Age of Digitisation and Collaboration
March 24, 2017
On 16th March, Adjuno attended the ‘Made in Asia’ conference organised by the French Chamber of Commerce in Hong Kong. This event was designed to help understand the changes accelerated by the arrival of digital and artificial intelligence waves in the sourcing world and how everything is moving into the digital space. There were few speakers who shared their thoughts on how retailers and suppliers are using cloud-based platforms to quickly share information, improve communication between retailer/supplier and eventually decreasing sourcing lead times. Furthermore, there was a panel discussion on digitisation or not!
The main message we heard during the event was, “Digitisation and collaboration”, the question is how this is happening in real world?
In the past, Retailers were purchasing product through agents because the agents were closer to the supplier/factory. Additionally if a Retailer could not meet a supplier’s minimum MOQ requirement, then the agent would be able to work with multiple retailers to meet supplier’s MOQ requirements.
There has been a landscape shift where retailers are continuing to open their own sourcing offices at origin. By doing so, the retailer is able to better collaborate directly with suppliers (e.g. shorten communication times), suppliers are able to directly share their market knowledge with the retailer (e.g. share observed trends from other customers), and retailer is able to assess product quality further upstream (e.g. faster and cheaper for origin suppliers to send samples to origin sourcing offices). With increased collaboration, retailers are shifting to allow their suppliers ability to self-inspect products; this builds a level of trust with the suppliers – this is also a way to shorten sourcing lead time because this foregoes suppliers having to send their samples to a Quality Test Lab for testing.
Additionally, as quoted by KPMG speaker, biggest spenders on the internet in China are Gen Y and Millennials’ who prefer online shopping (ecommerce) over Brick & Mortar shopping. By shifting to ecommerce, retailers are able to showcase their products quicker and able to reach a larger audience. Interesting point to note in one of the statistics presented was Asia is spending more on mobile payments than anywhere else on the planet.
Also by using AI/3D printing, customers are able to purchase their products online, retailer then receives the orders and then retailers are able to shorten the lead time by 3D printing certain “bespoke” components. AI was brought up and referenced via Amazon Go where customers can walk into a store with their phones, choose the products they want to purchase, and then walk out without really “checking out” since the customer uses a virtual wallet to automatically pay for products they walk out of the store with.
My key take-away messages from the event were:
- China is bracing itself and spending more in AI and cognitive than Europe and US put together.
- We need to start planning for scenarios of disruption, else may end up being controlled by them
- Collaboration has become the new norm and helps to manage the complex, unpredictable business environment – as discussed by Anne-Laure Descours – Global Director Development and Sourcing Apparel, PUMA SE
- Challenge and change is a new paradigm in apparel sourcing – as mentioned by Ambrish Jain – SVP Sales and Marketing, TAL Apparel Limited. Top 3 KPIs of a sourcing organisation are quality, delivery and cost. Searching the low cost sourcing countries like Ethiopia, common understanding of quality and compliance and challenging the on-time delivery mindset: shift from on-shelf availability to on-demand availability
- Supply chains are becoming more complex and these days its data-led decision making. With IoT you get big data which improves forecasting. Today we have a lot of data and it can overwhelm us.
- The new Reality – it’s Binary, it’s Rapid so we change or we perish – change at speed of thought as mentioned by Edwin Keh – CEO, HKRITA.
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We have found them to be an excellent business partner. Through the implementation of both their supply chain and sourcing software they have more than proven themselves in giving us a product that functions the way we need it to. LIMA has been a fantastic supply chain visibility tool, calculating real accurate landed cost position throughout the order lifecycle. The LIBERTY software matches our product sourcing business needs perfectly. PLM systems I’ve previously used, often bring lots of issues through implementation, but these guys managed this and I’ve got highly satisfied users.John Amm - GM Global Sourcing, Myer
The solution has realised more benefits than we initially thought possible. Claims notifications are being handled in a fraction of the time. Suppliers are making fewer calls into the office and quality scores have increased dramatically. All of this can only have had a positive impact on the customer experienceMartin Ashfield, head of commercial property claims, AXA
The system alerts us to exceptions against our plan, allowing us to focus our attentions on solving the real issues in the supply chain. Having a comprehensive audit trail of events for everyone to see has resulted in significantly improved service levels from our suppliers and agents.Darren Walker, head of generics buying and UK trading, Alliance Healthcare
Now our buyers can exchange photographs with suppliers and have a real-time dialogue as they develop styles, while buyers out in the Far East can send detailed and accurate information back to their teams in the UK. It has certainly cut lead times and reduced errors.Maxine Walter, supply chain co-ordination manager, New Look
The time it takes to compile reports has been significantly reduced; a report which used to take five whole days to complete is now accomplished within a single day!Sam Brown, Responsible Sourcing Co-ordinator - John Lewis.