Apparel Value Chain Ripe for Disruption

In the Foreword to his book Re-Imagine bestselling author, business and management guru Tom Peters explained how his eleventh book came about.

“Because I’m pissed off,” he wrote, “I happen to believe that all innovation comes, not from market research or carefully crafted focus groups, but from pissed-off people.”

After more than 20 years in retail and several corporate sourcing reorganisations and restructures, I can comfortably say I share those feelings. It is not that every reorganisation or restructuring was wasteful or unnecessary, but for the massive process engineering that it took and the resultant impact both up and down the value chain, the results and improvement were at best incremental. In addition, organisations went through the same process again in three to five years. While changes were for the better, they were static, non-organic events until the next reorganisation.

Like every other MBA graduate of the ’80s and ’90s, I was an ardent believer in over- analysis and aggressive Key Performance Indicators (KPIs), bound by what I was taught by my mentors and limited by organisational boundaries. It was a time when price, value, quality and customer service were direct and measureable. Then, about two years ago, I took a college level course by Steve Blank, a Silicon Valley entrepreneur and academician.

Though the course was about start-ups, it was an epiphany of sorts. How does one unlearn processes and habits programmed into you? “To truly get closer to customers takes a culture of customer-centricity, empowerment and innovation,” writes Brian Solis, author of What’s the Future of Business? “We must destroy bureaucratic processes and bureaucratic structures and build a new, from a new base,” says Tom Peters.

Now, the time is for investing in fantastic and shareable customer experiences through multiple channels and platforms and multiple touch points. How can we expect people and old corporate structures to behave, collaborate and work differently just because we call them omni-channel buyers or omni-channel designers and give them more responsibilities? Irrespective of how the future merchandising organisation structure looks, if the total user/consumer experience is paramount in this new world of omni-channel retail, it is equally important that the entire ecosystem with all its touch points is more important than the sum of its parts, whether it be external or internal to the organisation.

This can happen only if there is a customer-centric value chain loop. It cannot simply be multiples of one sale in one channel with good customer service. Tom Peters points out, “We must understand that a ‘product’ or ‘service’ – even an excellent one — is but the price of entry, the bare bones beginning.” The larger the value chain loop, the poorer and less sharable the customer experience.

What are the fundamentals that the sourcing organisation should be built on to support an omni-channel business and fantastic customer experience? Here are some thoughts.