The Building Blocks of a Modern Fashion Supply Chain

MakersValley Blog | The Building Blocks of a Modern Fashion Supply Chain
Jessica Donovan

Jessica Donovan

CHAPTER 1: What Is a Modern Fashion Supply Chain?

The fashion industry is infamously unpredictable. Novel capsule collaborations may fly or fail; new product trends can surge suddenly; and the shifting sands of international trade can swiftly destabilize trusted supplier relationships.

Leading apparel and accessories brands acknowledge that while product quality should always move up, inventory priorities will flux from year to year and even season to season. Capably managing product quality, inventory volume, and fashion supplier relationships requires the flexibility, coordination, and balance of an innovative, modern fashion supply chain.

So, what do we mean by a “modern” fashion supply chain? Let’s get into that before we address how to build one.

The 5 Elements of a Modern Fashion Supply Chain

Fashion companies should strive to build a 21st century fashion supplier network that is:

  • Digital
  • Diverse
  • Transparent
  • Predictive
  • Partnered

Once we rid ourselves of traditional thinking we can get on with creating the future.

Jimmy Bertrand

Here’s why.

1. A Digital Fashion Supply Chain Prevents Logistics Headaches 

A Digital Fashion Supply Chain Helps Prevent Logistics Headaches for Fashion Brands

As COVID-19 shuttered nation after nation’s physical borders and non-essential businesses, the riskiness of traditional fashion supply chains became headline news. Most fashion professionals in charge of supplier relationships and product quality saw their year knocked off balance as in-person quality assurance checks and factory audits fell out of the realm of possibility. Add to this an already fragmented supplier-brand communication web, and the need for smooth, digitally based brand-to-supplier solutions becomes crystal clear.

Disruptors like Amazon, Stripe, Shopify, and others have driven B2C retail innovations for some time. However, comprehensive, intuitive, and easy-to-use tech tools have been slow to impact the supplier and sourcing B2B side of fashion. The market is rich in tools to get fashion products to customers in any circumstance, but there exist fewer tools to help fashion brands realize those products with manufacturers and get those goods to retailers in any crisis.

Smart fashion brands and proactive emerging fashion designers should seek out the best digital tools available for B2B sourcing and supply chain management. Doing so not only prepares them to surf the highs and lows of major logistical crises; it also makes for better communication throughout apparel sourcing, manufacturing, and delivery, regardless of location, timezone, or language.

2. A Diverse Fashion Supply Chain Reduces Risk

When viewed through the traditional pre-COVID-19 supply chain framework, sourcing apparel  and accessories with a variety of manufacturing partners looks inconvenient and logistically pricey. However in reality, a more modern diverse supply chain model gives fashion brands and designers some stand-out competitive advantages:

  1. Getting sampling and production quotes from multiple manufactures helps fashion brands keep sourcing costs competitive and factory partners accountable.

  2. Working with multiple apparel manufacturers gives fashion brands and designers a safety net should issues arise with individual suppliers.

  3. Different manufacturers have different expertise based on product category, fabric, or other factors. Each manufacturer also has its own network of fabric suppliers and trim suppliers. Working with a diverse factory network allows fashion brands to match product features to the best product experts for top quality production across their inventories.

If you want to be prepared for the occurrence of a random risk, then you have to make investments and decisions upfront, before the event.

Morris Cohen

While it remains to be seen how the COVID-19 pandemic will impact garment manufacturers in Asia, Europe, Africa, and the Americas long-term, this event has taken a magnifying glass to supplier-brand relationships everywhere across the globe. While as you’ve heard, “These are uncertain times,” the advantages listed above will benefit fashion brands now and even in more “normal” markets. Having a diverse fashion supply chain helps fashion designers and houses avoid unnecessary risk and equips them with a full toolbox of resources to make sourcing more complex inventories as seamless as possible.

3. A Transparent Fashion Supply Chain Enables Accountability

A Transparent Fashion Supply Chain Enables Accountability for Fashion Businesses

Social media has enabled a certain transparency. You can no longer control your luxury messaging within borders.

Stephanie Phair, Farfetch CSO

Fashion brands built on a highly transparent fashion supply chain have a competitive edge in three major areas of their business:

  1. How Transparency Helps Operations: Working with transparent supply chain partners makes it easier to maintain timely and accurate accounts of materials, production status, and manufacturing partner and product quality. The value of that transparency increases if your partners can offer you clear, specific communications as well as visual and/or third party authentication of sourcing, production, and distribution. 
  2. How Transparency Improves Employee Satisfaction: Transparency allows your employees to better align to your business’ mission, story, and role in the greater fashion community. This can help them feel more engaged in their role in your fashion business, a factor typically found to increase employee happiness and loyalty in every industry.
  3. How Transparency Benefits Brand Reputation and Consumer Perception: Fashion labels – particularly those that practice ethical manufacturing or use a distinctive creative process – stand to gain when showing up transparently on social media. That’s because, according to McKinsey, 52% of millennials, 45% of Gen-Z, and 41% of Boomers research businesses before buying. Along with product reviews and customer generated content, transparently showcasing stories from your product supply chain can help your fashion label win respect and stand out in one of the noisiest B2C industries out there.

Building and working with a high-touch, highly connective fashion supply chain improves trust and accountability across all levels of the business. Whether you’re talking to operations managers, apparel production directors, sourcing directors, sales associates, fashion buyers, or digital marketers, the more transparent you make all aspects of your fashion business, including the supply chain, the easier it becomes to achieve every kind of 21st century business goal.

Curious who’s ranking top in fashion industry transparency? Check out Fashion Revolution’s 2020 Fashion Transparency Index.

