Technology is at the heart of the apparel and textile industry’s emergence from post-Covid lockdown, with digitalisation now key to helping brands navigate the fragile system the pandemic has exposed.
“Technology is not a ‘nice to have,’ it’s a necessity, and the last three months has really shown that,” says Flora Davidson, co-founder of product development and production management platform SupplyCompass, during a recent webinar on ‘Leveraging Technology to Make Better Decisions.‘
“I’ve seen so many more businesses come to us during this period. The fashion industry is a very creative industry and really getting creative and design teams to understand that technology is not at odds with the work they’re doing and actually it could be an enabler of creativity and they can embrace it and work differently.”
Davidson says the consumer-facing side of fashion has taken great leaps, but the back end supply chain and logistics business needs to catch up.
Christos Chamberlain, UK general manager of freight forwarding company Flexport, believes it is important to acknowledge the impact of the pandemic.
“Looking at data, we saw it as a series of shocks, with China shutting down and then on the demand side as countries went into lockdown. And shocks are not good for supply chains, especially when things tend to be set up for high efficiency.
“There has been, in stable times, a greater push to be more efficient, and what Covid has shown very starkly, is that actually that creates a relatively fragile system,” he continues. “Now you see the conversation shifting much more to how do we get more resilience into the supply chain? How do we get more agility into the supply chain? Those questions are different, and for me, it’s one of the drivers that we definitely see for brands thinking more about digital solutions.”
Fashion lagging behind
So why is the fashion industry so far behind when it comes to digitalisation? Davidson believes it’s because the sector is so complicated. “So many different sides need their own solutions. What we build for a brand is not necessarily what is going to work for a manufacturer.”
She stresses the importance of getting the basics of efficient communication right, and moving away from fragmented decision-making and towards a standardisation of different processes.
Chamberlain notes the same in freight forwarding, explaining that data on a platform provides a variety of options, whether it be onboarding vendors, or comparing air freight versus ocean freight.
“One of the areas we are involved in is fast fashion, and if you think about the digital transformation that has happened there, it’s very much on the consumer side. It is data that has helped faster reaction to trends. And that development was very rapid, but the supply chain side of it was not as much of a problem. You could react to consumer trends very fast and turn around designs in a week and get them shipped over from China. So from a supply chain side, that requirement for technology just wasn’t as high on the agenda.
“But if you look at what has happened to air freight since Covid, with passenger traffic coming out, that accounts for 50% of freight capacity because freight travels in the belly of passenger planes. So now you have a situation where that world is far less stable, so you have to find other solutions and you have to be a little more detailed about what’s really going on in that supply chain because there’s not that ready flow.”
A sustainable approach
Yet efficiency and sustainability go hand-in-hand, and in areas such as making good buying choices, it is crucial to get the process right.
“Transparency and traceability is something we are working really hard towards,” says Davidson. “And it comes back to getting the basics right in order to easily map and trace a supply chain; it needs to have a digital core. You need technology to find, authenticate and be sure it does come from that source. Otherwise every single product, with every single supply chain, with every connection that one brand makes, it’s too costly and too time-consuming. So a lot really technology is the thing that allows a lot of the key requirements within sustainability to be scalable, affordable and fast.”
And data can play an important part in this, Davidson adds. “There are some great tools out there but generally it’s a relatively costly and cumbersome process. We want to move towards it being an easier thing for companies to do. We collect a mixture of manual and digital data to measure impact, but our aim is for it all to be digital.”
For Flexport, data is used to measure the carbon footprint of every shipment for clients, for example. “It’s a way of bringing that data and the impact very easily to people and it’s not tremendously difficult to calculate.
“The other problem area that technology helps solve is not just about real-time visibility, data, and workflows, but also reporting after the facts. With technology platforms you also get historical data of what has happened, and that allows you to do analysis…and make better decisions.”
Operating post Covid-19
According to software solutions firm Inturn, the industry’s challenges began before Covid-19 hit: a lack of product differentiation, a shift in consumer spending towards travel and entertainment, pricing pressure in the form of regular discounts, and dwindling foot traffic for brick and mortar stores. These factors were all compounded by a significant lag in innovation and data use to plan better. Now, with the pandemic, existing issues are heightened.
“Due to the seasonal cadence there’s massive supply valued at hundreds of billions of dollars,” says Ronen Lazar, CEO and co-founder of Inturn. “Spending is down nearly 70%. Luxury has over $125bn of unsold inventory for the quarter. Fast fashion has reported a significant decline in sales. The theme seems to be that the more mainstream a brand is, the better they’re doing and those with strong e-commerce businesses are doing significantly better, although their businesses have still taken a massive hit.
“There has been a lot of discussion around supply chain disruption. Although the impact has been significant, the real challenge is with demand. Even as we get back to normal, demand will be low and this will lead to what some are calling ‘the biggest liquidation sale in history’.”
Lazar says one of the most significant challenges is digital readiness for teams to operate remotely.
“Many companies are simply incapable of operating in this manner. This very much needs to be an area of immediate focus. A second is around inventory liquidation. Most anticipate things to be slow even once stores reopen. With some of the large off-price retailers closed and no open-to-buy dollars available, this poses the most significant issue for fashion brands today. So the question is, where will all the inventory go? And even once the discounters re-open, it will be extremely challenging to sell when a tsunami of Excel spreadsheets is presented to buyers all at once.”
Like Davidson and Chamberlain, Lazar stresses the importance of having a digital supply chain in place.
“Supply chains are traditionally linear in nature, with a set progression of design, plan, source, make and deliver. The concept of digital supply chain enables companies to react to constantly changing demand signals created by consumers, to make fast, accurate data-driven decisions and ultimately to achieve the right balance of supply and demand. The majority of companies have reported plans to expedite migration into digitally driven business by reallocating resources and reshuffling the organisation to support this transformation,” he explains.
“Fashion is a known late adopter of technology. In general, the entire way that business is done needs an overhaul. Many in the business are self-described merchants with a “nose” for the business. Some of the most successful investors and operators in the apparel and footwear space acknowledge that they ‘lost their smell.’ As it relates to the digital supply chain, those that have embraced new ways of operating have thrived by implementing agile digital supply chains.”