Supply Chain Dive: McKinsey’s Research on Cutting Costs for Apparel Buyers

(Image Source: Supply Chain Dive)

The demand of online shopping is increasing exponentially, putting a strain on the suppliers as they struggle to be consistent during this tough period. Retailers are also looking for an alternative to effectively manage their finances. This article also shared some of the ways sourcing organisations have been trying, to cope with the current situation:

  1. Collaborative and proactive management of cash flow and commitments with suppliers.
  2. McKinsey also recommended sourcing organisations to look into their internal operating costs for cuts, e.g. 50% of surveyed organisations have already made temporary cuts to staffing or staff compensation.

While short term cost-cutting measures are essential, we think that sourcing organisations should also think about implementing more long-term measures to prepare themselves for any future ‘shocks’. Here are some suggestions that we have found to counter this:

  1. Reducing inventory commitment 
  2. Exploring a just-in-time inventory system

Source: 45% of apparel buyers working with suppliers to cut costs: McKinsey


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