Understanding Read &

React
Implementation in a Fast Fashion
Environment

Insights by Weave Services Limited

Publication Date: 2/2/2016

The key to success in Fast Fashion is making the

correct decision faster than your competitors
In the Fast Fashion Industry, speed is key. The
goal is to make better informed decisions, faster
than your competitors. Best in class companies
achieve this by using 2 levers:

Delaying decisions to better read the market

Leaning out operations to execute decisions

across the company with speed and alacrity.

This article presents a practical roadmap to

implementing a Read and React program that
will enable your organization to achieve this.

For the Supply Chain, this means

getting buys

right the first time

Purchase decisions are the main supply chain levers for

profitability in fast fashion. However, retailers often use
arbitrary criteria when deciding how much to buy.
4 consequences resulting from arbitrary buying practices:
1) Overbuying

24%
loss

Example of lost sales due to underbuying

Source: Weave Client Work

causes over 40% of slow moving inventory

to be unsold. Excess inventory generally has 30% markdown.
2) Underbuying of best-selling products leads to up to 30%
of potential sales being lost. (see chart)
3) Buying too early creates unproductive inventory (cashflow issues). Carrying costs are often up to 20% of LDP cost.
4) Buying too late means missing narrow sales windows.
Therefore, for retailers, defining buying practices that
minimize risk and exposure is of greatest importance.

Implementing a Read & React program

enables retailers to know when and how much to buy
Read & React refers to a program whereby the company
divides the lifecycle of the product into multiple buy periods.
Within each buy period, the company defines a period to read
the markets response to the product, then uses the
information to decide how best to react to market conditions.
The system enables retailers to optimize the quantity of each
buy so that there is reasonable assurance that the product will
sell. Thereby increasing the accuracy of the buy and reducing
risks of over and/or under buying.
While the concept of Read and React is easy to understand,
few retailers are capable of reaching the full potential of the
program. A lack of systematic calculations and a chain of
supporting processes tend to be the main root cause of
unsuccessful Read and React programs.
Copyright 2016 Weave Services Ltd. is a wholly owned subsidiary of the TAL Group. All rights reserved. Printed in Hong Kong.

A successful Read & React program is built on

a sequence of foundational processes
Chain of processes

The forecasting processes of many retailers

are not Mature Enough to Calculate Risk
Forecasting demand is a vital process needed to support Read & React. However,
in the fast fashion industry, a combination of short product lifecycles and fickle
markets limits accuracy to 50%-100% MAPE*. As a result, many retailers are forced
to resort to guesswork to predict sales. However, fast fashion retailers can consider
the following:
1) Studies offered by many service providers can help retailers by providing
greater insights to market trends. (e.g WGSN, Edited, Stylumia and more)
2) Leveraging the capability of sales staff and pre-release sales helps provides
insights into the success of the products.
3) Looking at historical sales of analogous products provides insights into
potential demand and sales peaks in the products lifecycle.

The organization requires Risk-orientated Approach

to determine Read & React parameters
By leveraging data analytics,
retailers are able to determine
statistically optimal purchase
times and quantities. Weaves
model uses forecasts to
minimize overbuy risk and lost
sales risk. In the graph, the x
axis defines quantities and the
y axis depicts the probability.
The area under the intersect
of the 2 curves represents Using statistics to find optimal time and quantity
Source: Weave Analysis
expected risks.
One key strength of the risk based approach is that it enables easy quantification
to financial metrics. Using financial metrics enables decision making driven by
impacts to the bottom line rather than purely by fashion sense.

A well-defined Time and Action calendar

facilitates proper procurement management
Determining the appropriate action for each period provides clarity for both internal
and external parties when implementing Read & React. It is essential to consider the
purpose of each period when defining the Time and Action calendar.
Read: The retailer observes the market to see how best to respond.
React: The retailer buys the appropriate quantity based on the market environment.

Dont go at it alone, Read & React is a team effort

requiring end-to-end collaboration
Read & React relies on supply chain agility and flexibility. Suppliers need to be
capable of supporting the reaction of the model. To facilitate this, retailers must
develop collaborative and strategic relationships to ensure that suppliers are able
and willing to fulfill demand.
Contact us to find ways to implement Read & React in your Organization!
Copyright 2016 Weave Services Ltd. is a wholly owned subsidiary of the TAL Group. All rights reserved. Printed in Hong Kong.
* Fisher, Marshall L., and Ananth Raman. "Product Life Cycle Planning." The New Science of Retailing: How Analy!cs Are Transforming the Supply Chain and Improving Performance. Boston, MA: Harvard Business, 2010. 66. Print.

The Contributors
Seaton Li

Fred Lemoine

Supply Chain Consultant

Weave Services Limited,
Hong Kong
seatonli@weavenow.com

Principal
Weave Services Limited,
Hong Kong
fredlemoine@weavenow.com

About the Company

Weave Service Limited is a supply chain consulting firm that specializes in demand and production
planning optimization.
Our clients ask for our services when faced with long lead times, high variability in demand forecasting and
unbalanced inventory levels.
Planning should be at the cornerstone of all good supply chain strategy.
Tangible impact is driven through improved planning practices. With our help, our clients have identified 20%
incremental lost sales due to inability to respond to changes in demand. Others could reduce their lead time by 1520%, significantly impacting their cash-flow. Many believe that their factories run lean programs despite having 2030% reduction opportunities in buffer inventory.
We differentiate ourselves on 3 levels:

Deep expertise in supply chain management supported by strong analytics

Advanced process re-engineering and change management supported by expertise in lean transformation
Impact driven implementation model with focus on capability building and sustainable impact

Weave is a wholly owned subsidiary of the TAL Group one of the worlds largest apparel manufacturer. Weave
leverages TALs deep manufacturing and advanced planning expertise. Our clients can learn-by-doing as they have
access to 11 world-class factories operated by the TAL Group to observe real-life case studies.

We have effective toolkits and frameworks that enable us to identify opportunities at stake i.e. flash diagnostic.
Our greatest asset is our ability to present tailored solutions that have practical applications to your organization.
We make it our mission to build expertise and knowledge along the transformation journey so that your team
members can sustain the change management process once the project ends.

We have strong beliefs in delivering impactful, value-adding services to your business. If this cannot be achieved we
will happily direct you to other partners who may be more suited to help you.
We expect our clients to demand measurable improvements and we plan our projects accordingly.
Call us today and start planning your transformation journey with Weave!

Contact Us weave@weavenow.com
Hong Kong Office
5/F, T.A.L. Building,
49 Austin Road,
Kowloon, Hong Kong
Tel: +852 2738 6211

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8/F, 469 Seventh Avenue,
#469 7th Avenue,
New York, USA
Tel: +1 844 324 5459 (Toll free)