4. A Predictive Fashion Supply Chain Boosts Efficiency and Impact

Each year, tech companies engineer more and more online tools to help fashion retailers track and drive sales and study marketing impact. The most valuable of these tools also provide data that fashion businesses can use to predict sales trends, map repeat inventory needs, and automate customer interaction. The predictive data sourced by fashion tools like Fashion Snoops or WGSN provides a way for fashion brands to make inventory decisions and B2C activities as efficient and impactful as possible.

Fashion brands that manufacture their own private label apparel or accessories benefit from using tools that allow them to not only map and predict B2C activity, but also events in their fashion supply chain. Digital platforms that help the business monitor, alert, and predict milestones and challenges for fabric suppliers, manufacturer production capacity, and international delivery automatically make it faster and easier to plan experience and data-backed supply chain structures and maneuvers. 

Using predictive analytics to support decision making also gives fashion brands the ability to make important, impact-driving historical data universally available throughout the business. That’s a huge advantage for larger fashion houses in particular. Legacy data empowers the enterprise to train staff on reading and interpreting inventory trends from regular seasons and from those seasons which, like those of 2020, will have significant variance due to outside events. Democratizing access to predictive analytics across the brand helps fashion businesses make less reactive, more informed supply chain recommendations in crisis contexts, using the historical data of past events as a guide on how best to stabilize inventory planning when entering and exiting these events across the supply chain.

5. A Partnered Fashion Supply Chain Enables Trust

A Partnered Fashion Supply Chain Enables Trust for Fashion Brands and Suppliers

Although the Coronavirus pandemic presents a challenge unlike anything seen before, major interruptions to the global fashion industry aren’t new. From earthquakes that topple factories, to swift and rising tariffs in major manufacturing hubs, many of the logistics involved in sourcing quality fabrics, hardware, and labor make planning a seamless supply chain challenging to say the least. Despite this, one strategy that’s benefited fashion innovators is elevating supply chain vendors to the level of true partners.

A couple of things separate regular supply chain vendors from top-notch apparel manufacturing partners:

  • Reliable Communication – This happens when both fashion brands and fashion suppliers engage in up-to-date, consistent conversations and production updates over easy to access, easy to document communication channels. Ghosting, while always unprofessional, absolutely cannot happen in true brand-to-supplier partnerships.

  • Skillful Collaboration – Most any clothing factory can follow a pattern and deliver acceptable products. However, garment manufacturers committed to creating a partnered brand-to-supplier experience will take more initiative and feedback the viability of designs, fabric choices, etc. where needed. Partner-level fashion manufacturers should have the experience to make these materials, sampling, and production judgement calls and the confidence to relay them to brands thoughtfully and efficiently.

  • Relationships That Can Scale – Every fashion designer wants to increase their profitability year after year, and reaching that goal demands more of both their brand’s team members and suppliers over time. While you may not know what your inventory demand will look like in one, five or ten years, it’s beneficial to stock your fashion supply chain with product experts who can reliably fulfill requests, whether they’re small-batch or tens of thousands of units per production run.

Adopting a partnership mindset and approach with suppliers requires a lot of trust. Note that this approach won’t work with all supplier relationships. Unlike the other qualifiers of a modern fashion supply chain, developing brand-to-supplier relationships with a partnered approach will require your fashion brand to invest in regular, reliable audit channels for your manufacturers and your inventory.

What do you think of the modern fashion supply chain advantage? Are you ready to start building your supplier network? Read on to Chapter 2, and learn how to choose apparel manufacturers for your own modern fashion supply chain.

CHAPTER 2: Discover Manufacturers for Your Modern Fashion Supply Chain

CHAPTER 2: Discover Manufacturers for Your Modern Fashion Supply Chain

As mentioned in Chapter 1, the COVID-19 pandemic accelerated the need for large and small fashion labels alike to rethink traditional fashion supply chain models. The process of flying to overseas apparel factories, outsourcing quality control audits to third parties, and warehousing products from industrial production just doesn’t hold up post-COVID. 

Moving forward, fashion labels should use the model of a modern fashion supply chain – one that is digital, diverse, transparent, predictive, and partnered – as a guide to evaluate fabric supplier and garment manufacturer options. Assembling the best manufacturing partner mix to meet these new standards requires that apparel brands weigh three very important supplier factors: location, project management support, and quality.

Discover Fashion Suppliers by Location

Discover Qualified Fashion Suppliers by Location

Fashion is a global enterprise. Each nation, whether developed or developing, has fashion manufacturing advantages and disadvantages. That can make deciding where to look for manufacturers an overwhelming and confusing process for many designers, especially when factoring in language barriers, conflicting timezones, oversight barriers, and confusing labor and design protection laws. 

Be that as it may, deciding which garment factories to trust with your label’s goods is a major decision and one that you may need to make multiple times over as you diversify, grow, and pivot your fashion sourcing priorities. When deciding where to source your fashion suppliers, one of the main things you'll need to consider is where you’ll manufacture. To decide, you’ll need to evaluate a couple of location-dependent factors: 

  • Labor Cost
  • Quality
  • Reputation
  • Infrastructure

While there exists a literal world of location options, as mentioned in Chapter 1, fashion brands can balance the risks in their supply chain by collaborating with a diverse network of fashion suppliers, particularly in the wake of the Coronavirus pandemic and shifting Eastern and Western views on globalization. However, for the purposes of this piece we’ll take a look at 5 of the top fashion manufacturing hubs, plus the United States, and rate them on a scale of 1 (low)  to 5 (high). There’s a lot of research out there about the in’s and out’s of manufacturing in these different locations, but here’s a quick analysis. 

