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From Fast Fashion To Precision Fashion, The Battle Of Low Supply Of Apparel Supply Chain.

2019/12/26 12:10:00 0

Supply Chain

In May 2018, Hongkong Lifeng group, one of the largest apparel suppliers in the world, announced the signing of a strategic cooperation agreement with Softwear Automation, the US innovation automation sewing technology company, to establish the first fully digitized apparel supply chain as part of its "future supply chain" plan.
Textile and garment manufacturing industry has always been a pioneer of globalization. The earliest industrial transfer in the industry has made Asia the basic hub of the apparel supply chain. Since 1994, the total export volume of China's textile and clothing ranks first in the world. For the whole of Asia, the clothing trade also helped to develop basic industries in South Asia and Southeast Asia. Even the clothing industry allowed the establishment of basic industries in Bangladesh to be established from zero, and clothing trade accounted for more than 80% of the total exports of Bangladesh. But nowadays, a lot of Asian countries, including China, are suffering from a strong shock from the international market.
At present, why is the earthquake called supply chain restructuring occurring and what is the future of the apparel supply chain?
   Polarization of clothing prices
With fast fashion brands like Forever 21, Zara and H&M launching cheap costumes, dizzy price tags appear before the top brand counters. Gucci's T-shirt sells for $950, while H&M's jeans cost only $9.9.
The middle market of the clothing industry is like a missing hole. It is being pulled up by the fast fashion and high-end fashion which are heading for two extreme prices. Although high-end brands claim that their products are better, their accessories are more expensive and their manufacturing costs are higher, they do not cost 6-8 times more. The price beyond the pure production cost has become a halo of high-end brands, and continues to introduce expensive new products to demonstrate the brand's good condition abroad, proving that they deserve the premium to attract consumers. Most of the fast fashion brands do not have more actions to make up for the vacancy, but choose to go further on the price slant.
Over the past five or six years, cotton prices have risen by more than 30%, while clothing prices have been cut down. The result of fast fashion expansion is that the sale of cheap clothing is increasingly concentrated in large multinational brands. They rely heavily on supply chains, issuing large quantities of orders, thus squeezing out the space for flexibility, not only setting production schedules, but also making price easily, and this kind of game has finally reached the stage of being verified.
In October, the US fast fashion brand Forever 21 filed a bankruptcy petition document to the court, vividly depicting the American spirit story of the rise of American immigrants. In 1981, a Korean couple migrated to Losangeles, the United States, facing a situation that many immigrant companions would face: no savings, no higher education, and few social contacts in the United States. Forever 21 came into being and used cheap costumes to please its target audience. However, Forever 21 has not grown with the millennial generation. The change of tastes and shopping habits of consumers will rely too much on the Forever 21 of the entity to get rid of the runway.
And those survivors: Zara, H&M, UNIQLO, had to run faster, adapt to new technologies faster, change product lines faster and react faster. They invest in technology to improve customer experience in the store, and establish data management and intelligent logistics systems to optimize their products and supply chains. Make sure that the right clothing is placed in front of the right customers at the right time. This is the evolution from "fast fashion" to "precise fashion". They need to understand the tastes of individual customers and recommend "precise fashion" suitable for clothing. Otherwise, these brands will easily be defeated by social networking providers in the relentless fast fashion competition.
Precision fashion means paying more attention to speed, accuracy, traceability and adaptability rather than mass production.
   Two, global supply chain changes
In order to speed up and cut prices, fast fashion supply chains are often contractors and subcontractors without formal documents, mainly composed of low-cost labor and cheap land. Constantly shifting production bases to continuously seek lower wages and cheaper land, and partners willing to produce at a lower cost. This will extend the supply chain of fast fashion brands to a large geographical distance: separating the cloth making factory from the sewing factory area, and the distance from thousands of kilometers to a next production link will take several weeks.
At first, this place was China, but with the development of China and the rising cost, the place became Bangladesh, Kampuchea and other South Asian and Southeast Asian countries. According to the global trade data released by WTO, China's share in the global apparel trade market has been shrinking in recent years. At one time, South and Southeast Asian countries were regarded as China's pursuers and strong competitors in clothing trade. Now many domestic manufacturers have moved their production bases here.
