Challenges In Fashion Industry Supply Chains: An Essay.

This task involves you to research and examine industry reports on Supply Chain Management over the past three years and provide a critique around issues and challenges faced by Supply chains within in the form of an HBR article.

You are expected to obtain at least a dozen industry reports such as readily available reports over the last 3 years by PwC, Cap Gemini, McKinsey, IBM, SCMR or other supply chain reports via the internet, as well as the Guest Lecture by Prof John Gattorna and his book Dynamic Alignment. From these reports/book research and consolidate issues, risks and challenges faced by global supply chains, and identify barriers and enablers of supply chains. Further, identify areas where Australian firms – in particular small and medium firms - seem to be facing a shortfall in relevant competencies and capabilities within organisations to manage their supply chains. In this essay discuss the role of supply chain management and advanced technologies (specifically, additive manufacturing, 3D printing, IoT, cloud computing, blockchain etc) together with transition to sustainability across supply chains ie. what would be the economic, environmental, and social impacts of adopting advanced technologies on current supply chains and how they ought to change the future SC in the coming 5 years?

Examples of some industry reports are:

The aim of this exercise is to address one or some of the following topics (this list is not exhaustive):

1. Understanding supply chainexcellence
2. Whyis planning and designing a closed and open loop supply chain/value network so hard?
3. Supply Chain metrics – does thatmatter?
4. Identifysupply chains that demonstrate best practice
5. Outsourcing vsinsourcing
6. Procurement policies and theirmanagement
7. Supply chain integration, collaboration andalignment
8. Service value networks and valueco-creation
9. Supplychain risk, complexity and disruption management
10. Roleof digital ubiquity in supply chains and data analytic tools
11. Roleof technology and ecommerce in service delivery – especially the last mile to the end consumer
12. Why should supply chains be sustainable, and the role of reverse supply chains and circular economy concepts in managing sustainable supplychains?
13. How global and domestic partners can maximize efficiency and mitigate risks through leveraging 3PL for optimised
14. How are businesses from different industry sectors consolidating their businesses and their supply chains in search of value

Globalization and Technology in Supply Chain Management

Managing the supply chain in the organizations is the most challenging task and these main activities involved in the transformation of the goods from the raw materials to the final products consumed by the customers. The process of the creation of the products and customer’s consumption of these products. Looking into the previous years and the last 3 years industry reports, it has been observed that the globalization has a great impact on the supply chains. There are no such restrictions on the trade of the products and services in certain areas. Talking about the each industry, then every company in today’s world makes use of the latest technologies in the supply chains. In the past years, the activities like planning, manufacturing and retailing etc. are done by the industries itself. But now the industries are using the different kind of softwares to mane the supply chain. There are many risks involved in the supply chain management and the industries build many strategies to integrate all the activities and this is the best way to manage the supply chain. The fashion industry is chosen for the analysis and to understand the different challenges faced by the industry. The fashion industry is the sector which is growing rapidly and every country is contributing to this fashion industry (Grail Research, 2009). The fashion industry has many companies and brands like Zara, H&M, Forever New, Benetton, Madame etc.

The role played by the supply chain management is very significant for the success of the fashion industry. The models of the inventory management are very helpful to find out the quantity of stock that is transported to the retail stores at least two times a week. As the stock of the apparels, fashionable accessories, footwears in the fashion industry is very limited and it is very significant to identify that each outlet of the fashion brand is getting the stock as per their needs. The workers and the staff members, who are responsible for the management of the stock  and their quantity of their  fashion industries outlets.

Talking about the challenges faced by the fashion industries, needs of the individual are dynamic and are changing with the time. Thus, it is important to analyze the demands of the people. There are various methods that are used by the industries to analyze the demand are like questionnaire, surveys and personal interviews.  It is possible by hiring a trained employees as well as professionals. In the supply chain management the appropriate maintenance of the goods and services  is also identified by carrying out the different strategies. The fashion industry introduces its very creative projects in the different countries like France, New York, Sydney, Melbourne, for the smooth flow of the supply chain as well as to manage the logistics (Shen, 2014). The merging their brands with other retail markets is the strategy of these fashion industries. The merger of the brands or companies is very helpful in providing the support to the organization financially as well as the maintenance of the logistics management in the right direction. The supply chain management of the fashion organization is good, but still facing some of the challenges because of the increase in population, inflation, environmental factors, competition and changing the behavior of the employees as well as customers. The fashion industry started using the new technologies as well as new strategies with the change in the time.

Role of Supply Chain Management in Fashion Industry

It has been found that the in the emerging economies the fashion industry faced many challenges. Looking at the managerial point of view, it is very difficult to increase the employee engagement and performance and to get the maximum results from the workforce as teamwork. It is very important to motivate the employees or members of the fashion brand to perform extraordinary by giving them some financial rewards. There is a possibility that the members of the companies get discouraged because of this lack of financial rewards. It is very difficult to retain the workforce at the time of inflation as the fashion industry is rising at 10 percent and in the same way the inflation rises by 5% that creates a problem for the organization in retaining the workforce (Hansson, 2011).

