Sean Scott, Co-Founder & CEO of COMUNITYmade
Sean’s insights delve deep into the heart of the current global manufacturing model, shedding light on its shortcomings and paving the way for the alternative: near-shoring.
As the world strides towards 2024, the fashion supply chain unfurls a tapestry of challenges, each with its own complexities and opportunities. While not unique to now, here are the 13 supply chain challenges that we feel are most pressing for a fashion industry in flux:
Have we hear this before? Absolutely, but sustainability isn’t just a buzzword; it’s a clarion call for the fashion industry. The pressure mounts for brands to demonstrate a commitment to ethical production, from the harvesting of raw materials to labour practices. Yet, achieving sustainability comes at a price, often at odds with the traditional business model that prioritizes cost efficiency. To transition effectively, the fashion industry must innovate, finding new materials and processes that satisfy both ecological and economic demands. (See From Overproduction to Optimization: Fashion’s Tech-Driven Transformation)
Modern consumers are not just shoppers; they’re conscious citizens who increasingly are demanding visibility into the product journey. Transparency has thus become a non-negotiable aspect of the fashion business model. Brands are expected to disclose their supply chains, from the sourcing of raw materials to the manufacturing of the final product, often in real-time. However, achieving such transparency requires robust traceability systems and can significantly impact operations and cost structures.
Consumer preferences are as changeable as the seasons, and the fashion supply chain must be just as dynamic. The shift towards e-commerce and the preference for comfort wear during the pandemic necessitates an agile response from retailers. Brands must forecast trends accurately and adapt their supply chains to meet these evolving demands, balancing inventory to avoid obsolescence and waste.
AI, IoT, and blockchain are no longer futuristic concepts but necessities for a responsive supply chain. These technologies offer predictive analytics for trend forecasting, real-time inventory management, and secure tracking of goods. The challenge lies in the implementation—upgrading systems, retraining staff, and the initial investment can be substantial hurdles for established players and newcomers alike.
The vulnerability of global supply chains was laid bare by the COVID-19 pandemic. Political tensions and economic instabilities add to this fragility. Building a resilient supply chain now requires diversification of sourcing and manufacturing bases, as well as inventory and distribution strategies to manage these risks effectively.
The fast fashion model is under scrutiny for its environmental impact, giving rise to the slow fashion movement which emphasizes quality and sustainability. The dichotomy here is between consumer demand for the latest trends at breakneck speed and the call for durable, timeless pieces that reduce fashion’s ecological footprint.
Fluctuating costs for materials and logistics are a perennial challenge. Economic unpredictability affects pricing strategies and can squeeze margins to the breaking point. Brands must be nimble, adjusting pricing, sourcing, and even product offerings to remain viable.
Compliance with international labour laws, import/export restrictions, and environmental regulations presents a complex web for fashion companies to navigate. With each country presenting its own set of rules, compliance can be an expensive and time-consuming affair. (See Digital Product Passport (DPP) – What is it and what does it mean for the fashion industry?)
While global sourcing can lead to cost savings, there’s a burgeoning trend toward local production to reduce lead times, increase supply chain agility and ensure greater certainty. This shift could result in a more balanced approach, blending global sourcing for cost-effectiveness with local manufacturing for speed and flexibility.
As technology and sustainability reshape the industry, a new skill set is in demand. Finding talent that can navigate the latest digital tools and understand sustainable practices is critical. This requires significant investment in training and education within the industry. (Apply to attend the HR in Fashion Forum in Palm Springs if this is an area of interest)
The rise of e-commerce necessitates an effective digital supply chain. Data analytics must be harnessed for accurate demand forecasting and inventory management, creating a seamless transition from the digital cart to the physical doorstep.
Overproduction is fashion’s Achilles’ heel, leading to significant waste. On-demand manufacturing and leaner inventory models can help address this excess, but they require a rethinking of traditional production cycles and demand planning strategies.
While inflation – at time of writing – has come down in most Western economies, it’s still higher than most finance ministers would like, and the threat of an economic downturn remains real, which would in turn lead to reduced consumer spending. Fashion brands must navigate these economic headwinds with care, balancing cost pressures with the need to invest in new technologies and sustainability initiatives.
Despite the challenges, there are reasons for optimism. Technological advancements offer unprecedented opportunities for efficiency and insight. Furthermore, the rise of the slow fashion movement suggests a growing market for sustainable products, which could drive innovation and new business models.
In this session, recorded at PI Apparel’s Supply Chain Forum in New York in 2022, we hear from Amanda Levitt, Partner at Sandler, Travis & Rosenberg, where she talks about the Uyghur Forced Labor Prevention Act and its implications for the industry.
The newly effective Uyghur Forced Labor Prevention Act (UFLPA) is extensive in breadth and establishes a rebuttable presumption that the import of any goods, wholly or in part, from the Xinjiang Uyghur Autonomous Region (XUAR) of China are prohibited from entry into the United States.
There is no de minimis requirement in these restrictions – if a single thread of rayon from XUAR makes its way into the lining of a jacket, for example, that finished product will not be allowed into the United States.
As we have seen an unprecedented amount of detentions by CBP in recent years under Withhold Release Orders (WROs) and the UFLPA, it is prudent for any company with a global supply chain to deepen their visibility into their supply chain and enact supply chain controls to minimize risk of detention or non-compliance with U.S. forced labor laws.
This discussion walks through the legal authority and best practices for companies to consider in this new era of Forced Labor Enforcement.
Topics discussed include:
A full transcript of this session can be found here.
In this session, recorded at the PI Apparel Supply Chain Forum in New York in 2022, Alex Thomas, the VP Global Quality at GAP shares his perspective on the supply chain disruption experienced in the last few years, what this means for GAP and what the future holds.
A full transcript of this session can be found here.