(Please note: In addition to the factors listed below, you’ll also want to evaluate delivery costs. We did not include them here as they depend on warehouse locations, tariffs, and other highly flexible variables.)

Location

Labor Cost

Quality

Reputation

Infrastructure

China

3

3

3

5

Bangladesh

1

1

1

1

Vietnam

2

1-2

2

2

India

2

1-3

2

1

Italy

5

4-5

5

5

United States

5

3

4

5

China

At present, China leads the globe in workforce and infrastructure to manufacture nearly anything, garments included. That positively impacts their labor skill, which impacts quality, as well as their infrastructure score here. However in fashion, while China’s reputation for high-end and luxury quality apparel has significantly improved in recent years, it’s quality is still more variable depending on the specific manufacturer, which is why its quality score has a broader range and its reputation falls behind that of Italy and the US. 

Additionally, as the Coronavirus originated in Wuhan, China, Chinese factories and infrastructure sustained significant impact from the pandemic fallout and mass lockdown orders. While Chinese fashion manufacturing may recover its pace and market demand as a vaccine becomes available, the global fashion industry is proceeding there cautiously following the pandemic’s first wave financial blowback.

Bangladesh

Bangladesh’s fashion economy was also hard hit by the Coronavirus. However, issues with Bangladeshi fashion manufacturing did not start there. In the years leading up to 2020, the nation has made headlines for a host of other issues, including worker compensation and safety. While the country is one of the world’s major fashion producers, its average worker skill, producer infrastructure, and more still lag behind global competitors. These issues, even more so than the pandemic, have established Bangladesh as a risky investment for high-profile fashion brands.

Vietnam

Many fashion houses seeking to diversify away from China in response to COVID-19 have shifted product sourcing to Vietnam. However, at present, Vietnam lacks the infrastructure, skill, and labor force to present these brands with an equivalent supplier option. The exceptions to this rule are the fashion brands that set up their own fashion production factories in Vietnam. In this unique case, Vietnam’s immaturity in apparel manufacturing infrastructure and lack of strict regulations stand to benefit those fashion businesses.

sewing machine

India

While India is a rising player on the global fashion scene, its apparel infrastructure does not match that of more practiced apparel competitors like China and Italy. However, due to the size of its workforce, India presents an attractive supplier option for fashion brands looking for significant industrial production capacity. India’s size and regional diversity also gives it a distinct advantage in fabric sourcing. However, one thing that India will need to focus on improving as its fashion manufacturing industry evolves is skilled labor production capacity. At this time, fashion production in India is still largely considered unskilled labor and makes a poor choice for fashion houses hoping to produce complex, high-end garment designs.

Italy

Italian fabric suppliers and fashion producers suffered a 6-week lockdown order during the Coronavirus pandemic’s springtime peak. While this caused production and sampling delays, the nation’s manufacturing sector rebounded quickly once the lockdown order expired in early May 2020. That’s likely due to the legacy investment in fashion manufacturing skill and infrastructure that's key to the Italian economy and workforce. 

Italy’s lasting reputation for fine fashion began in the 11th century. Skilled fashion labor forms a cornerstone of the Italian workforce, and as such, the garment industry’s ability, size, and infrastructure in Italy is one of the world’s strongest. However, that said, the quality of Italian craftsmanship is reflected in the price of production. You won’t find fast fashion quality garments made in Italy. The distinction that accompanies Made in Italy will typically only draw those fashion labels selling higher-quality products to higher income customers.

mannequin in cut and sew workshop

The United States

While Made in America branding may benefit apparel labels that sell stateside, there’s a number of drawbacks to producing clothing in the US that encompasses many of the challenges of producing in other nations. As with Italian garment production, products from American clothing manufacturers cost significantly more than Asia-produced counterparts, in large part due to labor compensation requirements. However, unlike Italy, America lacks the skilled labor needed to produce many garment types sought after by brands. This can also translate to a lack of the machines needed to do more complicated, skilled garment work. The main benefit of producing garments in America (for US-based fashion brands) is turnaround time. It’s faster for fashion labels to get products from the factory to the store shelves when they’re manufactured on the same side of the Atlantic, but American garment brands must weigh this advantage against the benefits of both labor costs and craftsman ability

Your Fashion Suppliers and Project Management

Your Fashion Suppliers and Project Management

Did you know that poor project management cost businesses 12% of their resources in 2019? That’s a harsh price to pay in the best of times, but with COVID-19 already dinging supply chain efficiency and apparel sales forecasts, that 12% becomes an even more must-keep piece of a shrinking revenue pie.

It may not seem like it at first, but project management matters in every industry, especially one as complex and variable as apparel sourcing. Between coordinating your brand’s own designs or factory design choices, your fabric suppliers, cut and sew manufacturers, quality assurance, shipping, warehousing, and merchandising, there’s a lot of people, product, and objectives to align and assure. 

To keep managing the fashion brand efficient, designers must prioritize project management for the entire fashion supply chain. While this typically happens, in large part, over email and Excel, we advise fashion design houses to seek out tech tools that make this easier, as well as willing sourcing partners who can help them coordinate smart project management across as many internal and external supply chain touch points as possible.

The market has some tech tools available to help fashion businesses coordinate with various suppliers on their supply chain:

  • Zedonk – Zedonk will benefit small and medium sized fashion designers looking to produce a variety of apparel products. Their tool is online-based, so it can be accessed anywhere, and allows your team to clearly define raw materials sourcing and use that information to create purchase and production orders for current manufacturing partners. This tool also lets fashion brands track delivery logistics, create line sheets, and create sales reports.

