Five ways luxury fashion companies can navigate their challenges

For an industry that prides itself on timelessness, it’s ironic that luxury fashion remains a digital laggard, bogged down by clunky solutions. Time, most definitely, has caught up with it.

Luxury has long struggled with extended lead times, stringent quality requirements, and counterfeit goods, yet few companies have successfully navigated these challenges.

Here are five ways luxury businesses can tackle them head-on.

1.) Proactively manage raw materials

It’s no secret that luxury fashion relies on rare and specialised raw materials, which often results in painfully long lead times due to scarcity.

Longer lead times naturally complicate the supply chain, demanding that luxury companies proactively manage their raw material activities from the outset to reduce delays and keep production on track.

There are tools available in the market that facilitate raw material management, providing comprehensive overviews of quantities and availability — insights essential for managing the supply chain efficiently.

Before finalising orders, it’s also wise to assess raw material needs and share this information with suppliers to ensure proactivity on all sides.

2.) Use the right tools to reserve stock for key clients

The aforementioned scarcity of raw materials can often lead to tough decisions about which customers receive their orders first.

Without an effective process in place, however, it can be decidedly difficult to action your decisions.

The best approach is to adopt “ringfencing,” which, paired with prioritised order allocation functionality, allows companies to reserve inventory for key customers. This ensures they receive their goods even when supplies are limited.

Ringfencing is a powerful tool that extends beyond just reserving inventory for specific customers. It can be used to control product availability across different items, collections, or regions, giving luxury companies the flexibility to manage resources effectively.

3.) Embed quality control at every stage

Unlike cheaper, fast fashion, quality and durability are non-negotiable in luxury. The problem many companies face, however, is that their ERP systems don’t offer quality control support until the end of production.

As you can imagine, this isn’t very efficient and leaves room for error. The simplest solution is to adopt a system that enables quality control at each stage of the production process, drastically mitigating potential issues.

For example, a system that supports sampling — such as proto-samples, salesman samples, and pre-production samples — allows luxury companies to conduct thorough quality assessments early on, ensuring that only the finest fabrics and products make it to market.

4.) Establish CSR transaction rules

While luxury does indeed differ substantially from other fashion sectors, there are some overlaps in the challenges companies face, such as the growing need for eco-friendly practices.

Sustainability isn’t just a trend; it’s a necessity for luxury brands. Pressure from both consumers and governments is pushing companies to reassess their practices.

However, it’s not always easy for businesses in fashion to disclose their supply chain.

With that said, there are tools that can be implemented today to make a difference. Dedicated Corporate Social Responsibility (CSR) modules provide classifications and certifications for raw materials and suppliers.

Armed with this knowledge, luxury companies can make informed decisions based on their specific CSR criteria. These tools also offer rules that can be set to block transactions with suppliers who don’t meet CSR standards, helping to drive initiatives hassle-free.

5.) Adopt a product passport system

We had to save the best until last! Counterfeit goods are the bane of the luxury industry, costing brands countless amounts of money.

The ability to track provenance is a pivotal way to combat this issue, something that can be achieved in several ways.

Microsoft’s Dynamics 365 Finance & Supply Chain Management, for instance, provides serialisation support. When this powerful functionality is paired with a dedicated product passport, an item’s and/or raw material’s history can be logged throughout its lifecycle, inclusive of all relevant CSR data.

Not only does this provide yet another way to champion CSR, but it also enables the tracking of provenance — something invaluable to luxury companies.

How K3 can help

If you haven’t figured it out yet, our K3 Fashion solution provides everything outlined in this article, with the exception of the product passport app, which is currently in development!

As experts in all things fashion, our solutions are carefully developed to accommodate the needs of companies in all market segments, including luxury. We support:

• Raw material management
• Ringfencing
• Quality control
• Sampling
• Corporate Social Responsibility

And so much more. If you’d like to know how we can support you, feel free to contact us today.