With a labor force of 3,384.1 million, fashion is one of the biggest industries in the world. The revenue of the global apparel market was $1.5 trillion in 2021 and is predicted to increase to approximately $2 trillion by 2026.
The supply chain processes within such a large industry are inevitably complex and challenging. Due to the industry’s size, streamlined operations are essential for efficient supply chain functions. The good news is, your supply chain can undergo a significant transformation thanks to cutting-edge software solutions.
In this post, we’re discussing the main supply chain challenges in the fashion industry and how software solutions can help streamline operations and supply chain management.
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How Does the Fashion Supply Chain Differ From Other Supply Chains?
It’s not only the size of the industry that makes the fashion supply chain challenging. In order to truly understand its complexity, we also need to see what sets it apart from other supply chains.
First of all, the fashion industry depends heavily on high-quality, dependable logistics because the nature of the sector requires sourcing, manufacturing, and delivery of clothing products across different locations.
Another thing that makes the fashion supply chain unique is the constant demand for new and better clothing from consumers. While the demand for clothes used to be predictable due to factors like the seasons, more individuals now buy clothing for aesthetic reasons rather than for its practicality.
To put it another way, in order to offer enough trendy fashion clothing to satisfy customer demand, the apparel brands are constantly in competition with itself. And for this, they need quick-reacting logistics, as well as reliable supply chain operations and supply chain management.
Top Supply Chain Problems in the Apparel Industry
Here are the top five issues in supply chain operations frequently encountered by fashion companies:
1. Unpredictability and volatility
The fashion industry is known for being unpredictable and volatile when it comes to demand and production. In today’s fast-paced market, one item of clothing can be the most fashionable today but become outdated the next day.
No matter how efficient your production is, unstable demand can easily cause serious losses. If you order the most in-demand garments and they quickly go out of style before you manage to sell them, you’ll end up paying for goods that you will inevitably have to sell at a reduced price.
Another common supply chain issue that fashion businesses face is production volatility. Numerous issues, such as a lack of raw materials or defective production, might arise during the manufacture of clothing, resulting in frustrated customers and, in turn, profit losses.
One way to avoid production unpredictability is to work with more than one supplier for the same product. By doing this, if one of your suppliers encounters difficulties with a supplier, you’ll be able to rely on another one and maintain a consistent flow of goods to satisfy the needs of your customers.
2. Inefficient demand forecasting
Demand forecasting is essential to managing and growing your apparel business. Simply put, you need to know how much you’re going to sell and that you have enough products at hand to cover those anticipated sales.
However, the fashion sector is particularly challenging due to its wide diversity and segmentation (by sales channel, consumer type, etc.), shorter product life cycles, frequently prolonged supply lead times, impulsive purchases, and the aforementioned variations in demand.
For this reason, forecasting demand manually can be difficult. In order to be successful, demand planning should include a variety of components, such as trustworthy data, helpful feedback from the sales team, market research, good supply chain analytics, etc.
To make the process considerably simpler, it is essential to have a strong and creative supply chain strategy and to use the necessary supply chain software solutions that offer in-depth analytics and distribution metrics.
3. Waste management
Waste management is undoubtedly one of the biggest challenges in the fashion industry. According to research, every second the equivalent of a trash truck full of clothing ends up in landfills. This translates to an annual production of 92 million tonnes of textile waste.
Considering the fact that much of the excess in the apparel industry comes from overproduction and overstocking, one way fashion companies can reduce waste production is by optimizing their supply chain operations and inventory control methods.
Apparel software can track inventory items in real time and generate reliable data on supply and demand, helping you clear out excess inventory from the supply chain and reduce waste.
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4. Time management
Relocating manufacturing and production to low-wage countries – usually Africa and Asia – is a prevalent strategy in the fashion industry.
While this might result in cost savings, it can also lead to lost sales. For instance, moving your production to a different country will likely take some time before the finished product reaches the stores where your target market shops. If the product is not available at your store at this time, it is very likely that the buyer will purchase it from another store.
This supply chain issue might be solved with nearshoring. Instead of shipping your raw materials to a distant nation, consider sending them to one that is closer and where the cost of production will be lower.
5. Transportation issues
Although they don’t occur frequently, even the most insignificant transportation problems could have a huge impact on your supply chain operations and how you meet client demands.
For instance, a few extra hours at one of your wholesaler’s warehouses will affect item accessibility, resulting in losing customers to the competition. The fashion supply chain moves quickly, and every second counts. If you fail to deliver the garments your customers want, someone else will.
Working with reputable logistics professionals who offer backup choices can help you to minimize this inconvenience. Additionally, there will be less likelihood of transportation issues developing in the first place. Another option is to choose a software solution like ApparelMagic that links to leading logistics solutions to automate your transport and logistics processes and reduce your supply chain costs effectively.
How Supply Chain Software Solutions Can Help
Many companies that depend on efficient supply chain operations can benefit from software systems, such as supply chain management tools, inventory management tools, ERP (enterprise resource planning), and PLM (product lifecycle management).
These cloud platforms provide you with better visibility and control over your complex apparel supply chain, increasing productivity and better preparing you to handle various issues and disruptions.
Below is a more detailed list of the most important benefits of using software solutions in the fashion supply chain.
The Benefits of Software Solutions in the Fashion Supply Chain
Increased visibility
Effective supply chain management is all about knowing what is happening in your supply chain and where it is happening. Software solutions give you a single, centralized view of the inventory, processes, technologies, and people across all supply chain operations, providing you with increased visibility and transparency. This improved visibility enables companies to track performance along the whole supply chain by improving communication and collaboration between retailers, suppliers, and distributors.
Valuable data and analytics
Each process along the supply chain generates a wealth of useful information, such as the cost of raw materials, delivery schedules, and sales numbers. Thanks to this data, you can monitor your supply chain operations and make informed decisions that will result in its improvement and exceptional customer experience.
Better agility
By having complete visibility into supply chain operations and access to all related data in one location, you can predict possible disturbances like supplier problems or changes in customer demand and make sure you respond promptly in order to maintain high levels of customer satisfaction and increase profits.
Improved efficiency
An inefficient supply chain can cost your business lots of money. Software solutions can help you improve processes and operations by identifying and removing any bottlenecks that might be slowing your supply chain activities down. Moreover, by automating manual operations and integrating the software with existing systems, you can shorten time-to-market and boost your team’s productivity.
Decreased costs
Reducing your expenses can have a significant impact on your company’s overall performance, as well as your bottom line. By using supply chain management software, you can cut various costs like those related to inventory overstocking, and eliminate waste by improving efficiency and quality control.
The Bottom Line
As a fashion business, if you don’t have insight into your supply chain, you could easily lose customers to your competition. Today, customers have more choices than ever before, which means providing outstanding customer experiences and maintaining high levels of customer satisfaction is of the utmost importance. In other words, if you’re unable to deliver the desired goods on time, other apparel businesses could seize the opportunity and increase their sales. This is why it’s crucial to keep an eye on your supply chain and implement regular upgrades to keep up with changing demands.
By adjusting to changing consumer behavior, listening to consumers and employees, and investing in the appropriate software solutions with advanced technology, businesses in the fashion industry will be better equipped to deal with supply chain challenges.
