Agile Supply Chains and the Future of the Fashion Industry

As the fashion industry continues to grapple with the far-reaching impacts of the pandemic, it has become clear that the ability to swiftly respond to changes in the supply chain is a defining factor in achieving success.

On 6 June, 2023, SHEIN hosted a webinar that discussed how digitalization and agile supply chain models are helping fashion industry players gain a competitive edge in today’s market.

Panelists:

 

  • Donald Tang, Executive Vice Chairman, SHEIN
  • Divya Demato, CEO & Co-founder, GoodOps
  • Veronique Yang, Managing Director and Senior Partner, BCG

 

As the world recovers from the standstill that was the pandemic, the customer purchase decision process has changed, as have the products being prioritized. Customers are demanding greater product variety, including more responsible options and faster product fulfillment to feed their desire for almost instant gratification. Veronique Yang, Managing Director and Senior Partner, BCG, said consumers are demanding more inclusive products with speedier delivery. She added that the growth of ecommerce channels during the pandemic has also driven customer demand for speedier delivery times – while holding expectations on quality and price.

“Consumers are becoming quite demanding and less forgiving, and the battle for those hearts and minds has intensified. And the battle has moved online,” added Donald Tang, Executive Vice Chairman from SHEIN. He further referenced results of a recent survey of over 2,500 SHEIN customers, where 87% reported shifting to more affordable fashion choices as a result of inflationary pressures.

With increasing global economic pressures, there has been a notable shift in supply chains, with companies increasingly having to adapt their models to survive. Said Divya Demato, Co-Founder and CEO of GoodOps, “These changes were happening before the pandemic, but the pandemic exacerbated it.” This was echoed by Donald Tang, who shared SHEIN’s business model of on-demand production. Veronique Yang further explained that companies are rethinking their global supply chain network – diversifying their supply bases “and sometimes even changing their supply chain models to prevent disruption.”

This drove the conversation towards the topic of resilience, which all speakers agreed was fundamental for the advancement of the fashion industry. While Donald Tang further shared how SHEIN had made it its mission to empower the supply chain since the start of SHEIN’s business, whether it was by funding their adoption of new tools and technology, or providing training and up-skilling to their workers, or even offering flexible settlement terms that are much shorter than the 90-days standard of the industry. Veronique Yang also added that resilience required creating more openness and transparency across the entire value chain – from suppliers to retailers. “They have to work together to problem solve the potential frictions… and digitization is a big part of that.”

Speaking to the recent report, Creating Agile Supply Chains in the Fashion Industry | BCG, Veronique Yang shared key learnings from BCG’s research:

  • Digital technology can help improve performance across three measured commercial areas: balancing cost, speed to market and quality
  • Digitalization helps streamline supply chain tasks and save time for suppliers. For example, an online fabric ordering database and order system makes it effortless for suppliers to carry out material preparation ahead of production
  • People think it’s hard to control quality while keeping cost down. In reality, a digital system can predict and pre-empt potential quality issues, containing them from the very start of the value chain.

Donald Tang agreed, adding how on-demand fashion enables a brand to minimize waste while addressing the “fashion trilemma” – offering the broadest amount of choices, with frequent refresh while addressing inventory management. In this way, bespoke production can actually cost less than mass production.

Divya Demato countered that while there could be fewer articles of clothing upstream, fashion brands still need to consider downstream and post-consumption. She raised a call to innovation and investments in technologies and materials to support more sustainable fabrics for upstream.

In closing, speaking to forward looking change, Veronique Yang added: “Fashion industry companies – you have the responsibility and power and influence and to shape this together.”

In the short Q&A segment, there was much interest in SHEIN’s ability to replicate its business model in other markets. Donald Tang invited Marcelo Claure, Chairman of SHEIN Latin America, who was in the audience, to share about his plans and experience in rolling out manufacturing for SHEIN in Brazil.

Filed Under By GoodOps, Things We Love

Fashion’s Downfall

“Above all we understood we went way too far. Our reckless actions have burned the house we live in,” says Gucci creative director, Alessandro Michele.

Angeli Mehta explores the troubling reality facing the fashion industry in her recent article in Ethical Corporation: “‘Pandemic forces fashion industry to take stock.”

The dire conditions facing manufacturing communities, due to abrupt cancellations of apparel orders from global brands, is accelerating the already critical crisis.

Highlights from the report include:

  • The average market capitalization of apparel, fashion and luxury brands dropped almost 40% in the year to the end of March.
  • McKinsey expects “a large number” of global fashion companies will go bankrupt in the next 12 to 18 months.
  • In 2016, WRAP estimated the fashion industry global supply chain waste was 800,000 tonnes, even before any clothing reached the consumer. In the UK alone that year 300,000 tonnes of clothing went to landfill.
  • The industry accounts for 10% of global carbon emissions.
  • McKinsey’s survey of North American and western European sourcing executives reveals not all brands are taking steps to support their supplier base. And only 19% are providing pre-payment for orders, even though 64% of respondents said this action would have a significant impact.
  • The pandemic has increased consumer interest in sustainability: a survey of consumers carried out in Europe and the US in March suggested 20% of them want to support local business, and in Europe 16% said they’d be buying more socially and ecologically sustainable clothing in future.
  • Consumers have also taken note of efforts by brands to look after their employees, contributing items like PPE, or donating to their communities.
  • The Textile Recycling Association fears that unsold stock will take the place of secondhand clothing in many markets in eastern Europe.

Read more here: https://bit.ly/2AwaaVw

Filed Under Things We Love

Webinar: Greenwashing

Brands are facing a reckoning.

Greenwashing is as pervasive now as it was pre-COVID. Sustainability marketing claims have spiked, but they don’t always mean action. Conscious consumerism is bringing a tsunami of accountability like never before.

How do brands navigate? How can consumers cut through the noise? And what really drives social and environmental impact in fashion and food?

Transparency, supplier partnerships and ESG innovation are just some of the solutions we explored in our NextGenChef Table Talk.

Our panel:

Watch the full panel: HERE

 

 

Filed Under By GoodOps

Webinar: FASHINNOVATION Worldwide Talks

FASHINNOVATION’s Worldwide Talks 2020 panel on Supply Chain and Circular Economy explores the role of equal justice, standardizing sustainability metrics, power of being an early adopter of ESG and future trends like plant-based materials.

Panelists:

Watch the full panel here: https://lnkd.in/djH-xNv

Filed Under By GoodOps