As stores close down and brands cancel orders, particularly in North America and Europe, the much-vaunted supply chain of the textiles-apparel-fashion industry suddenly seems non-existent.
Globalisation means different things to different people, and it also fleshes out in different ways for different industries. But there is no other industry that is more global both in nature as well as in extent than the textiles apparel- fashion industry. And there is also no other industry that finds the world to have been turned upside down by the covid-19 outbreak. Virtually every other cog in the so-called value chain lies broken. It is time to pick up the pieces, and it is also time to retrospect.
Manufacturers, brands and experts are already rethinking of new ways to make the industry run, even as the covid-19 pandemic is fanning out fast into every nook and corner of the world. One thing that clearly emerges from the furious rants and the frantic discussions all over is that no one wants to be held to ransom anymore by its own supply chain. No one has a definitive answer, with opinions ranging from the need to break away from China to near shoring, from automating as much of the manufacturing process to digitalising as much of the process as possible.
In this light, the International Apparel Federation (IAF) has called on the apparel supply chain and its stakeholders to enact sufficient supply chain solidarity. As the federation points out, no buyer can be expected to sacrifice its own existence or the jobs of its employees to save its suppliers. Yet, “collaboratively searching for ways to reduce the damage to suppliers is not only an urgent need, but feasible. Solidarity in the face of this crisis means collaborating with industry members to bridge the income gap for workers and the demand gap for business.”
IAF secretary-general Matthijs Crietee said in a statement: “Each individual company will have to determine what line of buying behaviour it does not want to cross if it can in any way avoid it. It is IAF’s view that the global normative framework that has become available in the form of the UN Guiding Principles on Business and Human Rights and translated into the practice of the apparel and footwear industries by the OECD’s Due Diligence Guidance can help make companies make these choices. In the past few years, we have seen strong and public commitments from leading brands and retailers for responsible purchasing practices in the supply chain in line with recommendations from OECD due diligence guidance. This climate is the most important and public test of those commitments.”
Stemming the Rot
There are many checklists of advisories that are floating around the internet. But as things stand, consultancy firm Deloitte's suggested measures that companies can take to protect their supply chain operations possibly make most sense, even though those are for industry in general.
For companies that operate or have business relationships in China and other impacted countries, steps may include:
• Educate employees on covid-19 symptoms and prevention;
• Reinforce screening protocols;
• Prepare for increased absenteeism;
• Restrict non-essential travel and promote flexible working arrangements;
• Align IT systems and support to evolving work requirements;
• Prepare succession plans for key executive positions;
• Focus on cash flow.
The Search for an Alternative Model
Brands in North America were first hit by the impact of the covid-19 outbreak in January this year when it started causing delays in their supply chains. The concern at that time was soley about being overly dependent on China for both finished and intermediate products. With the pandemic now sweeping through both the US and major parts of Europe, the talk now is only about supply chains that are resilient. No one wants to put all their eggs in one basket anymore.
Endeavours are already under way. Consumer goods supply chain solutions provider Li & Fung Limited and technology company First Insight Inc are looking an an altenative model. "The partnership will integrate First Insight’s Voice of the Customer analytics into Li & Fung’s Digital Product Development solution, enabling brands and retailers to select, price and buy designs with greater confidence, increasing sell through and reducing mark downs," the companies announced on March 16.
The idea is to create the "supply chain of the future." So, Li & Fung is working on" a fully-integrated digital supply chain platform that connects brands and retailers with suppliers and other partners seamlessly with end-to-end data capture and visibility. Its industry-leading 3D virtual design services are disrupting traditional product development." Physical will replacce digital in all segments: from design, blocks and patterns, product development and fitting, to digital catalogues, and 3D retail and visual merchandising. This is where First Insight would come in. Its digital consumer testing will review consumer insights, thus making informed changes early in the product development phase.
The objectives have been laid down. The Li & Fung-First Insight partnership will deliver an end-to-end digital product development solution, from the initial design concept to the finished product. Benefits to brands and retailers include:
• Higher confidence in selecting designs that consumers want, at the prices they will pay;
• Higher responsiveness in their value chain—demand driven, rather than supply driven;
• Faster speed-to-market;
• Specific design feedback by region, retailer and customer demographic;
• Reduced markdowns; increased sell through and margins;
• Reduced cost in physical samples, reduced fabric wastage and airfreight;
Improved sustainability for the business and environmental footprint.
Francisco Betti, head of Shaping the Future of Advanced Manufacturing and Production at the World Economic Forum (WEF), and Jun Ni, Shien-Ming Wu Collegiate Professor of manufacturing science at the University of Michigan, wrote on the WEF website: “Supply value chains cannot be established overnight. It takes time and effort to qualify potential suppliers in areas of manufacturing quality, capacity, delivery, cost and their ability to respond to engineering or demand changes. Thus, supply value chains are designed for longer-term needs. Once they are established, it can be difficult to change them quickly to adapt to unpredictable disruptions.”
Their sobering thoughts, “The covid-19 pandemic has reminded corporate decision makers that there is a need to develop new business strategies in their future supply chain designs. The PIs to be considered for future supply value chain designs will likely contain both traditional metrics such as cost, quality and delivery, and new performance measures including resilience, responsiveness, and configurability (otherwise known as the 3Rs).”
They concluded: “Moving forward, there will be an increased need for infrastructures and technical means to create the transparency within global supply chains. There must also be a call for the development of predictive models for proactive scheduling and dynamic planning of supply demands with the consideration of uncertainties and risk factors. These predictive models will help corporate decision makers do what-if analysis of various scenarios.”
This article was first published in the April 2020 edition of the print magazine.