Fashion Industry Urged to Diversify Supply Chain Strategies Amid Persistent Disruptions
The Covid-19 pandemic and labor disputes have caused significant supply chain disruptions in the fashion industry, prompting companies to reevaluate their contingency plans. Port stoppages and strike threats have further highlighted the need for improved planning strategies.
The fashion industry's production system, largely unchanged over the past four decades, contributes to long lead times and delivery issues. This outdated system, coupled with labor issues, extreme weather, and trade disputes, has led to persistent supply chain disruptions. In recent years, many companies have expanded production in Southeast Asia and the Near East due to favorable business conditions and strategic locations.
In 2021, West Coast ports experienced periodic disruptions due to stalled labor negotiations between the International Longshore & Warehouse Union and the Pacific Maritime Association. Intervention by the U.S. labor secretary helped broker a tentative agreement in June 2022, with 75% of ILWU members voting in favor. Similarly, negotiations between UPS and its union went down to the wire before a deal was reached in late July 2022. A 2022 McKinsey report emphasized the need for investment in faster and geographically closer manufacturing systems to mitigate these disruptions.
Given the constant supply chain issues and potential for increased disruption in the coming decade, fashion industry leaders are advised to diversify their strategies. This includes investing in modern production systems and exploring new manufacturing locations to maintain efficiency and market relevance.
