Breaking Down the Fashion Industry Supply Chain
When looking at the dynamic network of the production of fashion items and distribution to customers, the process can be complex. However, recent global trends can help break down the system.
COVID-19 revealed how demand can directly affect scarcity when toilet paper rose so high in demand that suppliers couldn’t keep up with the demand.
Additionally, this concept is prevalent in the fashion industry since small changes in demand on the customer side have large effects on the production side. This is also otherwise known as the bullwhip affect which happens when changes in demand filter into the supply chain.
To understand this, it can be helpful to look at where production starts and ends: in design, the sourcing of raw materials, assembly, and distribution.
“Basically the supply chain can be affected at every stage by politics, environmental changes, and especially economic pressures,” said FSC economics student Santiago Zuniga.
Most recently inflation has had direct impacts on consumers purchasing habits. For instance, the Business of Fashion explained how, “when post-pandemic inflationary pressures and economic uncertainty arose in the second half of 2022, making consumers more cautious than anticipated, retailers were left with billions of dollars in unsold goods. As a result, many orders for the upcoming 2023 season were reduced or canceled.”
It is clear that these economic and global trends can have far reaching effects that can affect suppliers for years.
Data Article: Current Global Trends Affecting the Supply Chain
As most industries have recovered from the effects of COVID19 the supply chain is still feeling its disruptions and not just regarding inflation.
According to McKinsey and Company “Europe had the toughest challenge to deal with, because they were lacking international travelers.”
Due to lack of travel during the pandemic Europe has taken longer to recover financially. This is notable because when looking at the visual map above, Europe is the second largest importer of clothing worldwide next to the United States.
In contrast, North America recovered extremely fast after the pandemic and leads the world in imports mainly from Asia.
Another global issue that has fed into the supply chain has been the war on Ukraine due to its impact on the cost of energy.
According to the Harvard Business Review “With oil and gas prices soaring due to the war, transportation costs will follow suit.”
With transportation costs increasing, the cost of goods will soon follow, and this can be seen by consumers in the increase in prices of items available. To combat this, the Harvard Business Review reveals how fashion companies can diversify their sourcing methods.
Additionally, fashion companies can set up defenses against global trends by prioritizing innovation and sustainability. FSC sophomore Emma Sammons who recently interned at a Paris fashion startup focused on sustainability shared what Fix That Shirt does to enhance sustainability.
“Fix that Shirt takes returned or damaged fashion items and uses them to repair clothes that would otherwise be wasted” Sammons said.
This could help the company cut costs of inventory and raw materials which helps cut costs for consumers.
Overall, the fashion industry supply chain can be affected by several current events which are seen by consumers through the increase and decrease of prices.