Table of contents
- What are lead times? And why they matter in the era of on-demand fashion
- How to shorten lead times starting with a more reliable inventory forecast
- 3 simple ways to slash long lead times in apparel
Whether you love fashion or not, there’s no doubt buying and selling apparel can be a lot of fun. But forecasting?
That’s a whole other issue.
With constantly shifting trends and consumer demands, the fashion industry is especially vulnerable to expensive inventory errors. Throw in extra long lead times, and it’s easy to see how forecasting mistakes can incur huge losses for apparel brands.
If you’re an online fashion retailer, you’re probably thinking about questions like:
How do I strike a balance between my foundational and trending products? Should I release the same models every year? How should I forecast for new products vs. the classics I’m known for?
In this guide to managing long lead times in the online apparel industry, we’ll share a simple game plan for accurate inventory forecasting and offer top tips to drive greater efficiency and revenue for your brand.
Tired of seeing the same old inventory mistakes? Discover how Flieber can help.
What are lead times? And why they matter in the era of on-demand fashion
In a nutshell, there are two main types of lead times online retailers are always thinking about.
First, you have your production lead times. These are the time estimates manufacturers and suppliers give for how long it takes to produce a specific product or item.
Then, you have your transportation lead times. These are the time ranges required to send the product from your manufacturer to your storage center or customer, including the multiple supply chain touchpoints in between (such as customs clearance, quality inspections, etc.).
Depending on your category, lead times can vary significantly. For the apparel industry specifically, they tend to hover around the 30 to 90-day mark.
So why are these key production timeframes so crucial for online apparel retailers? In short, because fashion moves fast.
According to a 2019 report authored by a team of researchers from McKinsey & Co, we’ve now entered a “[S]eismic shift where products are ‘pulled’ into the market based on actual demand rather than ‘pushed’ based on best guesses and forecasts.” The report continues:
In the future of fashion retail, brands that can respond to consumers with agility, and get new designs on their digital shelves quickly will receive the lion’s share of sales.
Today’s online fashion retailers not only need great designs, they also need stellar reviews, firm product rankings and an agile inventory optimization strategy to make sure they’re moving the right products at the right time.
Are inventory mistakes costing you sales? Find out how Flieber can get you back on track.
What causes long lead times in the apparel industry?
Unfortunately, there’s no one simple answer to this question.
Long lead times are the result of a variety of manufacturing and shipping factors, stacking up to push delivery dates back. Your ability to shorten those lead times depends on the accuracy of your inventory forecasts, and how efficient your supply chain is (or isn’t 😬).
Let’s take a closer look at the factors that can disrupt your production time:
- Buyer behavior: Consumer demands change rapidly in fashion, causing some retailers to adjust their orders with manufacturers and prolong the manufacturing process.
- Delays in gathering stock prediction data: Most retailers base their minimum order quantity (MOQ) on predicted demand across multiple different sizes. It can also take a while for retailers to compile the sales data they need in order to fine-tune their forecasts for more accurate order amounts.
- Insufficient processes: Fragmented supply chains, unorganized manufacturers and brands, and approval bottlenecks can lead to mistakes and confusion in crucial SLAs and supplier activities.
- Supplier relationships: Your relationships with suppliers greatly affect production. Poor communication, strained relationships and language barriers can all have an impact on your delivery dates.
- Operational challenges: When manufacturers are short-staffed or over-extend their production capacity, it can slow everything down. Problems sourcing raw material can also contribute to long lead times.
- Complex designs: It takes time and specialized skills to create complicated garments. If either element is unavailable, it can limit a manufacturer’s output.
- Human errors: When employees make errors, work has to be revised or redone, causing significant delays. This problem can be especially prevalent with inexperienced retailers.
- Freight and Customs: Issues like long wait times for sea and land freight, or goods being held up in customs, can significantly lengthen your stock’s production time.
Many online clothing brands dream of goods flying off the shelves and being refilled just as quickly, but with everything they’re up against—fashion retailers aren’t sure how to make it happen.
If you’re like most online retailers in the fast-moving world of apparel, buying and forecasting guesswork quickly becomes the default.
The good news is, building a store with optimized inventory levels across multiple product categories and sales channels is totally achievable…as long as you have the right approach.
Let’s break down the key steps to creating accurate inventory forecasts for your online clothing store.
When your raw data is reliable, it sets a great foundation for building an accurate forecast. High-integrity data allows you to uncover your top sellers, rising stars and underperformers, without outliers or insufficient sales data clouding your outcomes.
Here are some tasks to complete when sprucing up your data:
- Remove duplicates, errors and inconsistencies
- Add missing data
- Standardize your data input
- Check data accuracy using your past history of sales and stockouts
Customer feedback is critical for choosing items that fit customer demands, now and in the future.
