Retailing and Supply Chains in the Information Age

Abstract

This article describes how information technologies have reconfigured retailing and in turn the operation of a core US manufacturing industry, apparel. “Lean retailers” exchange point-of-sales information with their suppliers and require them to replenish orders quickly based on actual sales. This shifts part of the risk arising from changing consumer tastes from retailers and onto suppliers. In response to this shift in risk, we argue that manufacturers must reshape planning methods, cost models, inventory practices, production operations, and sourcing strategies. We then show that suppliers that adopt comprehensive changes to their manufacturing processes perform better along a number of dimensions compared to firms that have not.