In fact, in the 2018 trade data released by WTO, only Vietnam accounted for the upward trend in the first five exporters (land), accounting for 6.2% in 2018, 0.3 percentage points higher than in 2017. For Bangladesh, which is located only in China's second largest garment manufacturing market, its overcrowded garment manufacturing industry can reflect the precarious situation of garment manufacturing. Nearly 2/3 of its clothing exports have gone to Europe, while export prices have dropped by about 5%.
Fast fashion brands continue to exert price pressure on production bases, split production links, and do their best to reduce production costs until they find that they have to react immediately to the trend of sudden changes in Instagram. As technology has become more advanced and can replace the cheap labor force that maintains the apparel industry, the brand has invested heavily in automation and digitization. In order to cooperate with them, the supplier moved the production center closer to the junction of infrastructure, raw materials and target markets, so that the brand could save valuable turnaround time.
However, technology can not solve all the problems. The delay in procurement and transportation is usually caused by weak infrastructure and basic geographical location. With the development of garment manufacturing in the direction of speed and efficiency, the physical distance between components of the supply chain is becoming more and more important. To solve this problem, fast fashion brands began to reverse the trend of decentralized supply chain over the past decades. Fast fashion brands are concentrating on production centers, and even transferring production to a more close position to their consumers to reduce the time lost in transportation. More and more European and American brands are beginning to choose European and American factories to serve themselves.
It is often misunderstood that automated production is mainly to reduce production costs, but in most cases, this is to shorten the delivery time and speed of the shelves, to meet the needs of consumers for faster delivery. For precision fashion, instead of going through the whole production cycle and returning products from Asia, it is better to directly establish local supply chains and directly produce them in close proximity. Although the production cost of products will be higher, they can shorten their entire cycle to 1/4, and the whole process will take only about five weeks.
This change has become a key issue for South Asian and Southeast Asian countries, as well as the domestic apparel supply chain, and how to rethink the role of the apparel industry in the value chain and how to face diversified production pressures.
Three, low valley war
This is a battle of low prices. Those factories that supply Adidas, Nike, Puma or other international clothing brands are under increasing pressure from their customers. The average delivery time has been shortened to 90 days from 120 days 4 years ago. Now it may be 60 days, and even more, the delivery time of some factories is much shorter. The rapid change of fashion trend requires the flexibility of factories and the grasp of wind direction. Whoever can respond faster can win the victory.
Many companies including China have rapidly invested in digitization and automation, emphasizing precise fashion, demanding less production, short selling period and quick response to the market. This has brought advantages to the countries with perfect foundation and mature logistics, and at a certain distance, China's natural advantages have come back again. Even so, factors such as Sino US trade war and wage rise still force some companies to transfer their production overseas.
And the "made in America" made in China's manufacturing core is also conducive to coping with this problem. Just like the "future supply chain plan" of Li Feng Group, automation is entering the garment manufacturing industry, and many processes can be automated, such as cutting, printing, dyeing, sorting and packaging, with little manual intervention. Managers and directors can monitor and manage the entire production line through mobile phones, which helps offset the high wages of the United States.
In 2017, Suzhou Industrial Park Tianyuan garments, one of Adidas's largest suppliers, opened a factory in Little Rock, Arkansas, USA. It employs about 150 people to produce high-end sports apparel for the factory. They do not have to be a skilled garment worker in Little Rock, because most of the processes in this factory are at least partially automated. The pace of the fashion industry is accelerating. If we are closer to our customers, the production and transportation cycle will be shortened. This is the strategy adopted by Tianyuan. Between February and September this year, the factory produced 600 thousand products.
The new technology is changing these garment factories, making it more profitable to directly establish the local supply chain. The Tianyuan clothing factory in Little Rock is expected to produce about 1 million 200 thousand T-shirts a year, and the cost of each piece is about 33 cents, which is much less than the cost of low labor cost countries, and the time is shorter.
Of course, such a huge change will require a corresponding price, and many clothing retailers and factory stores will be closed down. And this price is just like a stepping stone to this low point war. There are still some people who can step over the experience and lessons of their predecessors and go up step by step to create a new fashion supply chain.

Source: cross border Amie Show

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