  • Accellar – Accellar can benefit fashion brands that own their own cut and sew manufacturers, if those partners are based in Asia. The business can use this tool to track manufacturer waste, monitor cycle times, plan visible order timelines, and make use of multi-level approvals on apparel manufacturing tasks.

  • Indigo8 – Small or large fashion businesses with existing fashion supplier relationships can take advantage of the robust capabilities provided by Indigo8, particularly if they already work with Indigo8’s existing partnerships like Shopify or Joor. This cloud-based tool offers Lite and Enterprise plans that make it easy for fashion businesses to coordinate details of tech packs, sample management, suppliers, sales, etc.

  • ApparelMagic – Similar to Indigo, ApparelMagic is a cloud-based tool that assists large fashion houses to coordinate inventory planning, materials costing, sales, and inventory management across multiple touch points. ApparelMagic is used by many big names in the fashion industry and also offers numerous partnering tool integrations with some of the same big names as Indigo8.

  • MakesValley – MakersValley differs from the above tools for a couple of reasons. This web-based resource enables project management for small and large fashion businesses working exclusively with a highly-vetted network of Italian manufacturers. Fashion houses can use MakersValley’s tools to build and coordinate tech packs, source white label factory designs, evaluate manufacturer bids, direct materials sourcing, manage invoices and deadlines, and assure quality control and warehouse or store delivery. 

Something it’s crucial to consider before integrating any of these valuable project management tools or their competitors will be how willing your sourcing partners are to adopt them. Most of the tools listed above do not integrate a network of ready apparel manufacturers already set up and trained on their tool suites. In cases where the business chooses to build out project management using tool options, they’ll need their supply chain partners to buy in and  assure full training and adoption on the production side, or risk a wasted investment.

Fashion Supplier Quality Assurance

Fashion Supplier Quality Assurance

Once you’ve narrowed down a list of potential garment manufacturers, you’ll need to ask the factories on your list about at least two key areas of quality assurance standards and reporting: product quality and factory quality. 

Product quality matters to even the most inexperienced fashion designers and often determines whether or not brand-supplier relationships last beyond a single product or collection. No matter where your fashion business sells, the materials, cut and sew quality, and finishes of your garments or accessories need to match the same standards as much as possible. While a production order may never reach the ultimate 100% quality verified standard, especially when the order consists of thousands of pieces, you want to work with fashion suppliers who can assure you of quality as much as possible. To do this, you’ll want to discuss the following things with your potential sourcing partners:

  • Are they product experts? Would you trust a factory that specializes in silk dresses to produce your leather pump collection? The machines and skills that garment producers use to create high-quality fashion designs are areas of significant investment. You’ll need assurances, visual proofs, and certifications to make sure that your manufacturing partner has the right equipment and sewers with the right training to bring your tech packs beautifully to life.

  • Where do they source their raw materials? Product design starts with the raw materials. Even with a master sewer behind the needle, if the raw materials don’t measure up, your product will lack quality and appeal. You’ll need certificates of delivery and of material composition to confirm that your factory partner will use raw materials that meet the standards you’ve set for your product line.

  • What AQL will they agree to meet? You will need to reach an agreement on AQL, or Acceptable Quality Level, in your contracts with manufacturers. This standard indicator defines what percentage of below quality pieces out of an entire production order will be accepted by the fashion business from the manufacturer. Standard AQL for fashion products is 4% for minor defects and 2.5% for major, but you’ll need to decide if that’s an industry standard that works for your brand, production unit order, and budget.

As mentioned, you’ll not only need to figure out how your manufacturing partners will quality assure your products; you’ll also need to have a clear understanding of their quality level as a garment factory. This may not seem important as immediately as product quality, but in this era of rapidly increasing digital transparency and rising consumer sentiment for ethically produced products, fashion businesses must evaluate factory partner health, safety, and reputation early or risk a public relations crisis later.

Most fashion businesses and designers prefer to verify manufacturer quality in person, however, smart fashion brands will weave contingency plans into the fabric of their brand-supplier audit structures. One reason that matters: see the fashion industry’s current dilemma of COVID-related travel restrictions taking in-person, overseas manufacturer audits off the table for most of 2020. 

COVID-19 supply chain travel issues

While COVID-19 is an extraordinary circumstance, global events that disrupt the supply chain now happen annually. Tsunamis, earthquakes, and rising isolationism all put the reliability of regular fashion factory audits into the “Uncertain” category. Fashion brands with overseas manufacturers should discuss the best way to continue transparent, regular factory audits during another travel crisis or shutdown. This conversation needs to happen at the start of this relationship in order to avoid surprises and expensive pivots later.

How does your fashion brand balance factory location against project management ability and quality assurance? Have you found sourcing partners who you trust to produce your label? If so, read on to Chapter 3 and discover how to get your brand’s products from your manufacturers to your customers.

CHAPTER 3: Understanding Modern Fashion Supply Chain Logistics

CHAPTER 3: Understanding Modern Fashion Supply Chain Logistics

Simply put, figuring out your fashion supply chain logistics is just deciding how your products will get from point A to point B. This involves shipping, customs, packaging, warehousing, and more, but in essence, logistics indicates goods or information transport and how it happens.

Logistics planning has existed for millennia, but we’re a long way from when the Han Dynasty charted the Silk Road. While logistics planning may have required less monitoring and optimization in years past, the fast changing retail landscape, trade structures, costs, and labor practices that impact sourcing globally have evolved logistics planning into an area of ongoing monitoring, growth, and improvement for fashion businesses. 

