Fashion Supply Chains Emerging out of COVID-19

As the devastating effects of the COVID-19 pandemic slowly recede, fashion supply chains across the world are finding new priorities and ways to reorganize themselves. Creating safe workplaces for garment workers, discovering new ways of collaboration, enabling greater traceability of products and processes and adapting to the ripples in demand and supply, the fashion industry is focused on creating more resilient systems, based on the critical lessons learned.

SupplyCompass, Santander UK and Inspectorio, a quality and sustainability network platform discuss the road ahead, and what fashion supply chains should focus on as they look to rebuild with a fresh, new lens.

How are global supply chains getting back on track after COVID-19? 

Srishti Dhawan, Head of Supply Chain Innovation at SupplyCompass comments: “COVID-19 has challenged fashion businesses of all shapes and sizes to re-look at business practices and forced many to adopt new ways of working. With restricted access to factories, technology is now playing a key role in defining how brands build trust, collaborate with their supply chain partners and empower them to deliver on-time, to a high quality. Initially, we saw a large number of cancellations across the supply chain, however we are now seeing an upswing in orders being placed across our network.  

As a first step measure, it is essential to ensure that supply chains are set up to operate safely. For this, SupplyCompass has partnered with Inspectorio – the quality and sustainability network platform powered by AI – to carry out factory-level inspections to ensure that our network is set up in the right way from a health and safety perspective. We are advising our factories on the measures they need to put in place and providing guidance and support to ensure these can be met. 

Secondly, we are seeing the emergence of new business models and technology opportunities across the supply chain. From brands, we are noticing new models of selling such as ‘pre-order’ and 3D sampling to name a few. At SupplyCompass, we are working closely with our network to ensure they are set up to respond to new and agile ways of working. For example, our new deadstock material initiative enables factories to sell fabric from previous orders that may have been cancelled, to work on new orders with shorter lead times.”

Some key trends we are noticing to ensure supply chains remain active and weather further storms are listed below:

1. Worker safety: Our network has now resumed business operations, with factories opening on a reduced capacity to ensure worker health and safety. Inspectorio’s Rise COVID-19 solution has enabled SupplyCompass to map our current network against ILO and OSHA requirements to ensure health and safety standards are adhered to across the supply chain.

2. Producing closer to raw materials: As a business, SupplyCompass has developed and grown our network manufacturers close to source materials. We have carefully mapped out where certain raw materials are sourced from and built a strong network of manufacturers around these hotspots. India is a key market for us and while there have been disruptions due to COVID-19, producing closer to source materials has meant our supply chains have been able to re-open faster and start producing orders. There is now increased demand for keeping production more localised to avoid delays in imports.

3. New models and technology: Brands are now also experimenting with new models of selling, as well as with using technology to reduce wasteful production. Brands are now trying to sell either through pre-orders, or 3D modelling before going into full swing production. In addition, across large-scale retailers as well as SMEs, we are now seeing increased demand for smaller production runs. We are working closely with our network to ensure they are set up to respond to new and agile ways of working. For example, our new deadstock material initiative enables factories to sell fabric from previous orders that may have been cancelled, to work on new orders with shorter lead times. 

Anastasia Reshetnikova, Director of Partnerships at SupplyCompass comments: “Inspectorio is one of the largest players in the industry when it comes to managing QA and QC in the fashion industry. Their digital tools are used by over 15,000 vendor and factory organisations across the globe to conduct quality assurance inspections and compliance audits.

They have developed a heat map that displays COVID-19 location-based updates, in parallel with real-time results from COVID-19 self-assessments. Inspectorio’s Rise COVID-19 solution is a unique response tool that can help manufacturers to self-access the safety of their staff and factories. By onboarding SupplyCompass factories, we can request assessments to be made as often as monthly and weekly basis. Our Senior Product Manager is holding her hand on the pulse and has a super close relationship with our major factories tracking the situation through the platform and in person.