In the developing economies, there are many other environmental factors that affect the sustainable business like transportation of the stocks from one place to another and these factors are like pollution, poverty, and natural resource depletion.  As the fashion companies are highly dependable on the transportation. The population of the countries is increasing very fast and it will obviously create more pollution from the automobiles and also the increase in the usage of vehicles bring the road networks jams because of traffic. These traffic jams and pollution affect the business by the delay in the stock delivery. Moving further, the other environmental factors like weather during the season of Monsoon  that creates problems for the fashion outlets to  deliver the goods in a safe manner and on time. As the fashion industry is very famous and with the increase in the population, more and more clients availed these services and products offered by the different brand companies like Zara, H&M. . The fashion industry is facing challenges now in building the strategies to deal with the increasing clientele, environmental factors, diseases and expectations of the customers (Özlen, 2013).

Moving further, the management of the fashion industries found it very difficult to deal with the increasing costs of labor, cost of transportation and expectations of the members with the salary and also the changing tastes for goods, apparels, footwears, fashion styles of the people. The organization afraid from the strikes by the unions and members of the municipal corporation as it will affect the business of the organization. The fashion brand companies kept the strong bond between management and workforce to carry out its with the changing environment. As it was found that, the time has changed  as when we compared the  prices of the clothes of last 3 years, then the drastic increase in the prices has been observed through this report (Kumar, 2005).

Moreover, the people of the countries attracting towards the westernization and preferring to focus more on western clothes, footwear and bags. As the time has changed, people also found it fashion to buy the branded products for themselves. The analysis of the Supply chain management has shown that the they are focusing more on the office workers and employees

Challenges and Issues Faced by the Fashion Industry

Lastly, the biggest challenge for the organization is its competitors. There are  many competitors in the fashion industries. The prices offered by the different brand companies for the similar product are different and it attracts the new customers. The example in the fashion industry can be like the Zara company is facing the challenge of competition from its biggest competitors like H&M, Marks and Spencer, Lifestyle etc.

The inbound and the outbound logistics need to be improved to resolve the issues faced by the fashion industries. The inbound logistics means to establish the strong relationship with the suppliers and to make proper use of the resources as well as raw materials to avoid the waste and to manage the supply chain in the fashion industry (Sen, 2008).  The outbound logistics is the term used for the delivery of the products like for the consumption of the consumers. All the products like apparels, footwears, other equipments need to be stored and distribute in the people by using different sales strategies. The procurement in the  supply chain is very important to avoid the main issues and it refers to the communication take place between the supplier, retailers, wholesalers and the distributors via phone call or emails. This communication is very significant for the timely delivery of the ready products to the customers. Another important factor in the supply chain management is the use of the latest technology. There are many technologies used by the  fashion industries like 3D printing for the manufacturing of the designer clothes, Cloud computing for the tracking of goods throughout its lifecycle.

As above already discussed about the challenges faced by the fashion industry in the supply chain management.  Now coming to the analysis of the fashion industry reports, there are many reports on the global status of the fashion industry given by the Mckinsey and these reports shows the growth of the industries in the coming years as compared to the fall in the previous years (Amed & Berg, 2016).  The below diagram depicts the status of the fashion industry by showing the percentage of respondents in the pie chart below. The fashion industry situation is getting worse in the previous year as per the industry report and the 67% respondents agree with worse condition of the fashion industry.  Only 19% of the respondents said that the fashion economy condition is better and the rest of the people have the view that the industry is on the same stage .

The reason of the bad conditions of the fashion industries found in the last 3 years is the poor supply chain management of the fashion industries. The main components of the supply chain management are distribution, warehousing, risk management, logistics  and the advanced technologies. All these main components of the SCM need to be focused by the fashion industries. The fashion industries face many types of risks in the supply chain which affect the sales of the company.  

Impact of Technology, Sustainability and Advanced Manufacturing in Supply Chain Management

According to the view of Corsten and Gruen, the situation of the out of stock is a risk for the fashion industry supply chain and the risk are categorized into the four types:-

Retailer shopper loss risk: - this risk corresponds to the retailers when the consumers switch to the other stores after facing the situation of out of stock of the products.  The customer expectations and habit changes and they switch to another brand or supermarket for their satisfaction.

Retailer sales loss risk-  The sale of the supermarket will negatively affect due to the mismanagement of the stock levels. The customers may buy the product from the other brands because of the shortage or out of stock. The other risk is the cancellation of the products by the consumers and when specially consumers prefer to substitute its out of stock product with the lower rate product also affect the sales of the organization.

All these risks affect the sales of the cloths, shoes, accessories and other equipments. The industry reports given by the COCA (Chinese textile commerce, outdoor breach) shows that the supply of the inventory to the department stores is much better than the outdoor store sales. The data below show the percentage of the sales in the both stores. It is also analyzed that the outdoor stores need to be focused more and their supply chain management need to be improved to increase the sales of the company.