Planning a modern fashion supply chain logistics network primarily requires fashion labels to weigh two things against each other – customer service and business cost. 

Let our advance worrying become advance thinking and planning.

– Winston Churchill

Here again, small, medium, and large fashion brands would benefit from creating a logistics network that’s as digital, diverse, transparent, predictive, and partnered as possible to balance risk, assure accountability, and protect their investments.

How Do Fashion Supply Chain Logistics Impact the Customer Experience?

How Do Fashion Supply Chain Logistics Impact the Customer Experience?

The best and most modern fashion supply chain logistics networks prioritize the customer. They accomplish this by mapping the most efficient and favorable path between apparel origin and their customer. Starting with that point A and point B, they’ll work down from the big picture to the details, filling in the route with transportation and warehouses, dropshippers, or retail locations.

Let’s examine that detail drill down starting with a look at warehousing strategy. Whether your fashion brand has decided to invest in building your own warehouses or prefers to use a dropshipper or ship directly to retail, you’ll need to make sure that your product storage locations are convenient to your customers. Over the past two decades, Amazon has used its incredible resources to execute this beautifully, growing from two fulfillment centers in Delaware and Seattle to 175 of them located at various points throughout Europe and the US

The other side of the logistics equation is transportation. How fashion businesses organize their warehousing strategy has a huge impact on how they’ll need to plan their transportation strategy. That’s because these two elements balance and feed each other. If one is weak, the other will have to overcompensate to fill in the gaps and still deliver the best customer experience possible. Here again, Amazon easily excels with a robust network of air, ground, and sea product transport. 

Amazon’s outstanding distribution network has given rise to its speedy Amazon Prime shipping service, built it a reputation for reliable delivery, and made it one of the most competitive players in nearly every goods industry. That’s the beauty of a well-planned and well-maintained logistics network – it can serve as not only a means to an end, but also a customer benefit in itself.

What Are the Costs and the Benefits of Quality Fashion Logistics?

What's the Cost of Quality Fashion Logistics?It’s clear that Amazon is an extraordinary example with more financial, warehousing, and transportation resources than almost any other company, let alone any given fashion brand. As such, matching Amazon’s scale won’t be possible, but what apparel business owners can and should do is to plan their logistics network very strategically, weighing cost against customer service at every avenue. 

Careful logistics planning of warehousing and transportation can give fashion brands business and marketing advantages, including but not limited to:

  • More reliable delivery
  • Faster product delivery
  • Fewer logistics-related product quality issues

The cheapest logistic network looks different from the most expensive one in terms of not only cost, but service. You can have great customer service with only one warehouse supported by overnight transportation, but the cost on that would be more than what most young fashion brands can take on. Fashion designers should bear in mind that better service for customers almost always equates to a higher investment cost for the business. A couple of questions you should ask yourself when planning your logistics network include:

  1. What is the least number of warehouses or dropshippers I need to deliver to the biggest number of my customers?
  2. How can I keep my miles per delivery (MPD) as low as possible?
  3. How will I balance where I spend across my whole fashion logistics network?

Answering these questions will take some time and homework, but will be well-worth it in the end. Building a solid warehousing or dropshipping network from the start will allow you to keep your transportation costs efficient and cost-effective. If you don’t or your needs change significantly over time, transportation will need to make up for some of those shifts months or years later.

How will you evaluate the costs and benefits of a quality logistics network?

Pro Tip: As you’re researching setting up your logistics network, be on the lookout for convenient logistics clusters. These exist almost everywhere, and can help you create some solid foundations for your logistics strategy. Take as an example, Reno, Nevada on the West Coast. Reno is a popular logistics center for many consumer goods brands because of its proximity to California and its lack of inventory tax. An East Coast example is the Lehigh Valley in Pennsylvania. It’s close to New York City, but is a cheaper location to run and build warehouses while still providing easy access to customers up and down the New England coast.
 

Once you figure out the best logistics mix for your fashion label, you can jump into the details of fashion demand forecasting and inventory planning. This ongoing exercise is crucial to helping your brand excite customers and earn profits in any season.

CHAPTER 4: Fashion Demand Forecasting within a Modern Fashion Supply Chain

MakersValley Blog | CHAPTER 4: Fashion Demand Forecasting within a Modern Fashion Supply Chain

Every fashion brand has a perspective on what people want to wear. The label’s original designs and prints try to match that expectation. However, aside from sticking to that unique vision, much of the work that fashion brands do to succeed season-to-season and year-to-year involves a practice called fashion forecasting. According to Fibre2Fashion, fashion forecasting is, “the prediction of mood, behavior and buying habits of the consumer.” Fashion forecasting requires fashion buyers and producers to research not only emerging apparel trends, but also patterns and global events that can help or hurt their customers and their brand’s attempt to source fabric, connect with manufacturers, or move products from point A to point B.

Accurately forecasted demand may lead to increased customer satisfaction, reduced stock outs, efficient production,...and more informed pricing….

Jenni Moisanen

Fashion demand forecasting is an imperfect science, but when well-executed, it provides both established and emerging fashion brands a critical foundation for everything from design, to production, to fashion logistics, to marketing and promotions.

The Challenges of Fashion Demand Forecasting

MakersValley Blog | The Challenges of Fashion Demand ForecastingNo matter how much preparation and analysis fashion designers do, fashion demand forecasting will always involve some margin of error. It’s essentially akin to performing informed fortune telling, so keep your predictions careful and realistic.

