Supply chain risk factors in the fashion industry | Pakistan Today

Supply chain risk factors in the fashion industry

A guide to the complexities of fashion supply chains

In the past few decades, consumers’ demand has made the supply chain management of the fashion industry more challenging. Fashion, apparel and textile supply chains are becoming extremely complex. This industry has an unpredictable and very short life span which needs to refresh fashion products in a timely and efficient manner. It implies reducing lead time and associated logistical costs in order to avoid an intense reduction in prices at the end of the selling season due to rapid changes in trends. Today, fashion retailers are facing different risks in maintaining their supply chains with changing trends and awareness of the fashion industry, which has high volatility, with items’ shelf life being a few weeks before the consumer switches to a new design, fabric or colour. A principal criticality of fashion lies in the ability of knowing the taste of customer and then converting it into a required product.

Technology is one of the risks that fashion retailers are facing because now consumers can easily compare prices online and want more time for internet browsing instead of visiting a shopping mall. It has stimulated the fashion retailers to optimize their supply chain activities and setting the prices low, and due to pressure from price side they start outsourcing from markets with low cost.

Trend assessment is another big risk of the fashion industry and these trends are mostly erratic. A successful clothing store takes advantage of the latest trends and is well aware of situations when such trends are on their go-down time. A single slip-up may lead to excessive inventory, destroying credibility and a chaotic brand identity for the store, and consequently may prove disastrous in the clothing business. Stores may avoid stumbles by hiring experienced people, to go for reputable brands and to purchase commercialized clothing. Another possible risk is from offshoring trend; while it assures a significant cost advantage, it contributes to lengthy lead times. This may lead to replenishment time extensions and therefore a lot of trouble in timely responding to the delays along the chain or change in the demand.

There are also some legal and political factors which affect businesses in the clothing industry. Rights of workers, child labour laws, workers’ unions are existing issues in clothing manufacturing plants. Workers may picket their employers and then lockouts would come up, due to unfairness in wages or other benefits which impact on the production of clothing and consequently these can cause delays for retailers in getting changing season fashions on time.

Due to the adoption of conventional semi-permanent demand forecasting, any change or fluctuation may lead to overstocking, as products quickly become obsolete or out of fashion. On the other hand, under-stocking may be faced which may lead to decrease in actual volume of sales resulting in destruction of image and lost sales. There is still lack of educated and skilled labour in the textile industry of Pakistan. There are many social and environmental challenges in Pakistani factories which have always been difficult to detect. Beyond tier 1 or 2, it is not easy to oversee adequate transparency in the production processes where businesses may not be aware of social and environmental issues. Negative attitude towards female labour and unsafe working conditions in the garments industry is common. These kinds of problems have an impact on the quantity, quality and management of the textile industry. Also, a government order imposing a trade barrier against a company’s imports would push purchasers in the clothing industry to find different suppliers.

To improve performance on productivity and quality, the government should spend money on polishing the skills and management development of workforce belonging to fashion industry.

There are many textile fashion brands which are manufactured in Asian countries like Pakistan, China, India and Bangladesh with a fashion cycles of once or twice per year, which is favorable to some extent for the Pakistani market to respond to their lead time. Lead time in the textile and fashion business of world indicates that it is shrinking day by day. China is giving tough competition to the apparel industry of developed countries because Chinese are proficient in manufacturing apparel in a short time and then making them available to sell in the market at a competitive price. But in many developing countries like Pakistan, apparel industries are mismanaged and not yet fully developed. Big fashion industries like Zara and H&M have achieved very short lead times for design and production by adopting a flexible supply chain.

It is important for Pakistan’s fashion industry to focus on developing the apparel sector in order to raise the export revenue from textile and apparel products. Externally, global recession hit the Pakistan textile industry very hard. Internally, the swift rise in energy and fuel costs resulted in higher cost of production and then the depreciation of the Pakistani currency raised the cost of imported raw material. At the same time, inflation and crises of energy have also affected the textile industry. To improve performance on productivity and quality, the government should spend money on polishing the skills and management development of workforce belonging to fashion industry.

Behind the success of the largest fashion retailers in the world, the key to success is to bring the correct products to customers speedily in an efficient manner so that those products are sold at ordinary price with minimum reduction of price or sell-outs, so to get high profit objectives. In order to reach this goal, large fashion retailers combine domestic as well as off-shore sourcing to optimize business profitability by using flexible sourcing for high fashion products domestically and cost efficient offshore sourcing for basic fashion products. To develop a sound supply chain policy of fashion industry that is holistic in its approach, it is imperative to have authentic data and a continuous interaction among stakeholders within domestic and international markets.