Quick Response
Betting Smarter on Demand by Betting Smaller, More Frequently, and Closer to the Selling Season
Quick Response is a comprehensive strategy for linking retailing and production in a way that affords the flexibility needed to respond quickly to market shifts. Built upon proprietary theory and research and extensive experience in the apparel, shoe, and other industries, its underlying inspiration is to scientifically manage and exploit the fact that demand forecasts improve significantly the closer they are made to the selling season.
Conventionally retailers place large orders less frequently further away from the selling season. With Quick Response retailers place smaller orders later and more frequently, even into the selling season: in effect, they bet smarter, more often, and smaller amounts.
Quick response responds specifically to the escalating costs of stockouts, discounts, markdowns, and obsolescence, exacerbated by an explosion of product variety and simultaneous shortening of order/delivery cycles. It is a set of measures that act in concert to dramatically reduce the total time required for a supply chain to respond to end-consumer demand by establishing production schedules closer to the selling season and basing replenishment on sales data to assure that manufacturers and retailers have the right product in the right place at the right time.
The figure illustrates graphically how Quick Response supports in-season ordering by estimating not just the forecast for demand, but also the quality of the forecast and how the forecast quality will improve with time. It is this novel insight, which we have termed the evolution of uncertainty in time, that supports the compression of time horizons that is a critical element in a seamless integrated logistics network that hinges as well on rapid transportation, strategic cross docking operations, and effective store receipt and distribution systems.
Quick Response optimizes the supply chain by emphasizing short runs, measured in hours instead of weeks, and exploiting close ties between suppliers and producers to pre-position raw materials and capacity so as to be able to anticipate in production schedules and mode of shipment inevitable deviations from forecasts. In essence, it rewards betting smaller amounts, but betting more frequently and closer to the selling season.
The concepts of Minimalism reduced our work in progress (WIP) to one third its original amount. Its not only amazing that we saved money but we are also quicker in responding to our market demands and customer needs.
Implementation of Quick Response entails radical change. Modularity, small batch sizes, short lead times, and low work in process inventory must all be implemented and business processes and information shared. The requisite mental shift that needs to be instilled in workers through training necessitates a change in company cultures, and company philosophies need to be adjusted to embrace the larger picture, more of a world view, in order to understand and appreciate how the methodology and its execution fit into the grander scheme.
The benefits of Quick Response are potentially enormous. That relatively inexpensive raw material is held in stock rather than costly finished goods reduces exposure for suppliers and frees up working capital for retailers, and improved asset and inventory management, savings in costly markdowns and discounts, and agile, in-season response to consumer demand typically yield a one-quarter increase in profitability and one-third reduction in risk.