Fashion industry development of ever more sophisticated omni-channel sales operations is presenting logistics providers servicing that market in Asia and globally with increasingly complex challenges – but also with a range of new business opportunities.

Many of those opportunities are arising from the fact that, according to the results of a study by US-based retail and supply chain solutions provider JDA Software Group published  in April, retailers in general are still finding it hard to make such operations profitable.

The global survey of more than 400 retail and consumer sector CEOs from around the world, including China and Japan, conducted for JDA by multinational professional services group PwC, found that while retailers and consumer goods manufacturers were spending “an enormous amount of money, energy and time to improve their omni-channel sales capabilities … only 16% of companies say they can fulfil omni-channel demand profitably today.”

The key challenge in that context, continued the resulting JDA report, The Omni-Channel Fulfilment Imperative, was the high cost of fulfilling orders, with 67% of respondents stating that those costs were growing as they increased their focus on selling across channels.

Expanding on that point, Kevin Iaquinto, JDA’s chief marketing officer, explained that every time retailers receive an online order, they have a number of options to fulfil that demand. They can pull the product from a local store, send it from a centralized warehouse or ship it directly from the supplier.

However, he continued: “Most retailers lack the insight to make these decisions in a profitable manner – and are not sufficiently focused on this critical capability gap. They need intelligent logistics and fulfilment solutions that can reveal the hidden costs, and the customer service trade-offs, associated with every delivery option.”

Although the JDA survey covered omni-channel retailing in general, the development of such operations across the fashion industry and the emergence of related supply chain challenges in that particular sector was confirmed in a white paper, Fashion in Flux: Mastering the Omni-Channel Supply Chain, published late last year by global logistics provider DHL.

“Multi-channel selling through traditional bricks and mortar stores and online is rapidly morphing into omni-channel retail. This means all previously segregated selling channels must converge into a single route to market, which is adding complexity to the supply chain,” stated that report. In the light of that change, it added, the traditional fashion supply chain “must step up its game – to become fast, agile, responsive, accurate, optimised and innovative.”

The increasing complexity of the challenges being presented to fashion market logistics providers – and some of the resulting business opportunities – was confirmed by David Emerson, group sales and marketing director for SEKO Logistics, whose activities in that sector include e-commerce warehouses in Hong Kong and Shanghai, delivery management of fashion products from the UK to the Asia Pacific region and air/ocean freight services from Asia to the US and Europe.

“With the advent of the web, global demand for borderless baskets and the added requirement of consumers wanting products now, we have seen significant changes in how our customers want us to address their supply chain,” he stated.

In that context, continued Emerson, the ability to take inventory from a manufacturer and ship it direct to a consumer either through a regional warehouse or cross-docked CFS (container freight station) had become increasingly important.

“The advent of many drop-ship software solutions accessible through a common browser or API (application-programming interface) has also led to us working on projects where the retailer can give the manufacturer the ability to fulfil e-commerce orders directly from their factory if required,” he said.

Emerson also suggested the fashion sector would see an increasing trend in distribution centre bypass, cross-docking and vendor-managed fulfilment or hybrids of all. “Most retailer systems are still built around the traditional supply chain and, as such, anything that goes outside of this has to be managed manually or as a bolt-on. This is creating significant opportunities for logistics providers.”

Inevitably, a key area of development for logistics providers seeking to meet the challenges of omni-channel sales operations and other global fashion industry trends such as suppliers being asked to meet the delivery schedules associated with frequent inventory changes and so-called fast fashion, is IT (information technology) capability.

“Essentially, it becomes a question of managing purchase order data in the most efficient and transparent manner, and so allowing the logistics provider (3PL or 4PL) to pro-actively manage the supply chain,” said Sandro Knecht, executive vice president – global market sector consumer and retail for CEVA. “We like to be connected with the source of a purchase order, i.e. customer’s ERP system, and take ownership of managing the associated merchandise from origin to destination.”

Looking ahead, he said speed-to-market and constant visibility would continue to be important competitive differentiators when it came to fashion industry supply chain operations, with access to order and inventory volumes driving decision-making.

In that context, he said, CEVA would increasingly invest in end-to-end supply chain solutions. “By providing clear data from the supply chain, analyzing it and using it to custom-design new solutions, it will be possible to eliminate waste and build truly sustainable supply chains,” he said.

Alongside IT system enhancements, logistics providers are also still constantly looking to develop additional, more cost-effective, freight transport service options for the fashion industry.

UK-based multimodal forwarder Allport Cargo Services, for example, is continuing to expand its sea-air product, Eco Air, which ships fashion goods out of China and Southeast Asia by sea to other Asian gateways, notably in South Korea and Singapore, and then on by air to the UK, either directly or via a mainland Europe gateway.

“We used to see our fashion customers using premium air services all the time for shipping goods between Asia and the UK but now, pretty much to a man, they have all moved over to that product,” said Clyde Buntrock, Allport’s group marketing and business development director. “They have actually restructured their supply chains to add in the extra couple of days for a sea-air movement.”

By Phil Hastings

Europe Correspondent | London