Supply Chain Entries

New Research Explores The “Zara Gap”

If you regularly follow NGC’s blog or our guest posts on The Sourcing Journal, you’ve heard us discuss what has been christened in the industry as the “Zara Gap.” The “Zara Gap” is the idea that retailers can increase profits and capitalize on market share by reducing lead times and delaying product completion to respond to changing consumer demands. Zara has achieved this while other fast-fashion retailers continue to lose profits and waste raw materials by ignoring consumer demand.

John Thorbeck, chairman of Chainge Capital LLC, and Warren H. Hausman, a professor at Stanford University, along with Citi Research, were the first to discuss the Zara Gap and are diving deeper and researching this phenomenon. According to Thorbeck and Hausman, “retailers can increase profits by as much as 28 percent and market capitalisation by as much as 43 percent if they reduce lead times and delay finished product commitments in order to respond quickly to changing consumer demand.”

In a recent article on Jan. 9, Business of Fashion further explored the “Zara Gap” based on Thorbeck and Hausman’s research. You can view the full article and learn more about the “Zara Gap,” here.

If you’re a retailer looking to close the gaps in your supply chain, contact NGC today.

Supply Chain Dive Calls Supply Chain Visibility the “Obsession of the Year”

In 2016, supply chain visibility (and transparency) has been a major focus at NGC Software, and according to Supply Chain Dive, the topic has been on the minds of many industry professionals this year. In the “2016 Dive Awards,” the publication named supply chain visibility the “Obsession of the Year.”

Here’s what Supply Chain Dive had to say about the topic:

“Supply chain visibility lies at the intersection of every other industry obsession, and for that, it deserves a special award.

“The concept’s application is elusive at best – it demands the supply chain manager gain access to information about every link throughout the chain, including specific materials or supplier data. Simultaneously both risk- and consumer-focused, the concept promises to reduce the guesswork and improve margins. 

“Yet for that reason, vendors love it. After all, nearly all solutions can claim to improve visibility through better data collection. Yet, like “resilience,” “big data” and “omnichannel,” the concept must be broken down into components if it is to prove real value.

“But perhaps the industry needs to obsess over visibility if it is to implement the full scale of traceability, tracking and transparency solutions.”

The full list of “2016 Dive Awards” for the supply chain category can be found here. For a broader look at the retail industry, check out the additional Dive Awards here.

Reach out to NGC Software today to find out how to achieve supply chain visibility. 

Mark Burstein discusses how to break down supply chain silos in Supply & Demand Chain Executive

Organizational silos are the bane of so many brands’ and retailers’ supply chains, from disconnected departments to information disparages across channels. But there is relief in sight in the form of today’s next generation supply chain management (SCM) systems that are connecting channels and alleviating the pain silos put on production and profits.

In a recent article by our own Mark Burstein in Supply & Demand Chain Executive, he breaks down a few ways businesses can implement these new SCM practices across their enterprise, by:

  • Responding quickly to sales data. Boosting sales and profitability can be summed up with a simple formula: If something is selling, accelerate production and make more of it; if it’s not selling, cut the losses and stop making it, because it’s cheaper to cancel production. Even a handful of poor-selling products can ruin overall profitability. With the SCM hub connecting design, finance, sales and production data in real time, retailers and brands can quickly react to the latest sales information and make the most of every season.
  • Postponement. SCM allows organizations to push decision-making further downstream; this concept of postponement—waiting until the last possible minute to make decisions—is central to lead time optimization. And it improves decisions, because the further into the design-production process, the more information companies have and the better decisions they make.
  • Performing quality audits at the factory. SCM allows organizations to incorporate quality audits as part of the enterprise platform. This enables you to check for quality at the factory before the goods ship; if an audit fails, you can address it at the source, resolving quality issues quickly and without undue cost.

With omnichannel retailing grown exponentially every year, retailers and brands are looking to new ways their SCM helps meet the demands of consumers and increase profitability. View the full article by Mark, here.

To Avoid Large Chargebacks and Penalties, Improve Supply Chain Execution

The famous red Target “bulls-eye” is now trained squarely on suppliers that miss delivery windows, causing merchandise out-of-stocks and lost sales.

Sourcing Journal recently reported “as of May 30, Target’s domestic suppliers will face tightened deliver deadlines.” In addition, “they’ll no longer have the two-to-12-day grace period to ship goods late without penalties, and fines for inaccurate product information could reach as high as $10,000.” This follows a recent move by Walmart that changed the “on-time delivery standard from 90 to 95 percent and cut the delivery window to within one to two days of the target date.”       

With these moves, both Target and Walmart have reduced the margin of error to near zero for suppliers. And with Target and Walmart leading the way, other retailers will soon follow suit. 

The message to brands is clear: Supply chain execution is your #1 priority. Without it, you stand to incur huge penalties – and a possible loss of business from your most important customers. There’s plenty to be concerned about, too; according to Just-Style, “a large number of global apparel companies are still operating with little knowledge or control of their supply chains.”

Without better supply chain execution, production issues – quality problems, delayed shipments on raw materials, overbooked capacity, test and inspection failures and much more – can’t be shared before problems escalate into full-blown crises. By the time companies sort through mountains of spreadsheets, emails and faxes, they can be facing delayed shipments, rush charges for overnight shipments, and a failure to meet required delivery windows resulting in severe financial losses.

In this kind of environment, supply chain excellence is the #1 mandate. And the good news is a new generation of supply chain management systems is helping enterprises break through their organizational barriers and improve supply chain visibility and transparency. These new SCM systems connect the data and systems in an organization to drive better decision-making and faster turnaround time – turning SCM into an enterprise platform that helps brands optimize lead times, improve profitability and meet the new mandates from their most important customers.

To learn more about how supply chain systems can help improve overall performance, download NGC’s latest whitepaper, Optimize Lead Time, Maximize Profit.

PI Apparel Returns to NYC

Last year, PI Apparel made its mark on New York City and will return for the second year June 27-28. The two-day event brings together leading brands and retailers to “discover the technologies disrupting the fashion, apparel and footwear industry.” Last year’s event was inspiring, educational and well attended, and NGC is proud to sponsor PI Apparel for the second year in a row.

NGC’s customers are among the featured speakers at PI Apparel 2016. Sport Obermeyer will take the stage to discuss “Boosting Supply Chain Efficiencies with Modern Technology.” Gregory Bannister, COO, Sport Obermeyer, will speak about how the company modernized their legacy enterprise suite and how to choose the right technology partner for this undertaking.

Our long-time customer VF Corporation will also be present to discuss how they’ve established a culture of innovation among their 70,000 employees and 30 brands. Additional sessions will be offered on PLM, ERP, supply chain, planning and industry innovation.

PI Apparel 2016 will be held June 27-28, at New York’s Union League Club in Manhattan, at the corner of 37th Street and Park Avenue. For more details and to register, visit the conference website. And please contact us at if you’d like to schedule a meeting at the show.

We look forward to seeing you there. 

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