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December 1, 2023

Profitability and Sustainability: Transforming the Apparel Supply Chain

— Traditional apparel supply chains must give way to a sustainable, 'Supply Lattices' model that prioritizes proactive initiatives and leverages legislation, fostering an environment where profitability coexists with waste reduction, according to former CSCO at PVH Bill McRaith.

The following are the main takeaways from his talk at aim10x London.

Recognizing the Flaws of Traditional Supply Chain Models:

Bill highlighted the flaws in the hierarchical apparel supply chain model, where retailers sit atop the chain. He emphasized the need for collaboration and understanding between retailers and suppliers to address inefficiencies and reduce waste. By fostering a collaborative environment and aligning objectives, stakeholders can streamline operations, minimize costs, and enhance profitability.

Aligning Sustainability and Profitability:

Contrary to popular belief, Bill stressed that sustainability and profitability are not mutually exclusive. He emphasized that sustainable practices can lead to increased profitability and improved long-term financial performance. However, businesses must shift their focus from short-term gains to embracing sustainable business models that drive operational efficiency and reduce waste. Bill encouraged leaders to recognize the business benefits of sustainability and integrate it into their strategic decision-making processes.

Prioritizing Responsiveness in Supply Chain Planning:

Traditional supply chain planning models often prioritize cost optimization, which can result in excess inventory and waste. Bill advocated for a shift in focus towards responsiveness, particularly in extended supply chains where visibility and control are challenging. By adopting planning technologies that emphasize responsiveness, businesses can minimize waste, enhance efficiency, and improve overall supply chain performance.

The "Supply Lattices" Model for a Reactive Supply Chain:

Bill introduced the concept of "Supply Lattices," a new supply chain model that leverages offshore, nearshore, and onshore capabilities for the same product. This approach enables businesses to create a more reactive supply chain, reduce waste, address social issues, and drive profitability. However, the implementation of this model is hindered by the current toolset, as existing planning systems often prioritize cost over time and fail to consider all variables. The challenge lies in transitioning to this new model while optimizing planning systems to manage multiple locations and recognize all relevant factors.

Proactive Measures Over Consumer Demand:

Bill cautioned against waiting for consumer demand to drive sustainability initiatives in the apparel industry. Instead, he emphasized the importance of legislation as a catalyst for change and collaboration among retailers in a pre-competitive environment. By working together to solve sustainability challenges, businesses can proactively address industry-wide issues. However, the complexity arises from differing legislation in various countries, necessitating a centralized approach. Bill suggested embracing the European approach, as the EU is currently at the forefront of driving the sustainability agenda.

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