Self-assessment is carried out through a questionnaire and a photo record. Once submitted, results are calculated by the Inspectorio Rise system, and reports & CAPA are automatically generated. All the standards are in line with WHO and UN. These are globally recognised and are supported by the Government of India. We then get a live update on our factories, regions and other factories around the world on the outbreak and health situation. This enables us to alert our existing manufacturer network and the brads of any potential implications of the second wave and any further health issues. Most importantly the programme is designed to save lives and keep workers in their jobs.”

How can global supply chains safeguard against another COVID-19 outbreak? 

Srishti Dhawan: “Emerging out of COVID, fashion supply chains will need to reset a system that has largely been based on outdated processes. COVID has highlighted the need to re-imagine supply chains: make them smarter and nimbler to weather any future storms.

Safeguarding is possible, through: 

Digital Collaboration: Previously, supply chains relied on outdated systems and processes to manage supply chains. With the lockdown, there has been an increase in demand for finding new and better ways of working together. Technology plays a key role here. A digital tool that provides easy access to both brands and manufacturers is key – which is what SupplyCompass is – to make collaboration easier, faster and reliable. Everything is stored on one platform, with one-click access to remote global teams to see what is going on with their orders in real-time.

Proactive Forecasting: We are working closely with our brand partners to enable them to proactively and intelligently forecast future production output. This helps in planning production capacity and ensures a brand is fully aware of risks if supply chains close down again in the future.

Financial Resilience: Cash is king in the supply chain. With disruptions all-round, brands are cash-strapped and need better payment terms with their manufacturers. Manufacturers, on the other hand, need faster payments to make payments to their own suppliers and re-start production. We are partnering with Santander to offer a robust working capital solution.”

John Carroll, Head of International and Transactional Banking, Santander UK, comments: “Of the many challenges to businesses from COVID-19, robust and resilient supply chains have emerged as amongst the most critical. Despite the gravity of the overall crisis, demand in niche sectors such as ‘online household goods’ have reported growth of over 100%, which further highlighted the importance of diversified supply chains and plans to reduce dependency on one sourcing country.

We examined the efficiencies of a digitised supply chain and the sourcing opportunities which India, a significant producer of clothing exports, offers. India is keen to collaborate with UK importers with new apparel parks being opened, and focused regional clusters of manufacturing providing a ‘one- stop shop’.

Santander’s ecosystem of partners that operate in, and help navigate the complexities of trading in India, can support through ‘connections’ to manufacturers via a digital supply chain platform provided by SupplyCompass, and/or supporting with in-country setup through Sannam S4. With changing supplier payment terms, a robust working capital solution and ‘transparency’ of payment remains paramount to strengthen supplier relationships, which is where our own Supplier Finance solution can support.”

What longer-term changes/trends can we expect to see in the coming months/years, as a result of COVID-19? 

Srishti Dhawan:  “Responsive supply chains with greater transparency and visibility across the entire value chain will become the norm in the next few years. Digital collaborations and interactions, single access points for information and real-time visibility on networks will define the new way of working. The backbone of supply chains will become technology, underpinned by rigorous data collection.

Digital collaboration: Cloud-based collaborative platforms will enhance information sharing across decentralised teams and supply chain stakeholders. SupplyCompass offers global teams to work on product development and production managed through a single application with their manufacturers. We have enabled teams to make faster decisions, reduce duplication of effort and provided a single version of the truth during the design to delivery process. Applications like ours will become absolutely essential to de-risk future production runs. 

Rapid generation of insights: Brands will need to stay on top of the game, predict any areas of risks and find solutions to mitigate their production with speed and efficiency. Our platform can enable teams to gain insights on rejection rates, sample hit-rates, production timelines across the entire network, brand leadership teams will become better equipped to identify and predict risks and find solutions to mitigate these with greater speed and efficiency.

Real-time network visibility: Visibility into the entire supply chain including location, number of orders, stage of orders will become crucial in determining overall business risks. A single point of access to this information will become crucial. Technology will enable leadership teams to make informed decisions on existing supply chains and plan future expansions.”