Restructuring The Textile Sourcing Industry

Even as the global economy begins to recover from the devastating effects of the COVID-19 virus, the garment industry continues to get suffer by a perfect storm of fluctuating demand, logistical bottlenecks, increasing prices, and other factors. The supply chain is now more than ever at the forefront of business leaders’ minds. Supply-chain issues in textile sourcing, such as rising costs for transportation, materials, and production space, are here to stay.

There must be a dramatic change to a sourcing paradigm that is adaptable, rapid, sustainable, digitally improved, and focused on the needs of the end user. Drawing on the insights of chief procurement officers (CPOs) at 38 multinational brands and retailers, our 2021 Apparel CPO Survey evaluates the industry’s current standing, forecasts its future trajectory through 2025, and provides actionable advice for navigating the next few years.

Our research shows that significant shifts in the textile world are occurring. Half of the businesses polled had begun reorganizing their internal structures by changing their approaches to sourcing and design, their methods of working, and their commercial goals.

Supply chain blocks 

The path forward, however, will not be simple. Today’s sourcing executives face a number of challenges, including:

• Harbor closures, port congestion, container shortages, and capacity concerns have all played a role in the delays experienced by the shipping industry.
• After COVID-19, demand has been erratic, with both dips and increases. The emergence of consumers’ dormant purchasing power has put a burden on manufacturing and shipping infrastructure.
• The effects of COVID-19 on national industrial infrastructures are still being felt. Economies will continue to struggle for at least another year due to the uneven pace of recovery throughout the world.
• The delayed flow of raw materials from China has caused supply problems across industries. The high cost of raw materials and the scarcity of these items slow down any move toward nearshoring.
• The rise in online sales that has occurred during COVID-19 is not expected to return to its pre-pandemic levels. Concurrently, competition from up-and-coming online fast fashion firms is heating up.

Cost on the rise

It’s never been more obvious that the era of falling sourcing costs has come to an end. Shipping price increases are a top worry for sourcing executives for the first time in the last decade (since our very first Apparel CPO Survey). Further shipping industry mergers might make capacity constraints even more severe, and prices are likely to remain high.

The cost of raw materials has increased dramatically, and future hikes are anticipated. The tendency is fueled in part by the high markups in nearshore marketplaces. Businesses are planning to make the switch to more environmentally friendly fibers as quickly as possible, but this will raise the likelihood of feedstock unpredictability.

Companies in the apparel industry have been shocked into a new direction. This is leading to more adaptability, shorter lead times, and a shift toward demand-driven supply chains.

Simplifying the assortment

The majority of businesses expect significant changes in assortment planning and design choices, moving toward simpler products. Most will choose the “less is more” route, opting for increased responsiveness in the heat of the season at the expense of strategic flexibility.

Seventy-one percent of CEOs polled had nearshoring expansion plans.

Putting an emphasis on productive design and manufacturing processes

Pre-booking, fabric consolidation, and platforming are all expanding. There has been a recent uptick in the use of virtual design due to its ability to shorten development times and lower costs.

Deciding sourcing-country mix

Fashion businesses are shifting their sourcing strategies, with an eye on reshoring and, more specifically, nearshoring, in an effort to safeguard their supply chains. Finding the sweet spot between dependability and adaptability is essential; to this end, diversifying sourcing tactics, such as increasing the number of countries from which you source and adopting dual or multi-country sourcing more often, might be helpful.

Forging partnerships

Strategic partnerships get form between businesses and their most reliable vendors who are willing to put in the time and money to digitize and upskill their workforce. Also, being agile with production cycles and batch sizes. There is a rise in the prevalence of long-term, committed partnerships with a smaller pool of highly developed providers. Half of the businesses polled aim to reduce their supplier base by as much as 25 percent, creating challenges for suppliers that stick to outdated methods.

Smartening up sourcing with digitization

The digitization of the supply chain has become an essential factor in modern business performance because it allows for more agility in terms of both analytics and operational procedures. Virtual sampling, digital interfaces, analytical decision making, and enhanced operational and design procedures have all seen increased usage since the epidemic. Further investment is required as businesses undertake more comprehensive digital transitions.

Moving to a new operating model

The sourcing team’s responsibilities are expanding, and they’ll need to acquire new abilities to fulfill them. Concurrently, a lot of businesses are thinking about opening new sourcing offices. This reorganization clearly shows that Hong Kong is losing its status as a major sourcing center.

The E2E method of developing products is being studied in depth. Successful businesses are reevaluating their own systems, resources, and capabilities. Companies are adjusting their sourcing organization goals to account for the rising importance of full-price sell-through and net-product profit.

Steps towards the success

Common to all of these developments is the need of rethinking how product teams and suppliers collaborate, boosting both internal and external expertise, redefining the function of sourcing departments, and reorganizing whole businesses to better meet the needs of consumers. The absence of digital tools and skills, as well as the prevalence of walled organizational structures, and the inclination to place a higher value on costs than on product margins, are three persistent challenges.

With the sector facing significant sourcing challenges in the near future. We offer a series of solutions aimed at reversing the current trajectory of failure. And setting it on a new course for success.

Turbocharge digital tools and capabilities

Executives in charge of sourcing are often in the front of the digital transformation. The training of employees and making sure the company retains control of the technologies they use. It’s critical to put money into expanding your team’s digital competence. Also toward the creation and implementation of cutting-edge technologies. Instead of concentrating on a few key technologies, we recommend that the garment industry undertake a comprehensive digital and analytics transformation.

Optimize sourcing strategy for net margin

Timetables with enough buffers will be defined by the organization of the future. Many calendars lack sufficient detail or are too general. Significant value may be unlocked by investing in the calendar manager function and defining tasks.

Establishing strategic nearshoring capabilities will be crucial. It is critical to have a firm grasp of the needs of various product categories and the growth potential of each sourcing nation. Establishing appropriate rules and key performance indicators for sourcing firms. It is also not only for cost but also for adaptability and net margin, can assist propel the shift.

Create a (virtual) ecosystem

Cooperating with a small group of reliable vendors is essential for maintaining agility and openness. Getting suppliers on board with your product lifecycle management (PLM) system pays dividends immediately, as does establishing complete visibility into production and shipping schedules. Likewise, it is becoming more vital to construct the ecosystem beyond layer 1. To guarantee an adequate and adaptable supply of raw materials. Developing a (digital) ecosystem not only increases velocity and adaptability, but also guarantees environmentally and socially responsible manufacturing practices.

Align the organization with new incentives and roles

Aligning incentives and objectives is a challenge for many businesses. It is our firm belief that the requisite E2E alignment can get achieve by mapping common KPIs across functions. Lack of attention to procedure and preparation, such as sloppy calendar discipline, has consequences beyond monetary ones. It is our recommendation that these considerations get integration into overall company goals.

To be effective, a sourcing group must reevaluate its role in the supply chain beyond finding the lowest possible price. With less time spent on routine operations like order administration, sourcing teams can focus on developing their supplier-relationship management, digital, and analytics competencies.

Bottom line 

Textile industry has always been a platform for consistent change. Due to various reasons and factors like change in demand, production, availability of material and influence of celebs, this field has faced major shifting. Further, restructuring the textile industry with changes has become very common. Cost change, technological development and entry of AI machines has their own contribution in making the industry new. With these changes, the process of textile sourcing is also enhancing. If you are the one who belongs to the textile industry, then you must require a platform for textile sourcing then we are here. At fabriclore, you can get unlimited possibilities for textile sourcing with customization options.