Most major fashion retailers and brands have full departments and staff dedicated to analyzing trends, both in real time and from past seasons, to create forecasts that are more clear and accurate. Part of the reason fashion demand forecasting is such a challenge is because garment sales have a habit of bunching sporadically at different points in the calendar year, sometimes predictably and sometimes not. This is caused in large part by easily observable factors, including:

  • The vast number of potential shoppers in a given retail market
  • The varying fashion tastes of current customers and potential shoppers
  • The big variety and low regularity of customer product requests

While these three elements have historically caused uncertainty in fashion predictions, they’re no longer the only things doing so. In the last 20 years, shifting customer preferences and global labor and climate conditions have further complicated fashion demand forecasting. Now apparel brands must also contend with:

  • The Democratization of Apparel Sourcing and Retail – While starting your own clothing line or building new apparel products into an existing one still requires significant commitment and investment, more resources now exist to help emerging fashion designers and young retailers jump start a fashion business. From online wholesaler and garment manufacturer directories, to shoppable Instagram posts, startup fashion businesses no longer require major retail resources to successfully source, market, and sell clothes.
  • A Booming Niche Fashion Ecosystem – Modern fashion has segmented into micro-communities at a near viral pace. Niche fashion markets have thrived, in particular, thanks to the increasing weight of the fashion influencer community. While this offers fashion buyers and customers a more product rich environment and more diverse product selection, it has made mass production and sourcing more challenging for larger department stores and retailers, which focus on forecasting for broad, mass markets.
  • New Complications to Season-based Forecasting – In recent years, the realities of climate change have made it more difficult for fashion brands to produce and receive garments on schedule, accurately predict weather-based fashion trends, and stave off fashion image fatigue. For fashion brands like Gucci, COVID-19 cast the final, deciding vote in a long debate over whether or not to go seasonless.
  • An Increasing Customer Demand for Supply Chain Transparency – As movements like #WhoMadeMyClothes gain momentum, fashion brands must weigh the degree to which they will adopt and market their label’s supply chain transparency. They must identify the transparency proofs that their customers seek, and plan their inventory always keeping in mind how to best capture and showcase those product stories throughout forecasting, designing, sourcing, sampling, and production.

Challenges like these make fashion demand forecasting trickier and more important than ever. Mastering forecasting is particularly important for fashion brands balancing the longer lead times of overseas apparel manufacturers.

Fortunately, fashion brands and designers now have access to innovative tech tools that they can use to research, track, and model fashion forecasts more reliably, particularly when they apply them in collaboration with high-trust apparel supply chain partners and niche inventory strategies that meet the moment.

Using Data to Fashion Demand Forecast

MakersValley Blog | Using Data to Fashion Demand Forecast

Both established and emerging fashion brands can use data to stitch together a clearer picture of what fashion shoppers need and want over time. In Chapter Two, we highlighted the access that fashion brands now have to digital tools that rely on historical inventory and sales data to create more accurate apparel inventory forecasts. These days, fashion brands also have access to trend tracking data outside the business, which can add further texture to their predictions. Adopting the right mix of these data tools inside the fashion business, outside the fashion business, and in collaboration with the business’ fashion suppliers allows forward thinking brands to:

  1. Better predict customer demand. Fashion brands can use digital tools like Google Trends, Google Ads, and social media to track online search trends near their top grossing retail locations. This allows them to secure timely information on which apparel products most of their customers are looking for and record whether or not those desires match season-bound expectations over time.
  2. Spot reliable best sellers with the potential to become label staples. Apparel designers can easily do this by modeling the volume and frequency of reorders over time using data mined in collaboration with their garment manufacturing partners.
  3. Discover opportunities for testing out novel fabrics or product colors. These experiments are best informed by the reorder data mentioned above and performed in collaboration with an experienced and trusted manufacturing partner, especially one well-versed in small-batch apparel manufacturing.
  4. More accurately plan lead times. Comparing clear visual data on sampling, production, quality assurance, and delivery timelines of a variety of products, designs, and manufacturing partners will help fashion houses standardize their own unique product cycles – whether or not those fall into the traditional Spring/Summer or Fall/Winter seasons.

Learn to use historical data to forecast inventory demandTracking and analyzing historical manufacturing and sales data using tech tools works best with tools that allow for a unified view of the full fashion supply chain, as well as sales and overstock, across the entire fashion business. That’s because the fashion brand must evaluate the effectiveness of each fashion forecast.

Did the inventory sell out? How much overstock was leftover? Were certain apparel products over or under performers? Did any major supply chain disruptions occur? If so, why?

Asking questions like these, giving them honest answers, and modeling the results over time pushes fashion businesses to see the forest for the trees, spot changes over time, and plan instead of react. Usually fashion labels will need at least 2 years of doing this homework before they can start spotting the main patterns that inform inventory needs.

While data analysis plays a critical role in fashion demand forecasting, solid planning does require more than data alone. It also demands a responsive, reliable, and modern apparel supply chain.

How a Modern Fashion Supply Chain Facilitates Apparel Inventory Planning

MakersValley Blog | How a modern Fashion Supply Chain Facilitates Apparel Inventory PlanningFashion brands and retailers must constantly balance what their customers want against what their fashion supply chain can deliver. Relying on a digital, diverse, transparent, predictive, and partnered modern fashion supply chain gives these businesses distinct advantages when it comes to apparel inventory planning:

  1. The more your fashion supply chain partners use digital tools to enable production, reorders, and lead time data tracking, the more clarity you’ll have on timing sampling, production, shipping, and marketing and promotions, regardless of seasonality.
  2. The more agile and diverse your supply chain, the better your fashion brand can rise to meet demand changes in inventory planning. That’s the case even if you’re sourcing outside the country with higher quality manufacturing partners. Also, when you begin structuring your sourcing network with manufacturer location and specialization diversity in mind, your supply chain response time will be quicker since you will not need to repeatedly go through the long process of vetting new vendors.
  3. Working with transparent supply chain partners keeps your data reporting honest and reliable. This matters since slight variances in lead times can throw off your plans to present samples to fashion buyers or restock retailers on schedule. Plus, the more variables your data makes clear, the more complete your inventory forecast can be.
  4. Partnering with apparel suppliers who prioritize predictive metrics and fashion trend tracking themselves enables you to stay ahead of emerging trends in fabrics, production, and apparel design.
  5. The above mentioned systems work best when performed in collaboration with expert-level partners who have established reputations and value your brand’s success as much as you do.

