The global pandemic has drastically changed the fashion and apparel market, leaving companies with many supply chain challenges and new market demands that are here to stay. To overcome market disruptions, fashion companies must implement cost-effective solutions that neither jeopardize everyday operations nor waste resources.
Mitigation strategies can address two categories of disruptions: supply chain and demand. These approaches are designed to address vulnerabilities driven by just-in-time or zero inventory management strategies.
Supply chain disruptions
Supply chain disruptions became readily apparent when Covid-19 first hit the global market. Due to dependencies on a single source or location, input sourcing and even dual sourcing capabilities (using two suppliers for one material or product) were easily disrupted. While Covid-19 had a global reach, its impacts were first felt in localized regions, much like natural disasters.
Because of this, it is prudent for the sake of business continuity to be mindful of sourcing strategies. Both single-source and multi-source supply chain channels can be at risk. The single source supplier is most vulnerable—absorbing a disaster’s full impacts and then halting operations. A multi-source supplier may be able to weather an impact to a single site—but if that single site is a critical piece to operations, it could suffer a similar fate. These same outcomes will occur when suppliers are in similar geographic areas.
An inventory buffer is easier to attain for medium and large organizations, where “safety-stock” can help weather the storm of supply chain disruption. For smaller organizations, a time buffer could help temporarily delay the production of goods when and where demand becomes unpredictable.
Regardless of strategy, retailers and brands must be mindful of their suppliers and incentivize those providing critical elements, or even elements that are hard to replace. This is readily apparent in markets with high levels of craftsmanship or unique luxury materials. Organizations that can step in and support these suppliers during the storm will fare better than having to lose established relationships and dramatically alter their sourcing strategies.
Material and shipping costs are also on the rise, making it difficult to develop physical samples and final garments. Not only are these disruptions causing longer lead times, but fashion and apparel companies are now struggling to maintain their margins. This means either increasing their retail price or finding ways to reduce costs.
One method for overcoming these challenges is using technology to find the best compromise between the cost and design of the final garment. With tools like automated nesting and 3D, manufacturers can see each design’s cost impact, allowing them to easily make changes to optimize the garment’s final cost. Additionally, they can visualize their garment and fit without having to make a physical sample, thus saving time and material cost.
Demand disruptions can fluctuate for many reasons, and over the past year they have been swift and dramatic. For the apparel industry, some sales are only up to 70 percent of what they were pre-pandemic, and with much of the workforce still working from home—the apparel categories in demand have shifted.
With so much demand fluctuation, many brands are beginning to realize the need to transition to an on-demand manufacturing model. By transitioning from mass production to on-demand, fashion and apparel companies can better keep up with trends and reduce the amount of unsold inventory.
Reallocating inventory and maintaining a high level of online presence can mitigate these disruptions as well. Larger organizations can reallocate inventory across markets to adjust to varying demand, replenishing supplies as they are sold instead of allocating full inventory at the beginning of a season. This strategy adjustment gives the organization more flexibility to adjust to changes, and minimizes losses as demand fluctuates.
Brands can bolster their online presence to sustain demand and adapt regardless of the fate of their brick-and-mortar locations. An online platform makes it easier to adjust product offerings or quickly pivot to changing demand. Apparel retailers have opportunities to enhance the at-home shopping experience by developing an app that includes digital showrooms and fitting rooms, or even virtual try-on features like Warby Parker deployed for its eyewear.
The global pandemic was just the latest reminder of the importance of developing and maintaining hardened business continuity plans, particularly in supply chain operations. Natural disasters or pandemics can strike at any moment and dramatically affect the supply chain, which in turn affects the bottom line.
Disasters can dramatically alter demand as well, which is why mitigation strategies have become increasingly important.