How Brands Can Manage the Opportunities and Risks in the Supply Chains of the Fashion Industry

How unpredictable is the supply chain for the fashion industry? The fashion and apparel sector in India was expected to reach $59.3 billion by 2022 in 2019. The COVID19 pandemic then broke out. With the pandemic's end in sight, the Indian fashion sector has recovered well and is expected to generate $87.6 billion in revenues in 2022 and reach $102.6 billion by 2026. What explains the wild ride that the supply chain for the Indian fashion sector is experiencing? The following list of dangers and potential solutions to them is provided:

Demand Diversity Across Geographies, Cultures, and Time: Style preferences might vary based on a person's location, culture, and season. To be more specific, those who live in cold climates favour wearing jackets, coats, gloves, scarves, earmuffs, and warm clothing. In contrast, those who live in hot climates favour bright colours and loose-fitting, breathable clothing. You can see some good online shopping reviews here.

People also dress in accordance with their cultural affiliations. Some people might prefer wearing clothing made of fabric produced locally. On the other side, those with a comparatively higher level of exposure to the world may take in foreign fashion trends. In addition, the rise in hybrid and work-from-home job models over the past three years has changed people's' interests and preferences.

The time of year or the seasons might also influence what to wear. The attire worn during the summer, monsoon season, and winter might vary in the same regions. Numerous fashion designers throughout the world incorporate the hues of in-season fruits and vegetables into their creations. Due of their subliminal effect, customers relate to these hues effortlessly.

Digital and social media are significant factors influencing consumers' choices in clothing across all geographies, and they are acting as catalysts for disruption. Additionally, the introduction of immersive technologies such as augmented reality, virtual reality, and mixed reality has changed how clothing and fashion firms present their products to clients. In the fashion supply chain, digital client journeys are 14% quicker than physical ones. It is challenging to make precise predictions about the longevity of fashion trends due to the interaction between digital and social media, which has resulted in shorter product lifespans, disruptions in demand patterns, and shorter product lifespans.

Low Technology Integration and Fragmentation of Supply Chain Processes: Large corporate customers are focusing more on supply-side providers in the small-scale market as sustainable manufacturing practises gain hold. Unlike big businesses, MSMEs are not highly aware of the ESG requirements. Since just 5% of small vendors have access to technology integration tools, this is not surprising. Since there is no "fit for audit" data trail since there is no digital imprint, it is difficult to determine whether these units comply with ESG criteria due to the fragmented nature of the fashion supply chains.

Lack of Just-In-Time Working Capital for MSME Suppliers: The fashion industry's demand-driven supply chain makes it impossible to make accurate projections, which results in spot purchases of raw materials, bulk orders without a precedent or role model to follow regarding labour and material substitution, and the absence of any case studies regarding the shifting of plant, equipment, and machinery in the factory assembly lines. This means that working capital is needed just in time for MSMEs because liquidity is needed to quickly buy raw materials.

Despite the fact that a sizable portion of clothing is made from synthetic fabrics, consumers who care about the environment are putting more pressure on manufacturers to employ eco-friendly fibres like organic, natural, and sustainable ones. Although many manufacturers have shifted to clothing made of natural fibres, supply disruptions are always a possibility if sustainable alternatives are not easily accessible at scale.

Time-to-Market Obstacles: To reduce operational costs, the majority of clothing firms outsource production to nations with lower labour prices. These producing facilities are frequently found in Asia and Africa. Although operating expenses are declining, the time to market lengthens. Since the perishability window is smaller due to the longer lead time, the risks from variable demand are increased.

Possibilities in the Clothing Supply Chain

In light of the concerns mentioned above, big businesses and MSME suppliers should look at three possibilities:

Compliance with ESG Framework: It's possible that few people are aware that the textile business produces more greenhouse gas emissions than any other sector of the economy. A portion of the issue is caused by its supply ecology, as vendors in the value chain disregard compliance standards primarily to save costs and increase profits. Additionally, the fashion industry's "take, make, use, and trash" linear business model results in an astounding 13 million tonnes of textile waste that is either burned or ended up in landfills.

According to a recent Harvard Business School study, organisations that addressed ESG problems in their supply chain and procurement reported greater shareholder value generation than those that did not between 1990 and 2020. The conclusion is valid for significant businesses involved in the supply chain for clothing and fashion.

Businesses can invest in technological solutions that promote supply chain traceability, transparency, and visibility, such as blockchain. Additionally, a recurring review procedure can be implemented to routinely assess suppliers' working capital capacities, inventory cycles, and production processes. Large businesses might then satisfy both the demands of various stakeholders, including investors, as well as the compliance standards of several nations.

Customers hardly ever know what blend of fibres went into manufacturing a garment, according to apparel labelling. Clothing could be branded with the quantity or proportion of eco-friendly raw materials used. The percentage of water, energy, and chemicals utilised can also be stated on the label. Clothing labelling can serve a similar function and serve as a USP for eco-friendly products, comparable to star labels that indicate the greenness of air conditioners. Such clothing labelling can help suppliers create sustainable business practises from the bottom up and open the way for voluntary carbon emission disclosures, improved compliance with international climate change regulatory frameworks like the Glasgow Pact, and other related initiatives.

Women's Empowerment: According to empirical data, organisations that have higher gender equality provide better results. Women's different skill sets complement those of their male counterparts, which is the main reason for this. Second, the inclusion of women in the workforce, particularly in industries with forward and backward connections to the fashion supply chain like textiles, dying and colour pigmentation, and retail, can have a positive knock-on effect in the form of job creation and secondary spending waves due to consumption multipliers in the economy. According to the World Bank, increasing India's employment by 25% of the total female population could boost GDP growth by as much as 5%.

The Indian Fashion Supply Chain's Future

The lessons learned by end users, MSME suppliers, and large enterprise clients have all been learned the hard way. In order to tie up loose ends like raw materials, working capital, employee welfare, and ESG rules, a paradigm change is taking place that replaces fragmented processes, devices, production lines, data records, and credit with a single thread. The adoption and integration of technology will increase. By combining sourcing and financing with procure-to-pay solutions, supplier payments will be tied to performance. Above all, there will be more advanced data-driven decision support systems for more precise projections. However, it will enable each player in the fashion supply chain to deploy strong teams to quickly and effectively respond to disturbances, which won't put a stop to the roller coaster ride.