The textile supply chain involves long cultural distances and is one of the most delocalized and fragmented industries today. The consequences are clear: high social and environmental safety risks, lack of knowledge, lack of control of the chain itself and inefficient management. The very nature of the chain, coupled with current collateral problems such as rising transport prices, container imbalances and rising energy and raw material prices, are some of the causes of the crisis that the textile supply chain is currently experiencing. We are at a clear turning point where the revolution in the textile sourcing map has become a priority for the sector.
We are at a clear turning point where the revolution in the textile sourcing map has become a priority for the sector.
While it is true that brands cannot, and should not, assume the consequences of the global raw materials and energy crisis, they should understand the situation as an opportunity for improvement and resilience. To quote Pepe Barguñó of Thinking Mu, transparency means transparency. Let’s stop the hypocrisy, let’s set the record straight, let’s be clear about the complexity and current supply chain issues and design a resilient and adaptive supply chain through collaboration and transparency.
Historically, the fashion industry is one of the most delocalised and complex in the world, dominated by small and medium-sized enterprises (SMEs), which account for more than 80% of the market. A textile garment can easily undergo more than 30 different processes and move from one factory to another as required, involving multiple actors from the raw material extraction stage to the sales, use and end-of-use stages. In this sense, the delocalisation of the chain, the lack of visibility of the chain, the large number of associated processes and the multiple actors distributed throughout the production chain are the main reasons why the fashion value chain is still, to this day, a mystery for a large percentage of the population. Transparency is seen as a necessary step, not only to hold brands accountable for more sustainable and ethical practices, but also to explain and hold the final consumer accountable for their actions.
Transparency is seen as a necessary step, not only to hold brands accountable for more sustainable and ethical practices, but also to explain and hold the final consumer accountable for their actions.
Fashion is an industry of time and cost, where quantity prevails over quality, caused by an irresponsible demand from people who in turn have been stimulated by the fashion industry itself. A loop of accelerated production cycles, uncontrolled outsourcing, impossible lead times, unmanageable cost pressures and unsustainable margins. The consequences of this fundamentally flawed approach are serious: inequality, low wages, serious health problems, long working hours and non-existent safety conditions. Producing and selling at increasingly lower costs without taking into account the social and environmental implications is no longer an option. The premise is clear: if price, timing and margins continue to dictate, sustainability will never work and brands will never be profitable.
If price, timing and margins continue to dictate, sustainability will never work and brands will never be profitable.
Based on Oxford Economics, Global Risk Survey, “Supply-chain disruption to persist”, around half of global businesses suffered supply chain disruptions in 2021, with one in eight severely affected. The impact of the pandemic, firstly, and the disruption of the value chain, secondly, have revolutionized the textile sourcing map. The rise in energy and raw material prices, the bad publicity of production in Asian countries and the current situation of world transport, added to the fragmentation of the chain itself, have accelerated and forced the reorganization process of the supply structure.
The supply crisis has been threatening the textile sector and other industries manufacturing in Southeast Asia for months. First, factories were closed due to covid-19, then demand outstripped supply, and now transport problems resulting from an increase in the cost of sea containers, as well as a shortage of raw materials, have become an issue. Multiple factors will negatively impact supply chains in 2022, with higher shipping and materials costs as the main concerns. Indeed, 87 percent of fashion executives in BoF-McKinsey State of Fashion 2022 Survey expect supply chain disruptions to negatively impact margins next year. For one reason or another, the reorganization of the supply chain structure is a fact. What are the alternatives? Raise prices with the consequent impact on sales or reduce the margin? Reduce the number of units produced? Is relocation of production the solution? Find out in our last article on “How to save the fashion industry from the current supply crisis”.
The impact of the pandemic, firstly, and the disruption of the value chain, secondly, have revolutionized the textile sourcing map.
One of the major changes in the business culture of sourcing has been to move away from thinking of it solely as the final stage of manufacturing to looking at the entire production value chain in a comprehensive way. Understand the problem from a 360º perspective and address it taking into account all variables. Companies must rethink their sourcing strategies while implementing cutting- edge supply chain management. What are the main changes that the textile sector needs to address in its production strategies in order to reorganize its supply chain? The four key points are as follows:
It is likely that supply chain pressure challenges will only intensify in 2022, consequently the fashion industry has a great opportunity for transformation, with creativity in the business management of product development, transparency and collaboration between the actors in the chain itself the key points. Do you want to join the challenge of the supply change revolution? Get in touch!