Overview

In recent years, there has been a shift to more technologically advanced processes which has altered the way consumers interact with businesses. As customer preferences evolve, businesses are forced to re-evaluate their existing structures. To adapt to the new normal and improve overall performance, businesses need to digitize. Organizations that are slow to adopt risk failure in this highly competitive and uncertain environment. 

Why Digitize?

A study conducted by McKinsey found that end-to-end process efficiency was seen as a compelling opportunity by 41% of respondents. Digitization is the first step a business takes to digitally transform their business.

Unlike the traditional supply-chain that function as a series of fragmented parts, the digitized supply-chainprovides a seamless user experience where all parts of the system are integrated. The customer is at the core of a digitized supply chain and the rapid access, distribution, and analysis of data enables businesses to better adapt to emerging trends.  

The shift from manual to automated processes leads to a reduction in costs and enables quicker delivery. Real-time insights empower businesses to make more informed decisions and take corrective action promptly.

Companies that are further in their digital transformation journey tend to yield better results, especially in uncertain environments, compared to ones that are slow to adopt. 

Digitization in the Apparel Industry

While certain industries are making headway in their efforts to digitize, the apparel industry has fallen behind as it tackles various other challenges. A study by McKinsey found that less than 15% of participants in the industry viewed their organization as digitally mature. 

With an abundance of options and the availability of information at their fingertips, consumers are more selective and opt for brands that fit their requirements. As a result, the apparel industry faces pressure to reinvent their end-to-end processes with a core focus on flexibility, transparency, and agility. 

Fast-fashion company, Zara, was able to double in size due to their innovative and technologically advanced processes. Digitizing operations enabled Zara to surpass competitors and achieve greater efficiency and speed-to-market. The use of big data and analytics allowed the brand to offer a more personalized customer experience and contributed to their growth. 

Sourcing executives have recognized the need to improve their end-to-end process efficiency, supply-chain flexibility, and digitization efforts.  

Challenges to Digitization

Digitization is a huge step that requires organizations to reconfigure the way they work from top to bottom. It can be challenging and costly for businesses to break away from traditional methods and introduce new processes. 

Organizations can get easily discouraged when digitizing operations and pause efforts if the results don’t align with expectations. The MIT Centre for Information Systems Research (CIST) found that only 28% of leading companies have successfully digitized. The failure to digitize successfully can be attributed to companies taking siloed steps rather than a holistic approach. The fashion industry tends to take a fragmented approach in its efforts to digitally transform its business model. In the fashion sector, digitization can have a negative connotation as it is perceived as a threat to job security, creative freedom, and the human elements in design. 

A study by McKinsey discovered that 85% of the supply-chain executives surveyed experienced difficulties with their supply-chain technology. Businesses should view this as an opportunity, rather than a setback,  and implement digital solutions to enhance efficiency and productivity.

With exceeding expectations and scarce results, businesses become hesitant to invest in digitization. A survey of Chief Purchasing Officers (CPOs) found that a majority were investing less than 1% of their sourcing value in digitization. However, it is predicted that companies will invest more in technology in the years to come.

As consumers become more involved and aware, a one-size-fits all solution is no longer acceptable. Digitization is an essential undertaking for businesses to grow and adjust to the new normal. 

How to Successfully Digitize

To successfully digitize, businesses need to focus on the big picture and have a clear strategy in place. Focusing on individual pieces of the puzzle and existing limitations will only hinder the impact of digitization. In the fashion world, a human-centric and holistic approach is the key to unlock digital success. 

Organizations require additional resources and in-house capabilities to digitize end-to-end processes. Businesses need to onboard individuals with specialized skills sets and merge that with existing knowledge to achieve their goals. 90% of supply-chain executives surveyed mentioned their plan to onboard new talent with the appropriate knowledge and skillset or train current employees as they prepare for the shift to digital.

The founder of  Zara is making hefty investments in technology to surpass competitors and better serve customers. Technology allows the brands executives to observe customer behavior and adjust based on their findings. 

For a successful digital transformation, organizations should have a clear vision, priorities, and strong support from leadership. The digital supply-chain is agile, flexible, and transparent with a core focus on the customer

Future Outlook

For the apparel industry, digitization is no longer an option. Heightened competition, emerging trends, and increased consumer demands make it a necessity. For business to remain relevant in the face of competition and survive in uncertain environments, digitization is essential.