Ask customers what they want to see in your store and how you can improve your existing offerings, then compare that feedback with your product sales data to identify gaps and opportunities.
Here are some ways to reach out to your audience:
- Run a quick poll on social media.
- Create social media posts asking for suggestions.
- Email shoppers about their shopping preferences.
Send a brief survey to your existing customers and subscribers.
Bring a little agility to your inventory strategy
Many online apparel sellers are consistently let down by their manual inventory processes or basic out-of-the-box tools.
The unfortunate truth is that, no matter how great an inventory management system claims to be, most platforms leave out essential variables like seasonality, marketing influence and other key trends. As a seller in a fast-changing space, how can you make accurate purchase decisions with incomplete data?
To make matters worse, these issues usually compound each time you buy because decisions based on bad data lead to even more bad data—and even more mistakes.
Luckily, there’s a way around it.
For fashion retailers, it’s critical to use a dynamic inventory optimization system that can automatically generate accurate forecasts using real-time data on every moving piece in your supply chain.
With a tool like Flieber, deep AI-powered algorithms pull data from your entire supply chain, while assessing sales patterns across a broad range of factors like cyclicality, ranking and sales velocity. Flieber then uses this information to create forecasts that are an average 80.1% accurate, no matter which industry or category you’re in. That is, on average, 40% more accurate than using basic forecasting methodologies such as moving averages.
Are long lead times tripping you up? Find out how Flieber can get you back on track.
1. Use optimized forecasts to improve order precision
Optimized forecasts improve inventory accuracy. Fact.
And that’s not all. Unlike set 30-day reorder reminders, AI-powered forecasts can eliminate the long wait for information. With inventory forecasts that are constantly being monitored and adjusted in real time, you can instantly put data insights to work to shorten your long lead times.
Here are a few simple ways to gain control of your apparel lead times:
- Set up order points for seasonal and cyclical items.
- Arrange thresholds for reordering your baseline products.
- Manage your seasonal, trend-led and foundational products separately.
Another effective way to reduce your lead times? Organize your manufacturing process.
Make a note of your manufacturing process’ individual stages, then go granular and break down the individual jobs within that stage. For example, write down everything you need to achieve at the packaging stage before moving on to shipping (think: choosing appropriate materials, estimating sizing and packaging products, etc.).
Here’s how to segment your manufacturing tasks:
- Work out what each stage will entail (e.g., materials and sampling).
- Define your production costs.
- Create time estimates for each step.
- Factor in time buffers.
- Book in manufacturing slots with suppliers.
Here’s a quick example of how it might look to segment your manufacturing tasks:
It’s mid-June and you want to launch a sweater line in October. First, you need to speak to your manufacturer about the styles and colors you want to incorporate. Then, get an estimate on how much the sweater will be per unit and how long it’ll take to produce. If you’re given 90 days, add an additional 2-4 week time buffer and confirm your slot with your manufacturer.
The simple act of breaking down your manufacturing process to nuts and bolts will help reveal opportunities for reducing lead times.
Clunky supply chains waste time and energy, resulting in costly delays for apparel retailers.
One key step to accelerating your lead times is to get to know your supply chain inside and out so that you can actively look for ways to make your operations more streamlined. And don’t stop there.
Be sure to keep optimizing your supply chain even after you see results to help drive lead times down even further.
Here are the steps to start fixing gaps, grey areas and bottlenecks in your supply chain:
- Find trustworthy, experienced and reliable manufacturers and suppliers based both locally and internationally.
- Create a standard operating procedure for key tasks at each step of the supply chain.
- Share key data within your supply chain. For example, manufacturers should know when designers will send designs and tech packs, etc.
- Improve communications with your manufacturers and suppliers.
- Use an inventory optimization system to gain full visibility into your supply chain.
Long lead times are a common pain point in the apparel industry, but they don’t have to be your default setting.
The fashion industry is evolving quickly, but long lead times are here to stay. And while there’s not always much you can do to speed up your production and transportation times, companies that have inventory systems in place to help plan for long lead times and take action ahead of time will be the ones that come out ahead.
“Covid has crushed supply chains as well as manufacturing, resulting in longer lead times in the apparel industry. Flieber can tell NoNetz by sku when to start manufacturing as well as how many units to manufacture. This way there’s no stockouts, or overstock,” says Cathy Paraggio, founder of ethical activewear brand, NoNetz.
To stay one step ahead in the world of online fashion, get started optimizing your inventory forecasting, manufacturing and supply chain process today. You won’t regret it!
Are long lead times holding your apparel store back? Find out how Flieber can get you ahead of the game.