Looking into the trends in the textile and fashion business is found to be remain consistent in the last 3 years. The growth of the fashion industry shows no sign of abating as it is again the top trend and people are still availing the services of different brand of clothes. Moreover, the design and style in the fashion apparel as well as in the other items is the second choice for people. It is analyzed from the previous years that the company is performing consistently  in two years 2014 and 2015. The third year trend has shown some growth because of the introduction and usage of the new technology (Nagurney & Yu, 2010). The fashion industries  in the year of 2016 started using the online delivery of the products to the houses of the customers as they do not need to visit the store especially for the shopping. As a result of which, it will lead to growth and increase the sales of the company.

It has been seen from the trends that the digital and technology are playing a vital role in the growth of the business. As it is clear fact the technology is developing  in these days and the new mobile apps, online delivery orders, online payment option that attract the people and also increase the expectations of the customers.It has been observed that the new methods of payment are very interesting and they are secure in terms of accounts and money. For example, the Paytm was launched last year to pay and receive the payment directly into the accounts. In Australia, the Melbourne is using the different mode of receiving the payments. The different type of payment methods are the credit card, debit cards, internet banking  and cash on delivery. These all payment solutions are increasing rapidly and becomes very popular in nowadays (Orcao, 2014).

Conclusion

As per the observations, it is accounted that, in last year,  1% to 3% transactions used these apps. This percentage can be increased by making some more improvements in these payment methods like adding marketing and delivery rewards that will lead to retain the customers for a longer period of time. The last year, industry report has proved that the takeaway sales has been increased by 55% as the many fashion brands uses the customer loyalty schemes to retain its customers.  The customer loyalty schemes are the way to attract the client by offering them the services on 25 % less rate.

Expected growth in the coming years - As it has been observed from the previous performance of the company that it is growing rapidly and on the basis of that analysis the future growth of the fashion sector will also grow in the coming few years (Thomassey, 2014). As the organizations started using the new technology that will definitely enhance the performance of the  fashion service sector.

In the different countries , the expected growth of the fashion industry in the next two years has been shown in the above diagram.  As per the survey reports of the fashion industries, the score has been given to the different countries and Vietnam is the country which will grow in the future if the supply chain activities improved in this emerging economy (Maxwell & McAndrew, 2015).

At last it has been concluded that the industry report analysis shows the supply chain trends of the fashion industry as well as the expected growth of the countries in the next coming two years. The technologies played a very important role in the management of the supply chain and the different types of the technologies used by the fashion industries are the cloud computing to track the goods or inventory and the 3D printing for the design and style of the textiles. The trends show the increasing growth in the fashion industries in the coming years and bad conditions in the previous years (Amed, et al., 2016).

References:

Amed, I. & Berg, A., 2016. The State of Fashion 2017: McKinsey & Company, Available at: https://www.mckinsey.com/industries/retail/our-insights/the-state-of-fashion

Amed, I., Berg, A., Brantberg, L. & Hedrich, S., 2016. The state of fashion, Available at: https://www.businessoffashion.com/site/uploads/2016/11/The_State_of_Fashion_2017.pdf

Grail Research, 2009. The Global Fashion Industry – Growth in Emerging Markets, Available at: https://www.integreon.com/pdf/Blog/Global_Fashion_Industry_Growth_in_Emerging_Markets_260.pdf

Hansson, M., 2011. What impact has a fast fashion strategy on fashion companies´ supply chain management?, Available at: https://www.diva-portal.org/smash/get/diva2:456484/FULLTEXT01.pdf

Kumar, S., 2005. Supply Chain Strategies in the Apparel Industry: The Case of Victoria’s Secret, Available at: https://courses.edx.org/asset-v1:MITx+CTL.SC2x+3T2015+type@asset+block/theses_2005_Kumar_Thesis.pdf

Maxwell, D. & McAndrew, L., 2015. State of the Apparel Sector Report, Available at: https://glasaaward.org/wp-content/uploads/2015/05/GLASA_2015_StateofApparelSector_SpecialReport_Water_150624.pdf

Nagurney, A. & Yu, M., 2010. Fashion Supply Chain Management Through Cost and Time Minimization from a Network Perspective, Available at: https://supernet.isenberg.umass.edu/articles/fashionsupplychainmanagement.pdf

Orcao, A., 2014. Global production chains in the fast fashion sector, transports and logistics: the case of the Spanish retailer Inditex. Sience direct journal, December , 214(85), p. 113–127.

Özlen, M., 2013. Fashion Industry Supply Chain Issues: Zara (Azel France/BiH). European Researcher journal, January, 47(4), pp. 999-1008.

Sen, A., 2008. The US fashion industry: A supply chain review. Internatioal Journal of Production Economics, Volume 114, p. 571–593.

Shen, B., 2014. Sustainable Fashion Supply Chain: Lessons from H&M. Sustainability journal, September, Volume 6, pp. 6236-6249.

Thomassey, S., 2014. Sales Forecasting in Apparel and Fashion Industry: A Review