Manufacturers must future-proof as fashion gets faster –

Manufacturers must realign with the changing needs of the fast-shifting fashion business if they are to thrive in the coming decades

If there’s one thing the coronavirus pandemic has exposed, it’s that successful retailers and brands are the ones who are nimble, agile and flexible to meet customers’ rapidly changing needs. Here, Roit Kathiala sets out steps for manufacturers to realign with this fast-shifting fashion business if they want to stay relevant in the coming decades. 

The coronavirus pandemic has triggered a crisis of unforeseen proportions across fashion retail, the effect of which has cascaded down through the entire supply chain to every company and even the factory workers. Store closures, supply problems, factory shutdowns, layoffs, furloughs, non-payment of wages, bankruptcies and more have spread around the world – impacting the entire industry in one way or another.

As the world begins to slowly reopen, the problems faced by fashion manufacturers are far from over. Those who have managed to stay afloat after navigating numerous issues such as getting paid for ready goods, paying their workers, suppliers and other dues, managing the fate of cancelled raw materials, and scaling down their workforces for empty capacities caused by the sudden cancellation of orders, will be faced by a completely new normal when the world gets going again.

However, in these extremely challenging times lies a golden opportunity for manufacturers to realign with the true needs of a fast-shifting fashion business so they can thrive in the coming decades.

As Albert Einstein said: “In the midst of every crisis, lies great opportunity.” 

It is in exactly these extremely challenging times that lies a golden opportunity for manufacturers to pivot hard to realign with the true needs of a fast-shifting fashion business to thrive in the coming decades. 

The fashion industry has been taking steps to become more sustainable and move towards digitisation, and while the pace of change is unprecedented, similar disruptions are also taking place across multiple industries like financial services, healthcare, travel and real estate etc. Combined, they are altering long-held beliefs around doing business.

To illustrate the average lifespan of a S&P 500 company in

  • 1958 was circa 60 years
  • 1964 was circa 33 years
  • 1980 was circa 25 years
  • 2012 was circa 20 years
  • By 2027 it is estimated it will be around 12 years!

Within a matter of just 70 years the lifespan of a S&P 500 company has gone down to a fifth of what it was. This illustrates the rapid pace of disruption happening in business all around, where old models become redundant making way for newer models and ways.

It is important that manufacturers who want to stay relevant in the coming decades must also adapt to this shift – and do so fast.

Success will boil down to two main things: Making your core business stronger and more efficient, and investing for the future.

Make your core business stronger

In addition to managing their businesses, the way manufacturers are measured and evaluated by their customers is changing rapidly.

Costs: Good control of costs is extremely important, be they fixed or variable, such as machine worker ratios or wastage and marker efficiencies, which also have a strong sustainability component.

Speed: Speed of execution or responding to customer requests is becoming even more important. This should not be confused with ‘Fast Fashion,’ a term that is also sometimes associated with negative connotations, like poorer quality, lower sustainability and throwaway cheap prices. Independent from Fast Fashion, the case for speedier execution and production has always remained strong and is getting stronger. It is causing ripple effects of making every segment of the industry quicker – from luxury to value. Manufacturers must continue to find ways to reduce their lead-times and hasten their response and interactions with their customers and their own suppliers.

Flexibility and agility: As new challenges emerge, successful retailers and brands are the ones who are nimble, agile and flexible to meet their customers’ demands. Hence it is paramount for their supply chains and manufacturers to mirror this. An illustration of this pivot is during coronavirus lockdown, when consumers found themselves staying at home instead of going to work or to socialise. At extremely short notice, their purchases shifted to comfortable and casual clothes they could wear at home. Retailers had to respond suddenly by adding more inventory in casual clothes and reducing inventory commitments on office and formal wear – all at short notice and in the midst of a pandemic! This ability to react to unforeseen market conditions sets the winners apart.

A few things can help augment the flexibility and agility offered by manufacturers.

  • On-demand capacity: Flexible manufacturing set-ups that can vary capacity and shift between product types. This would include building a flexible pool of labour that can be called in to meet spurts in demand.
  • Upstream partnerships: Shorter and stronger upstream supply chain linkages will help manufacturers take more control of the product and service they are able to deliver to their customers.
  • Internal upgrade: Nimble internal processes, faster communication, quicker decision-making, extremely well-planned capacity and production lead times.
  • Automation and shorter assembly lines: The 20th Century was the day of mass merchants who sold fewer styles in huge quantities; the 21st Century will belong to curated and customised products and experiences. Automation and re-looking at the assembly line or modular manufacturing set-ups in their factories can help manufacturers deliver flexibility and much needed agility.

Invest for the future

This sounds simple, but unfortunately very few manufacturers actually end up doing it. When I say invest for the future I don’t just mean scaling up operations or looking at your customer mix and adjusting it – that should be part of the regular business. I am actually asking manufacturers to invest time to understand what their customers are doing and then reorienting themselves to be better prepared for their fast-changing world – not only for the business they are selling to today, but also the businesses they are becoming. Otherwise running a manufacturing business can seem like dealing with an endless string of crises one after the other.

Truth be told, a lot of retailers and brands have failed to do this themselves and now find themselves struggling to adapt to the shifts in their customers.

Things that are going to be important in the new reality:

Customisation at scale: With customers veering towards customisation, the ability to produce more style variations in smaller quantities per style is going to be critical. Even the mass merchants are offering more and more choices, so it is the time to re-evaluate the validity of long and inflexible assembly line production setups catered for large production runs.

Balance domestic and export business: The Export Oriented Unit (EOU) model of manufacturing has served the industry well with the expansion of globalisation. Countries have become inter-connected with an opportunity to focus on their natural advantages and strengths. A large proportion of manufacturing was geared purely for exports. However, trade wars, rising nationalist sentiments, and an ever-increasing need for speed to market means suppliers have to reduce their reliance on exports only and balance some part of their production for domestic customers as a profitable hedge. The rise of economic prosperity around the world with a large affluent class in each country can now enable this for the first time.

Low touch execution: The days of retailers and brands having large teams to support manufacturers are waning. Manufacturers must be able to take on more of the value-added tasks like merchandising, quality control, social and environmental compliance, product performance and raw material management to reorient themselves to be a “low touch” but responsive manufacturing extension of their customers.

Digitisation of key internal processes: The key to thrive in the digital age is to build digital capabilities to execute internal processes and the ability to share and collaborate with customers and suppliers digitally and in real time. This is a key dimension into which fashion manufacturing is moving into and is a must for a successful 21st Century manufacturer.

To sum up, the fashion business is changing at a very rapid pace, and the manufacturers who will emerge as winners in the future will be those who can realign to serve their customers in ways that makes them successful. To draw a comparison with Dr Spencer Johnson’s famous book ‘Who Moved my Cheese?’, ‘The cheese’ – that is, the fashion manufacturing business – is shifting fast and the window for the whole supply chain and manufacturing ecosystem to adapt will not be open for ever.

Roit Kathiala has led product and supply chain teams of leading fashion companies in Europe, Asia and North America and advises companies on their product, supply chain and digital strategies. Click here to read other articles he has written for just-style.


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