Even as some countries recover from a catastrophic pandemic, apparel sourcing faces a perfect storm of challenges: demand volatility, supplychain disruptions, rising costs, and profit pressure. These challenges have thrust the supply chain to the top of the agenda of fashion chief executives around the world. To address them, a fundamental shift toward a sourcing model that is flexible, fast, sustainable, digitally enhanced, and consumer-centric is required. This transformation will need to span all areas of the productdevelopment process.
Getting creative with platforming and postponement strategies
Customer-centric design is set to become more and more relevant. Brands are sharpening their assortment by using advanced analytics, pretesting with virtual products, and even introducing elements of consumer co-creation or made to order in a bid to gain better insight into sentiment and preferences ahead of production. Companies hope that better consumer intelligence will increase design adoption rates. To act on shorter-term consumer insights, and to switch from a push to a pull model, agility and efficient processes are key.
We can expect a reduction in product and design complexity to increase efficiency. Design libraries and blocks are important tools here: cutting development time, simplifying costing, enabling design to value, and freeing up the time of design and product teams for where it matters most.
In this area, where creativity and novelty come up intensely against efficiency and cost concerns, fashion companies are persisting with a balanced approach: More than half plan to rely on design blocks from libraries for up to 50 percent of their products. Nonetheless, the use of design blocks and libraries will remain less common than fabric consolidation and material platforming. Going forward, more companies will not simply source finished products, but will take a closer look at their fabric and material practices, from planning to design and sourcing. There will be moves toward more efficient material management; greater agility in the supply chain; and managing costs as well as working capital.
— Fabric from nominated mills: In the period leading up to 2025, more than a third of companies are planning to nominate fabrics for more than 70 percent of their products; slightly more will do so for less than half of their production. To avoid glitches in the process, suppliers that operate an integrated yarn-to-garment setup will be preferred. — Prebooking fabrics: Postponing decision making on colors and/ or styles is a common demand driven technique for bringing final product commitments closer to launch dates, while preloading the time-consuming fabric production process. The inventory management and cost-of-working capital benefits of prebooking yarn or fabrics gained additional traction during pandemic supply-chain disruptions, prompting players to increase this practice. However, this will need to be renegotiated with suppliers, who are asking for new contract terms and payment commitments after experiencing cancellations and full inventory risk during the pandemic. Fabric consolidation and platforming: More and more apparel companies are optimizing levels of fabric complexity across product teams—prompted by the search for cost savings in a sourcing market that moved from deflation to inflation. Platforming across products on greige, dyed, or printed materials is becoming more common. Larger companies will implement such efficiency measures across larger parts of their assortments. Alignment and buy-in across product teams, with clear commitments by designers, merchandisers, and sourcing, is central to successful fabric management.
Certain strategies are key:
· Consolidate multiple materials with similar specifications, utilizing core materials across different styles for additional scale.
· Track teams’ adherence to volume commitments.
· Embed incentives in key performance indicators (KPIs) and performance management for internal teams as well as suppliers.
Best-practice material-management tools include:
· Single-source-of-truth for fabric and trim details in the PLM/PDM system.
· Digitization of materials for product creation and integration into virtual design processes. — Adaptive costing and optimization of fabric yield integrated into the design process.
· Digital bills of materials (BOMs) for most products.
The changing face of design
Virtual design has revolutionized design, prototyping, and sample approval, and has opened new sell in and sales opportunities. The days when 3D design was used by only a few front-runners in the industry are over—it’s one of the boom technologies in fashion, with new use cases still in development. In design, it is an enabler of speed and flexibility, cutting development time and allowing the integration of cost efficiency. It also facilitates a consumer-centric approach, as more and more companies test virtual designs with consumers to increase hit rates. As companies upgrade their product development toolboxes, the fashion industry can match this by upgrading skill sets more broadly. Over the last two years, due to travel restrictions and supply-chain disruptions, there has been a surge in alternative approaches to sampling— ones that do not involve buyers constantly traveling, or the shipping of physical samples around the globe. Nonphysical sample approval is here to stay, with players reducing sample numbers significantly (in some cases, down to one), and not only cutting lead times dramatically (by up to four weeks), but also reducing wastage and carbon footprints. However, virtual sampling requires a very high level of trust in suppliers. Opinions on video approval had become polarized, with some sourcing executives expecting it to become common practice, and a similar number seeing it as a temporary solution only. Before virtual prototyping, video conferences had taken the lead in nonphysical sample approval; going forward, however, product approval via video is losing out.
Moving design and approval closer to production Besides digitization, companies will be employing a more distributed product-development process: relocating design or sample approval to the sourcing locations, and empowering vendors or local sourcing offices to streamline decision making and shorten lead times. Vendor-developed designs will play an increasing role, as apparel brands and retailers utilize the creative input of vendors and shorten lead times by buying off the rack. Direct suppliers continue to build up their design and merchandising capabilities. Overall, however, despite the continued trend for decreasing agent share, this is an area where agents and importers are still seen as valuable resources. Using designs developed in sourcing offices will remain out of the question, although some sourcing organizations have built design capabilities and plan to expand these further. Similarly, there is no clear industry trend toward empowerment of sourcing offices for sample approval. This remains highly dependent on assortment mix (especially the share of basics), the operating model for product development, and sourcingoffice capabilities.What these trends have in common are new ways of working, shared by product teams and suppliers; a need for upskilling internally, and for more skilled suppliers; and a shift in the role of sourcing offices.