The apparel sector has been fundamentally altered by the impact of Covid-19. The last number of months have seen increasing pressure on the sector due to abrupt order cancellations, halted payments for suppliers and workers along with enforced factory and store closures.
By John Watling
This is against a background of falling customer spending and a sharp decline in demand for clothing and footwear.
When the dust begins to settle, clothing manufacturers and their supply chain partners will need to rebuild their supply chains to serve a radically different set of circumstances.
Nonetheless, the importance of developing sustainable practices remains paramount.
This “restart” gives brands and retailers an opportunity to fundamentally reassess their ways of working, and crucially, work alongside manufacturers and suppliers to build sustainable mechanisms into their supply chain in order to transform the industry.
More than 150-billion garments are manufactured worldwide each year, often ending up far across the globe from where they were created. The annual global spend on fashion equates to the GDP of the world’s 126 poorest countries.
Improving the transparency of the production system could have a singular effect on sustainability, for customers, workforces, stakeholders and our planet. This is one of the great challenges in the manufacturing world: how to bring transparency and traceability to incredibly complicated systems, and how to use it to drive sustainable and ethical practices.
But the potential benefits are huge, and given the scale of the process, there is a diverse range of opportunities.
Research conducted by a team at The Dock, Accenture’s R&D and innovation centre, finds an emerging picture of a sector that is ready for disruption and willing to change.
In “Threads that Bind: Transforming the Supply Chain”, we marry this with insights from some of the world’s largest clothing manufacturers and identify six key considerations for restarting the fashion supply chain in a post-pandemic world:
- Brands and suppliers need to make sustainability systemic by making it integral to their strategy. This means aligning their existing purpose with sustainability goals and considering it against measures of business growth. This should make sustainability an equivalent factor to cost, lead time and quality.
- Sustainability only works if it makes economic sense. Our research shows how brands and suppliers can understand how to reduce their negative impact on the ecosystem to maintain and grow their business in the long term.
- Organisations need to develop partnerships and build strategic cross-tier relationships to put themselves on the leading edge of the industry.
- The industry needs to find common ground when it comes to sustainability standards and working practices. The good news is that the industry already operates in an environment of high interdependence so this should be an extension of existing practices, rather than a radical evolution.
- Audits are an industry-wide challenge. If brands collaborate to standardise audit requirements and their frequency, they could radically improve the efficiency and visibility of one of the most challenging parts of the apparel supply chain.
- Legacy systems need a radical restyle. Brands and suppliers need to improve inefficient processes, by upgrading systems and unlocking the trapped value in the formidable amount of data they are already collecting.
Colleen Connolly, senior innovation lead at Accenture’s The Dock, shared this insight: ‘When we were conducting this research earlier this year, there was a perspective that a blocker to the injection of transparency into the supply chain was that the system was unchangeable because the system was unstoppable.
“Now, we are looking at this industry in pause and the frenetic pace of production is being put under the microscope with people and businesses reassessing what they really need. Sustainability and transparency must be front and centre when retail businesses press play again.”
This is an industry that is heavily interdependent, as illustrated by recent challenges.
However, this can be turned to its advantage. Creating meaningful change will require a huge amount of collaboration across strategy, transparency, trust and guidance – but, unlike other sectors, many of these companies are already accustomed to working with each other, meaning they are already primed for change.
From securing sustainable water supplies to evolving shared auditing principles, a resilient supply chain will be essential to future-proofing their business.
Doing nothing is not an option – when it comes to sustainability, brands no longer have the luxury of choice around whether to share their consumers’ values.
And the risk is higher when it comes to fashion: this is an industry where the consumer expects to see their own shifting values and tastes reflected almost immediately on the rack.
In a post-Covid world, customers are likely to be even more discerning than ever before.
There is no one solution to such a complex problem, made even more challenging due to the current environment. Technology will not solve all these issues, but it can be used to improve conditions and transparency in nearly all of them.
John Watling is the MD: retail business at Accenture in Africa