Now that you know a little more about how to qualify your fashion supply chain partners, plan your logistics, and forecast your demand, we’ll take a look at the evolution of fashion supply chain management, and how to build and benefit from a modern approach going forward.

CHAPTER 5: Managing a Modern Fashion Supply Chain

The Building Blocks of a Modern Fashion Supply Chain  – Chapter 5: Managing a Modern Fashion Supply ChainOperating a cost-effective, efficient, and reliable apparel supply chain might be the toughest part of managing a successful fashion brand. While every fashion brand does this differently depending on how it sells, who it sells to, how large its staff is, etc., most default to an expected standard. In this chapter, we’ll discuss how those have evolved over time, and how adopting a modern fashion supply chain can help apparel suppliers and brands better operate moving forward.

Let’s get started.

The Old Fashion Supply Chain Model

bootmaker-sitting-in-workshop-making-shoes-P9FX3TF-1Hermès began in 1837 – the same year that the Oxford dictionary was created, Queen Victoria assumed the throne, and Charles Goodyear received his first rubber patent.

While Hermès provides an exceptional example, most of the top-known luxury fashion houses in the world have operated for at least several decades. Much has happened in that time, both in the fashion industry and in the global trade landscape that governs it. Right now, fashion is seeing shifts in the structure and management of the global supply chain rooted in policy changes that began 50 years ago.

In 1974, the US, Canada, and the European Union, signed the Multifiber Agreement (MFA) which placed quotas on the number of textile fibers, fabrics, and garments that developing nations could export to developed MFA countries. This instantly impacted the costs of apparel manufacturing for US and UK based designers, as well as for the fashion end-customer. “By limiting imports, the U.S. and the EU raised their domestic prices of clothing. Domestic production rose, and domestic consumption fell,” (MacDonald, 2006).

As a result, many of the biggest retailers and apparel brands operating during this time decided that owning their garment factories benefited their supply chains, internal governance, and profits more than having factory partnerships. Trade agreements including and similar to the MFA prompted them to take fabric development and supply in-house as well. This created an ultra streamlined fashion supply chain with factories that were wholly connected to the brand’s goals and one in which the garment supplier had a significant say in the production timeline and seasonal calendar.

Smaller brands that lacked the resources to completely own their fashion supply chain were left to collaborate with garment suppliers in a fashion network mix that favored developed nation partners relative to developing nation partners. In this scenario, the fashion company had less control over the logistics timelines of their fashion partners, as these relationships lacked the competition found in today’s model, and operated mostly on supplier-driven demand.

Changes in Demand Drive Changes to Fashion Supply Management

elegant-shopper-PZQT9WL-1The drivers of fashion demand started to change in the mid-1980s. Previously, fashion brands built clothing lines with a heavy focus on standard products like khakis, the need for which remained reliable season-to-season, with little need for nimble fashion forecasting. Apparel companies typically produced these collections in regular, two season bursts, coordinating a smooth, predictable delivery calendar between product developers and garment manufacturers. This met customer expectations at the time, and products usually moved off shelves at a steady and expected pace.

However, as time passed, consumers began to demand more fashion forward products on a faster timeline. Big retailers sought to meet this demand by producing more garments, in more new styles, available more consistently. This called for fashion brands to distance themselves from the traditional two season model and instead adopt shorter three, four, and five season product cycles to keep store traffic up and consumers buying. These shifts had three major impacts on the fashion industry:

  1. Retailers demanded quicker, less guaranteed fashion forecasts.
  2. Retailers sought out faster product development.
  3. Garment brands began to diversify their garment suppliers outside of their owned or usual partner network to be able to meet fashion consumers’ rising demands.

Competition in fashion retail was surging, and the supply chain started to shift from a supplier-driven sourcing calendar to a consumer-driven one. These conditions paved the way for fast fashion. What happened next led to its explosion.

The Birth of Fast Fashion

young-shoppers-ED48XHU-1The consumer-driven fashion industry changes of the late 1980s and the 1990s drove even major luxury garment companies to untether apparel factories from direct brand ownership. These industry leaders, known for their extensive oversight and rigorous full supply chain management and control, had found that increased outsourcing helped them grow their inventories, timelines, and competitive edge. However, fast fashion boomed at the start of the new millennium for two very specific reasons:

  1. In 1999, media coverage of fashion runways grew, exposing consumers to new trends at the same time as apparel gatekeepers like retailers, fashion media, and industry insiders.
  2. In 2005, the textile and garment quota regulations required by the MFA were discontinued.

With gaining more early access to emerging trends than ever before and the easing of textile and garment trade restrictions, large and small fashion brands began working to aggressively outsource everything from product development, to fabric supply, to garment production over to quick, cost-effective manufacturers. These relationships looked very different, often depending on the size and reputation of the fashion brand doing the outsourcing. For example, many large, luxury houses emphasized relationship building with their manufacturing partners, even in the era of fast fashion. These brands wanted trusted partners in place, who they could manage using predictable, standardized communication methods and processes over time. Smaller brands, however, had less capital to leverage against their competitors, and often made wholly cost-based decisions, anticipating that their relationships to developing world suppliers would only exist in the short term before they churned.

