• Written by Sonali Subhadarsini, Product Manager

A category manager in textiles and apparel often finds themselves waiting on a report to answer a question about the current season's range, such as which suppliers are consistently delivering on time, or how the prices of fabrics have changed over the past year. These questions are crucial to making informed decisions about procurement, but the wait for a report can be frustrating, especially when the lead times for production are long and the ranges are seasonal.

The procurement questions that currently wait on a report

The procurement team in textiles and apparel typically has to ask questions like what is the total spend with a particular supplier, or what is the average price paid for a specific fabric. These questions may seem straightforward, but they often require a report to be generated, which can take time, and by the time the report is available, the situation may have changed. For instance, a shift supervisor may need to know the current stock levels of a particular fabric to plan production, but if the report is not available, they may have to make decisions based on incomplete information.

A procurement team may also want to know what the contract terms are with a particular supplier, or what the payment history is with that supplier. This information is critical to making informed decisions about procurement, but it is often scattered across different systems, making it difficult to access. The category manager may have to spend a significant amount of time searching for this information, which can be time-consuming and frustrating.

The data behind them: purchase orders, supplier contracts and terms, invoice history, category structure

The data that underlies these questions is typically stored in various systems, such as enterprise resource planning (ERP) systems, procurement systems, and spreadsheet files. For example, purchase orders are usually stored in the procurement system, while supplier contracts and terms are stored in a separate database. Invoice history is often stored in the ERP system, while category structure is stored in a spreadsheet file. This fragmentation of data makes it difficult to get a complete picture of the procurement situation, and can lead to errors and inconsistencies.

The data itself is often complex and nuanced, requiring a deep understanding of the procurement process and the systems that support it. For instance, a purchase order may have multiple lines, each with its own set of attributes, such as price, quantity, and delivery date. The category manager needs to be able to navigate this complexity to get the information they need, which can be a challenge, especially when the data is scattered across different systems.

Sector constraints: range planning under uncertainty and supplier fragmentation

The textiles and apparel sector is characterized by long lead times and seasonal ranges, which makes procurement planning challenging. The category manager has to plan for ranges that may be six months or a year in the future, which can be difficult, especially when the demand is uncertain. For example, a shift supervisor may have to plan production for a range that is still in the design phase, which can be challenging, especially when the design is not yet finalized.

Supplier fragmentation is another challenge that the procurement team faces. The textiles and apparel sector is characterized by a large number of suppliers, each with their own strengths and weaknesses. The category manager has to navigate this complex landscape to find the best suppliers for each range, which can be time-consuming and challenging. For instance, the category manager may have to evaluate multiple suppliers for a particular fabric, each with its own set of attributes, such as price, quality, and delivery time.

What improvement looks like: spend under management, price variance to contract, supplier concentration

Improvement in procurement can be measured in various ways, such as spend under management, price variance to contract, and supplier concentration. Spend under management refers to the percentage of spend that is managed through formal procurement processes, such as contracts and purchase orders. Price variance to contract refers to the difference between the contract price and the actual price paid, which can be an indicator of procurement effectiveness. Supplier concentration refers to the percentage of spend with a particular supplier, which can be an indicator of supplier risk.

For example, a category manager may want to know what percentage of spend is under management, or what the price variance to contract is for a particular supplier. This information can help the category manager to identify areas for improvement and to develop strategies to address them. By using operations data to inform procurement decisions, the category manager can make more informed decisions and reduce the risk of errors and inconsistencies.

What this does not do, or when it is the wrong choice

While AI for procurement in textiles and apparel can be a powerful tool, it is not a panacea for all procurement challenges. For instance, it may not be able to provide insights into the design process, or to predict changes in demand. In such cases, other approaches, such as consulting with experts, may be more effective. Additionally, AI for procurement may not be suitable for small or medium-sized enterprises, which may not have the resources or infrastructure to support it.

Most people get wrong the idea that AI for procurement is a replacement for human judgment and expertise. This is wrong, as AI for procurement is meant to support and augment human decision-making, not replace it. The category manager still needs to use their expertise and judgment to interpret the results and to make informed decisions. By understanding the limitations and potential pitfalls of AI for procurement, the category manager can use it more effectively and achieve better results.