers will have the technical capabilities they need to adjust prices to clear shelves at an optimum yield.
Supply-chain execution is at a tipping point. The necessary technological capabilities are maturing quickly. Add in business creativity and discipline, and the potential for performance improvement is amazing.
-- Walt DuLaney
Peter Schay, TAC executive VP and chief operating officer, has 30 years of experience as a senior IT executive in IT vendor and research industries. He was most recently VP and chief technology officer of SiteShell Corp. Previously at Gartner, he was group VP of global research infrastructure and support, and launched coverage of client-server computing in the early 1990s.
Walt DuLaney, TAC Thought Leader, is an authority on the planning, design, and management of strategic business and technology initiatives. He consults extensively on strategy-alignment, project-management, and performance-measurement methods to assure that strategic initiatives are delivered successfully and operating results are verifiably improved. He is also the CEO of Adaptive RFID, an RFID software-services company.
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