Fashion&Luxury after Covid-19

Supply Chain planning and collaboration are no longer an option

The Fashion and Luxury industries are among those most impacted by Covid-19 due to delays and cancellations from critical suppliers, and later lockdowns, which affected manufacturing sites and stores, obliged to close around the world. Demand shifting to E-commerce has only offered a slight recovery. The initial plans were set aside and companies tried building new plans, but the conditions changed so quickly that each plan was valid for just an instant. Orders have been cancelled along all the chain, impacting all the involved actors and creating financial issues. Not surprisingly, big retailers such as Neiman Marcus (one of the historical US distributors of major fashion luxury brands) declared bankruptcy.


During this terrible storm, companies were pushed to become more agile, from both the inside and outside. In Fashion&Luxury, the ongoing transformation to become “faster” meant that some companies had already started this process, focusing on reviewing the organization and the structure of upstream and downstream supply chains (e.g., reviewing warehouse placement or finding alternatives and proximity in sourcing).


However, companies cannot forget that it is also fundamental to have an agile mindset to manage operational activities and that the latter must be organized and driven by a plan.

A company can consider itself truly agile also when:

  • it can establish a supply chain planning process which quickly generates plans aligned with ever-changing conditions;
  • it can easily share the above between internal and external actors;
  • it can rapidly realign execution to the new plan.

As we said, Covid-19 has also deeply affected Fashion&Luxury companies. What was the typical scenario, and its limitations, regarding these companies’ ability to plan the entire supply chain and what is the added-value of a modern Supply Chain Planning solution, in your opinion?


The context was that many fashion companies were still planning on spreadsheets or basic solutions and they were not able to integrate all demand and supply data, and simultaneously evaluate all the main critical constraints. Even when a new plan was created, although prepared accurately (but also with a level of high manual effort), it was the only plan. No alternative plans were available; supply planning cycles were still on a weekly frequency (or sometimes every two weeks).

On top of that, different departments in fashion companies were suffering from the silos effect. On the supply side, the poor coordination related to the production, material procurement and product engineering departments. Every department had its own plan and reconciliation was difficult.

When a Supply Chain Planning (SCP) tool is activated to support the supply planning process, things change:

  • the production planning department is able to transform the demand analyses collected during sales campaigns and forecast items to have continuously into a feasible plan and share it as the “company plan”;
  • product engineering can easily check if its plan is aligned with the planned production start dates;
  • material procurement departments can benefit from improved visibility of missing materials actually affecting planned production launches, enabling more focused expediting. Reorders after each cut off of sales campaigns would be aligned to time-phased requirements. Reorders after each cut off of sales campaigns would be aligned to time-phased requirements.

The weekly cycle, which was the target for many years in supply chain planning, shows its weakness as it is now evident that things can change even faster. In some conversations about restarting after lockdown, one recurring statement was: “We don’t need the best plan now, but the ability to create plans every day”. This remark is valid in supply chain planning too. Nowadays the true challenge is the ability to support decision making through a rapid availability of new plans. Creating them on a daily basis is only possible thanks to modern Supply Chain Planning solutions.

Companies that establish a virtuous and frequent supply planning process are able to better react to changes, resulting in cost savings and achieving:

  • a better synchronization on planned dates;
  • higher production launch feasibility;
  • higher capacity utilization;
  • on time deliveries to distribution centers;
  • compression of production lead times.


This is confirmed by companies and customers. On a recent visit to a company in the luxury world which had evaluated whether or not to implement software supporting the supply planning area for many years, the customer itself told us that the production planning projects completed were considered a company success: the managers are satisfied with the business targets achieved and users are happy to have the support of a solution that provides daily new-updated plans and provides all the necessary data to make decisions.

The ability to adapt to change in a landscape like the one you just described seems to be crucial. How does this topic of resilience fit in with that linked to sustainability, provided there is a possible connection?


Resiliency could mean many things: a revision of supply chain networks, rethinking and restructuring sourcing areas for materials, placement of materials and component warehouses, how products are manufactured, stock strategies (components vs. finished products), logistics hubs and transportation services along the distribution network in order to deliver the right product at the right time in the right place.

In parallel, supply chains need to be sustainable and reduce their carbon footprint. In the past, we have seen companies purchasing materials in one continent, manufacturing and shipping components in another continent, creating finished products back in the sourcing continent and shipping products again to another continent for trading. This example is the opposite of a sustainable supply chain. Main raw material suppliers and production workshops/factories will need to be in the same sourcing area as much as possible. Fashion supply chains were already moving in this direction, as one of the main trends was to bring production closer to markets in order to develop and deliver “fast” products.

