We all know innovation is the lifeblood of successful companies. But it’s not just about building innovative products or improving the customer experience – companies that survive and thrive for decades in their industry also continually revamp their processes, infrastructure, and strategic partnerships.
Right now, sourcing executives in the retail space are facing a crisis in the wake of the pandemic. It’s contributed to economic instability, shipping bottlenecks, and changes in consumer behavior. But for executives at longstanding companies like Gap, Inc., this isn’t the first significant market shift they’ve seen, and it won’t be the last.
Christophe Roussel, Executive Vice President of Sourcing and Production for Gap, Inc., recently sat down with Jane Singer on her podcast, “A Seat at the Table,” to discuss how sourcing needs to change to adapt to this new era of business.
Among Gap’s brands are Banana Republic, Old Navy, and Athleta. Roussel has helped to pilot the worldwide clothing and accessories retailer for more than four years, first as its Senior Vice President and then as its Executive Vice President. Prior to Gap, Roussel held executive positions at Tesco Plc and Sainsbury’s.
The new model for apparel sourcing Roussel describes pairs advanced data analytics with business network-based technologies to foster true partnership between brands and vendors. Ultimately, the new sourcing model ensures customers get the products they want when they want them.
Optimizing the supply chain through data analytics can help to reduce waste and cut costs, enabling sustainability and profitability long after the pandemic ends.
Identifying solutions during a crisis
The challenges posed by the pandemic helped Roussel more clearly see the benefits of a new sourcing model and develop a design for the future.
“As you can imagine, a company the size of Gap Inc., which is $16 billion in sales, already had a suite of contingency plans and risk assessments in place before the pandemic,” Roussel told Singer.
Gap’s contingency plans and risk assessments helped the company rebound quickly from COVID disruption and allowed them to learn a few things along the way. And what Roussel learned is that success is largely driven by strong foundational relationships between brands and vendors.
“The pandemic has taught us three or four things,” said Roussel. “First, it made us recognize and appreciate the value of working collaboratively with our brand partners.”
Developing discipline and consistent communication between teams is key when things get tough. Being able to quickly communicate changes digitally is particularly important when face-to-face interaction is no longer feasible.
“Another thing is recognizing and appreciating the value of the long-term relationship we’ve developed with our suppliers.”
The time Gap executives have spent nurturing relationships with suppliers ensures their suppliers will continue to support them during challenging times. Gap has been working with many of its suppliers for decades, and they are proud producers and supporters of their business. In recent years, these relationships have evolved into strategic partnerships.
“The other thing we’ve learned is the value of true partnerships, which means having strong interdependencies between all companies. Between the brands and the vendors,” Roussel explained. “Making sure we all understand that we cannot win alone or at the expense of the other.”
True partnership entails that Gap and its vendors share strategic business priorities. They all work toward a common goal, collaborating to achieve mutual growth and identify opportunities to drive synergies.
Gap wants to abandon the old model where brands give orders to suppliers and suppliers fill the orders. Instead, the company wants its vendors to be more participatory.
“The traditional one-way value creation world, which is design, plan, source, make fulfill and your service – it’s not innovative enough to respond to the market.”
Moving beyond these functional siloes and fostering a network of partnerships that communicate through comprehensive digital platforms enables a customer-centric model that’s more agile, flexible, and asset-light.
“All this is paid back as we’ve been able to develop and ship products with no face-to-face interaction,” he said.
Finally, Roussel said Gap and its partners have learned they need to continue to challenge themselves to work and think differently.
Taking an innovative approach to sourcing and supply chain management will continue to be an important ingredient to success in the future since crises will undoubtedly crop up in various forms. They always do.
“We’ve made great strides in new ways of working with virtual product development, responsiveness, being more flexible,” he said. “Also, we’ve been able to pivot to new products like masks and personal protective equipment. We need to accelerate this reconfiguration of the supply chain.”
The importance of digitization has quickly become apparent throughout the pandemic. We now log onto Zoom meetings for work, keep up with friends and family through text and FaceTime calls, and buy our groceries with Instacart.
Roussel maintains this shift to digital communication and consumerism is not just a temporary byproduct of the pandemic – it’s a permanent change to the way we live.
“Digital product creation was already in flight,” said Roussel. “The pandemic has accelerated it because we can’t meet face-to-face with vendors and brand colleagues.”
“It takes 21 days to develop new habits,” he continued. “After 21 months of not being able to travel, we will have developed strong habits. I do not think we are going to go back to what we did before the pandemic.”
Roussel predicts that after the pandemic subsides, brands will continue to invite their vendors to cocreate with them. This collaborative approach allows everyone to succeed in a complex supply chain.
Developing strong digital relationships with strategic vendors also helps to mitigate risk.
“Our global sourcing footprint at Gap is extremely diverse,” said Roussel. “We source across more than 20-25 countries. Each of our strategic vendors, which is a smaller pool, they all fulfill key capabilities that help us get what our customers need in store or online.”
The garment market is becoming more capital intensive rather than labor intensive, he says. New technologies are bolstering the industry, leading to a technological innovation where sourcing executives seek stability and long-term investments to build a supply chain that fully supports their strategies.
“Companies not only compete head-to-head with products and retail structures, but also with their supply chains,” said Roussel. “I’m not looking for the next country to work with, I’m looking at how I can build stability for my business through this network of partnerships and investments in new technologies.”
Modern technology enables brands to achieve their target cost and quality while paving the way for improved innovation, speed, and flexibility.
Digitizing the creation side of the product lifecycle helps to ensure brands develop on-trend products in season. Digitizing the entire supply chain will help brands create a real, sustainable direction for the future.
“There’s also a call for this partnership between players in the industry to tackle sustainability,” said Roussel. “We try to use less water, less energy, less chemicals, because this is part of the future. Capabilities we need less related to manufacturing include cocreation capabilities, and there should be and there will be an evolution of the sourcing function.”
Bridging the gap between supply and demand with data
Roussel wants his key strategic vendors to be fully integrated and own the performance they’re delivering to his company. This includes more than just producing quality products on time –vendors and brands need to work together to harness the data necessary to bridge supply and demand.
“As data improves, partnerships will improve,” he said. “This bridging of data, customer insight, and supply is part of the future as well.”
Analyzing data about vendor performance helps brands smartly invest long-term in the best possible partners.
When vendors and brands make insights about sourcing decisions powered by accurate data, they can replenish supply faster in season and ensure design decisions meet consumer expectations.
“The biggest issue in sustainability is ordering too much of what your customers do not want,” said Roussel. “This is how you deplete the natural resources. If I produce too much of something nobody wants, what do I do? I discount them? I sell them for nothing?”
Leveraging data analytics about consumer purchasing decisions enables brands to produce the right amount of what customers really want and sell these products at a higher margin. Ultimately, brands can reduce excess inventory to cut costs and resources.
“Our job is to build this strategy and these interdependencies,” said Roussel. “This is where it takes time, because we need to create a new operating model. That’s super exciting. This is where the sourcing of the future is going to be.”
Achieving an agile value chain through a software platform that advances digitization from product discovery to delivery instills resiliency to navigate across challenges and opportunities.
Ready to embrace the future of sourcing? Check out Bamboo Rose’s Sourcing Solution on the Multi-Enterprise Product & Supply Chain Platform.