Lynne Sampson | Content Strategist | May 9, 2023
As you consider the apparel within your company's inventory, do you know the origins of the fabrics or the assembly location for each garment? Are you aware of the diverse materials used in creating your footwear products, or the multiple countries involved in producing your accessories? While these questions might not be top of mind for the average consumer, they are important for companies involved in procuring, producing, and marketing fashion garments.
A supply chain is a coordinated network of companies and business services involved in sourcing, manufacturing, shipping, storing, and selling products. Supply chain activities include designing the product, sourcing raw materials and parts, evaluating and selecting suppliers, demand planning, manufacturing, shipping (including transportation and fleet management), warehousing, and managing customer orders. Today’s supply chains often span the globe, extending into trade activities such as customs, tariffs, and border crossings.
The supply chain in the fashion industry refers to the complex network of businesses and services that bring clothing and accessories (shoes, belts, purses, jewelry, and more) from concept to customer. Stakeholders in the fashion supply chain include growers of silk, cotton, and linen; textile manufacturers; distributors; retailers; third-party logistics providers; and more. A successful fashion supply chain has transparent communications among all parties at each stage. Communications are important to reduce lead times, improve quality, and ensure timely delivery to retailers and customers. A strong fashion supply chain helps reduce production, inventory, and logistics costs while increasing customer satisfaction.
The fashion supply chain starts with designs for the clothing or accessories to be manufactured, including specifications such as colors, fabrics, stitching, and fastenings (buttons, zips, Velcro, and so forth). When a manufacturer receives the specs, it sources the raw materials, develops a production plan, manufactures and assembles the goods, and distributes the finished products to warehouses. From there, the goods are shipped to retailers, for sale to customers online and in brick-and-mortar stores. Retailers typically also provide a customer service team to assist with questions and returns.
The global fashion industry generated more than US$1.5 trillion in revenue in 2022, according to Statista, with most of the manufacturing and production done in countries across Asia, due to their relatively low wages. Increasingly, customers in North America and Europe are demanding that fashion brands and retailers adhere to fair labor and environmental practices, pressuring the industry to evaluate suppliers based, in part, on those practices. Customers also want fashion brands and retailers to make that provenance information available on their websites, product packaging, and shelf labels.
The supply chain is important for the fashion industry because it ensures that brands and retailers can produce and deliver the right garments, accessories, and other products at the right time to meet ever-changing customer demands in a highly competitive market. A well-managed supply chain results in faster turnarounds, lower costs, and an improved customer experience, helping fashion producers and retailers maximize their profits. Companies rely heavily on technology to manage every step of their supply chains to ensure those results.
The fashion supply chain begins with creating designs by a fashion designer. These designs then go to either a textile sourcing company or a garment manufacturing facility that turns fabrics into pieces of clothing. Once manufactured, the apparel is inspected for quality control. If the garments pass that step, they’re shipped to online distributors and logistics warehouses or directly to brick-and-mortar retail stores, ready for customers to buy. Ultimately, the efficient flow of information and materials within this complex network is what drives the fashion industry forward.
Fashion industry supply chain processes can vary depending on market conditions, customer demand, and the retailer’s approach. For example, some retailers want to ensure that their products and underlying raw materials are sourced from suppliers that adhere to fair labor practices and have strict environmental standards. In general, though, a typical supply chain process looks like the following:
Fashion supply chain management involves collecting data at every step of the process and analyzing that data to make improvements. For example, if a shipping lane closes because of a political dispute, or if a key supplier goes out of business, supply chain managers want this information immediately to work around the disruptions quickly. The benefits of supply chain management include:
Fashion supply chains are complicated, and the biggest challenges are associated with organizing and analyzing all the information associated with every step. Companies rely heavily on supply chain management software to create plans, select suppliers, place orders, track progress, manage warehouses, plan logistics, and deliver goods to buyers. The following are among the most common challenges:
Fashion companies compete with one another on cost, price, style, quality, customer satisfaction, and sustainability practices. To stay competitive, fashion companies can follow a number of supply chain best practices, from sourcing to sale.
The more complex a company’s fashion supply chain, the more supply chain management applications can improve its efficiency. A good supply chain management system will help automate many steps in the supply chain. For example, procurement and order management systems can eliminate manual paperwork and data reentry when handing off raw materials from supplier to manufacturer or when moving finished goods from manufacturer to warehouse to retailer. Such systems help automate as many steps as possible, improve tracking, reduce mistakes and delays, and increase profitability. If your supply chain is riddled with manual handoffs, paperwork, or missing inventory, it’s time to implement fashion supply chain management.
The fashion industry is expected to undergo a massive transformation with the advent of AI and machine learning. Supply chain management software with built-in AI, machine learning, and predictive models can help companies adjust quickly to avoid potential interruptions in the chain. For example, machine learning can learn from a supplier's performance over time and apply built-in algorithms to predict future reliability. It can predict the likelihood of the supplier failing to deliver on its orders or the probability of a retail store failing to pay its bills on time. Companies can then take action to prevent these issues, such as switching to a different supplier for the same product or reducing the credit limit for the late-paying store. AI can also pull third-party data, such as weather forecasts, into the algorithm to predict potential shortfalls, including those caused by the Texas drought that’s affecting cotton production. With these advancements, fashion companies are gradually building smarter platforms that can help improve supply chain performance and reduce costs.
A well-oiled fashion supply chain can be worth several additional profit margin points. Oracle Retail Supply Chain Management helps fashion companies automate every step, from raw material acquisition to final sale. The entire application suite shares a common data model, ensuring that information remains consistent as it flows between applications. This integration reduces the number of manual handoffs between applications and provides visibility into the data across the entire supply chain. Planners, buyers, manufacturing workers, warehouse employees, shippers, and retail stores can all work with the same data, no matter where they are in the cycle. Oracle Cloud Supply Chain & Manufacturing applications are enhanced with AI and machine learning that continuously analyze the data, helping spot unforeseen problems and recommend solutions.
What is a fashion supply chain?
A fashion supply chain is the network of companies involved in the sourcing, manufacture, distribution, fulfillment, warehousing, and sale of clothing and accessories.
What are the four levels in the fashion industry supply chain?
The four levels in the fashion industry supply chain are primary, secondary, retail, and auxiliary. These correspond roughly to raw material production, apparel fabrication, finished product distribution and sale, and the media, consultants, and trade associations that surround the industry.
What are the steps in the fashion supply chain?
The steps in the fashion supply chain typically involve designing the apparel, evaluating and selecting raw material suppliers, sourcing those materials, manufacturing the apparel, transporting it to wholesalers, distributing it to retailers, and finally selling it to customers. Other activities and processes, such as sales, marketing, and merchandising, are essential to reaching customers and generating demand.