Lastly, all the above naturally converges in what is called the “reshoring” phenomenon: after the Covid-19 pandemic, a further acceleration in this direction is expected, as this will lead to supply chains which are simultaneously sustainable and agile.

Fast or slow fashion? Armani has said, “The fashion industry must slow down”, a message followed by several companies. Not knowing if this slowdown is yet a reality, the question is: how does planning impact the current speed in proposing new collections to consumers? How do you manage to involve all the necessary users to promptly react to changes in planning, to adhere to increasingly stringent deadlines?


Armani thought it was the right opportunity (and the right time) to rethink the right speed to create and propose collections to consumers. Gucci’s artistic creator Alessandro Michele suggested a different timing for proposing collections which is not driven by the standard fashion calendars.  A possible scenario is that products’ lifecycle could extend for a higher economic sustainability. Nevertheless, we still don’t know if consumers’ behavior would really change in this direction. Most likely, the two philosophies will coexist and they will attract different types of consumers.

For this reason, offering new products through one shot collections will remain a major trend. More and more companies even not “fast” had left the historical two-season collection model, with the aim of refreshing their assortment in physical stores or e-commerce sites.

In this context, due dates are more and more compelling and planning is even more important: materials and capacities of one-shot collections are shared with seasonal and permanent products. As an example, one of the main issues occurs in materials utilization among the different collections: a material used for a seasonal product may not be available for the production of an item planned in a future capsule. How can planners intercept this issue and solve it?

An SCP tool can easily highlight this type of issue to a planner, but the decision could require the involvement of a larger community. For this reason, modern planning tools should support users with collaborative features. Instead of starting long email threads or phone calls (which are difficult to control and analyze later), an integrated and orchestrated flow must be activated which involves the managers concerned.

Orchestrated flows have the objective of enabling greater cross-functional collaboration, based on company processes that must be designed and digitalized; a collaborative solution should also be:

  • cross-cutting, able to involve the right people in the right tool where they usually work;
  • flexible,  able to manage exceptions, adding other unexpected people to the decision making process or adding unplanned tasks to investigate other options.

Once decisions are made, all the data are stored for future analyses of the root causes and solutions of that specific issue in order to continuously improve business processes.

It therefore seems that collaboration within the company, between different users and functions, is necessary and sufficient to make the right decision at the right time. Is this truly the case?


Certainly, a planning process with modern, fluent collaboration inside the company helps improve decision making, but making the right decision often requires extending this visibility outside the company as well. In fact, disruptions can start occurring in the external network of subcontractors and suppliers and the lack of transparency simply means that critical issues are reported too late to be able to make the right decision.


In fashion companies, closer collaboration with suppliers is expected in materials management (e.g., with leather or fabric suppliers), creating shared stock to support new themes delivered through seasonal or capsule collections.


Visibility is a non-negotiable element for a resilient and agile supply chain. Supplier data are key in order to have the full picture and must be integrated automatically in a flexible way in one single point, removing the integration barriers of the old legacy systems. Having data available at the right moment allows monitoring order progress during production activities or having evermore reliable delivery plans for components and materials, so that a new planning cycle could start with the last updated inputs.

Data are also the base for a more structured collaboration. In past years, many SRM platforms in the fashion industry addressed operational areas (e.g., order acknowledgement, shipping declarations with ASN management). Nowadays the collaboration in planning activities with the external world (e.g., debating on new plans or negotiating additional capacities to face a surge in demand) remains a challenge; and it will need to work as an extension of the collaboration framework with internal departments, as described above.

The panorama previously analyzed from different points of view is very clear; what remains to be understood is how a company can manage the amount of data deriving from what we have described (internal collaborations, external collaborations, stringent deadlines, quick and alternative simulations…) in a really effective way.


With updated suppliers’ data immediately integrated in planning tools, companies can better understand  impacts on existing plans and start simulating corrective actions (e.g., shift some production from an overloaded vendor to another one, planning a change in transport means to fully or partially recover a delay), making decisions at right time.

Alternatively, if a delay cannot be recovered, it is also possible to analyze impacts on the demand side (channels and markets) and other actions could be investigated (such as changing priorities, or negotiating partial deliveries).

Through modern technology, simulations can be prepared, launched, and analyzed in a single point: a place where not only data and related KPIs are shared, but where alternative scenarios could be controlled and evaluated as well. To support decision-making in an end to end logic, these simulations need to be rapidly launched across all planning processes (demand forecasting, inventory, production and procurement planning, order promising, allocation & replenishment).

This further step of agile planning is the key that transforms future simulative scenarios into a company’s effective decisions.

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