In both scenarios though, many brands found that the gains of partnering with outside brands sometimes came with negative impacts to product quality, communication, and logistics costs.

Next in Fashion: The Modern Apparel Supply Chain

mixed-race-male-fashion-designer-sitting-in-the-ro-2NLWJFV-1In recent years, US and UK trade policy has trended back toward isolationism rather than collaboration. This late upswell of restrictions on global fashion production and trade has made international fabric suppliers and apparel factories nervous. Their skittishness had grown further in the aftermath of COVID-19’s first wave, which left several factories on the outs with fashion companies that had canceled orders last minute or left suppliers unpaid and struggling as stateside inventories failed to earn sales.

If anything is certain, it is that change is certain. The world we are planning for today will not exist in this form tomorrow.

Phil Crosby, Author, Consultant, Philosopher

However despite this, most international apparel production hubs have continued to seek out secure, long-term American and British fashion brand-supplier relationships. That’s a huge positive for fashion brands seeking to build a stronger, more diverse, and therefore, less risky fashion supply chain than what they relied upon pre-COVID.

preparing-for-travel-in-new-normal-9K834MG-1Fashion brands that take the opportunity to invest in more varied supply chains will find that the way to most effectively manage clothing production in this era is to do so collaboratively and digitally with their vendors. That requires a strong degree of partner trust, both from apparel factories and the garment brands who employ them. Not only that, but it also mandates that independent emerging and mid-sized to large apparel brands prioritize some very important supply chain practices.

Building and Managing a Modern Apparel Supply Chain

Managing an effective supply chain in partnership with garment factories and suppliers requires fashion brands to invest in their sourcing operations in a couple of ways:

Commit to efficient, high-quality factory and supplier vetting.

dressmaker-woman-sews-clothes-on-sewing-machine-in-LL6BUJ8-1While trust has always mattered in the garment industry, it matters even more when you’re asking your partners to collaborate with you on managing your timelines, quality assurance, and labor standards in a way that’s above reproach. While in the past, most apparel companies counted on visiting their suppliers in person, that’s one of the least efficient ways to vet a partner. Additionally, this method fails to provide uninterrupted quality control and as we’ve seen from the 2020 pandemic travel restrictions, it also isn’t always possible in times of trade crises.

An alternative way to vet partners is to have a boots on the ground relationship with a service like MakersValley that individually and regularly vets factory partners using consistent, and clear criteria of labor and quality control.

Preference expertise upfront.

Developing a clothing line with a diverse product offering is a challenge, but one with the potential to deliver a better market share, larger fan base, and more significant profits. However, if taking that approach, fashion brands should explore partnering with multiple factories, with highly specialized product expertise, instead of defaulting to a one-size fits all partner.

The problem with single factory apparel sourcing is that, not only is it a riskier supply chain strategy, but it also leaves you reliant on a factory partner that might produce excellent quality results in one of your product categories, but deliver subpar results on your other merchandise.

Streamline your factory-to-brand communication.

email-inbox-message-list-online-interface-HJKSBWY-1The market is flush with tools to communicate fashion design and fabric details with apparel manufacturers. However, most still omit much of the sampling and production process from the equation, leaving product developers stuck using a patchwork of email, WhatsApp, Excel documents, and lately, Zoom.

The line between disorder and order lies in logistics.

Sun Tzu

Meet the challenge of having clear, easy to trace, easy to place production communication by designating specific digital tools to track and communicate on supplier-brand production events for your entire season’s inventory. The tools you adopt would ideally take the place of multiple others in the communication web instead of adding to the logistical clutter without providing unique value. The best tools will also include visual proofs of your products in process, as an added layer of quality control and operational transparency.

The Benefits of Shifting to Modern Fashion Supply Chain Management

clothing-3NBR2TF-1For enterprise fashion brands, modernizing the fashion supply chain stands to help production clarify operations with outside partners, as well as de-silo some of the design, sourcing, production, and logistics operations.

Small-to-medium sized fashion labels stand to benefit from more partnered supplier relationships because they have fewer product development channels, layers of staff, and in-house garment supplier management resources than the big enterprise brands. While establishing trusted supplier-brand relationships does require an upfront time investment, prioritizing this style of supplier relationships with vendors who use highly organized, digital factory communication channels will help brands of all sizes meet customer-driven supply chain demands faster, more clearly, and with less uncertainty.

Aside from the operational upsides of transitioning your business to the modern fashion supply chain model, depending on your vendors, you also gain the advantage of corporate social responsibility proofs, and the ability to share those with your customers. This has the potential, to not only grow customer affinity and loyalty, but also to reduce the need for chaotic crisis management events.

Final Thoughts

As we mentioned at the beginning of this blog, fashion now moves too quickly for the traditional apparel supply chain to keep pace. This rings especially true if we observe how social media facilitates novel trend introduction, spread, and demand at a now frantic rate. That said, falling back on a fast fashion sourcing model puts apparel brands in a risky place, both in image and in operations.

Fortunately, thanks in part to technology and in part to changing global trade policies, it’s now possible to create and collaboratively manage an apparel supply chain that meets consumer demand and is digital, diverse, transparent, predictive, and partnered. We are happy to report that we believe this to be the best fashion supply chain model moving forward. Not only does it have the structured elasticity to work for any size apparel brand, it also has the resiliency to maintain utility and relevance throughout global crises like the COVID-19 pandemic.

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