In 2021, a fifth of all tech investments made by retailers were in supply chain

According to new research, more than 20% of all investments made in fashion and retail-tech in 2021 were in the supply chain. The top priorities are planning inventory flow, finding alternate suppliers, and resilient transportation.

“We are seeing that 23 percent of investments made in fashion and retail-tech have been in supply chains,” Anita Balchandani (a McKinsey partner based out of London) said in a podcast interview. She is the head of McKinsey’s Apparel Fashion & The Luxury Practice in EMEA.

“In particular we are excited about innovations like the role that technology plays in more predictive demand forecasting to allow for the flow of product. Technology can play a significant role in on-demand production. Balchandani said that technology can be used at the design stage to eliminate waste and long lead times associated with the physical production of samples.”

Technology can be used to address supply issues

According to McKinsey’s “The State of Fashion 2022” report, The Business of Fashion, approximately half of global businesses experienced supply chain disruptions in 2021. One in eight were severely affected.

These challenges will continue in the near future for most executives and will have a negative impact on their margins in the next few years. Joseph Phi, Li &’s group chief executive for supply chain management, emphasized this clearly. Fung said, “The supply chains assets are operating at maximum capacity.” It’s at its limit. These frustrations will last until the second half 2022, … or even into 2023.”

Apparel executives around the world are focused on planning inventory flow, finding alternate suppliers and resilient transport routes. Leaders innovating to improve efficiency have made these areas a priority, which has attracted a lot of investment. The most desired measures include improved inventory management and logistics tracking solutions.

Other areas which are expected to increase in investment appeal are:

Cross-functional integration and vertical integration are possible mainly by bringing production or distribution in-house. CB Insights’ May report shows that retailers have nearly doubled their investments in technology to make supply chain and logistics more efficient and faster, reaching 8.6 billion dollars.

Fulfillment and logistics. E-commerce’s rapid growth means that the last mile experience will soon be in jeopardy. Euromonitor International says that last mile reinvention is a key initiative for retailers. It also notes that AI and the Internet of Things are two of the most promising technologies for global retail professionals to make the necessary improvements. In-Store Experience: A third of global retail professionals polled by Euromonitor International in the third quarter 2021 believed that COVID-19 would accelerate initiatives to improve the in-store experience as well as their role in the overall business strategy.

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