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Fast Fashion Supply Chain Strategy

The Fast Fashion Supply Chain – A Strategy of Speed

Due to the impact of fast fashion and digital brands, fashion leaders will need to take more risks to stay ahead of the pack. This means embracing more flexible approaches in many parts of their operations, whether it’s their business models, supply chains, or distribution strategies.

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In a polarized fashion market that has hollowed out the middle, leaving luxury and affordable, budget fashion items are thriving. Not only is this still a focus for growth, there is a lot to be learned from how this segment operates.

Fast fashion has changed the market for good. Across most apparel categories, items are kept half as long as they were over a decade ago, with the some of the lowest priced garments disposed of after seven or eight wears, according to McKinsey.

future of fashion supply chain

The Future of Fashion

Check out the 2019/2020 Future of Fashion white paper and discover the trends changing the fabric of fashion.

Companies have achieved this by compressing production cycles. In the space of two weeks a trend exhibited on the catwalk can be turned into an affordable high street fashion item on the shelves of a store. This enables shoppers to expand their wardrobes in an affordable manner and to refresh them at speed, keeping up with the latest fads. A tight grip on the supply chain is essential in the process.

This is epitomized by brands like H&M, Primark, Boohoo, and Forever21 churning out affordable garments. It used to be about slashing prices simply to shift stock and push sales, but this model has shifted. When companies discount to shift stock, margins are compromised.

There are many ways labels feed consumers’ insatiable demand for fast fashion. For instance, Revolve’s reordering platform automatically pushes out a notification to buyers on a daily basis when an item is selling quickly.

There is now a backlash against the fast fashion movement driven by a need for more sustainability within the industry. The idea of ‘craft’ or ‘artisan’ is being profiled as an antidote to fast fashion. The concept and culture focused on the idea that fashion items should be crafted by craftsmen and women, as well as artisans.

The fashion supply chain

Those in the fashion business that have a formidable supply chain – taking their products from a nascent trend to a clickable online purchase with a deliverable garment at lightning fast pace – are the ones that are winning. This involves superior digitalisation, great analytics, and a backend process that is second-to-none. Key elements are:

Quick turnaround – Turning out the latest trends in ultra-quick time is what it’s all about. Don’t forget a garment takes roughly the same amount of time to make whatever it is. It’s the processes before and after production that take the time. When designs can go on sale in as little as two weeks it can make a big difference.

Take Zara, its 300 designers can create 12,000 new patterns every year. For the fastest-fashion pieces, it takes six weeks to go from a sketched design to a product in a store. Now take Boohoo it can design, manufacture and dispatch batches of 300 pieces of a particular design in two weeks. That makes it even more responsive to customers.

Inventory turnover – This is crucial for the bottom line. There’s no point in clothes being on the rack, they’re better off in someone’s wardrobe. Some companies in the fast fashion business realize this. Boohoo turns over its inventory 6.7 times a year, compared with 4.4 times for Inditex, owner of Zara, and 3.1 times for ASOS.

Test and repeat – This is a good tactic for those brands that work heavily online. They can try out examples of styles before ramping up production. For instance, Boohoo makes just 300 examples of a single style before going all out on those that sell best.

Transparency – Consumers are increasingly expecting companies to be fully transparent about their supply chain, according to McKinsey. There are now many questions around how the industry values those who grow the cotton, stitch the products, the environment and equitable profit for those in the supply chain. Many believe positive change starts with transparency and traceability.

The environment – Supply chain agility and fast fashion is a strength for a good number of companies. But right now, this is directly contributing to our overconsumption of clothes, which is having a monumental impact on the environment. Sustainability in fashion is a must, and sustainable clothing brands are becoming more and more popular among Gen Z and Millennial consumers.

Fast Fashion Supply Chain Boohoo

Smart forecasting

To get ahead of the game, smart fashion brands are investing in forecasting efforts. This is essentially predicting the garments, shapes, and colors that consumers will click on in a frenzy with the coming seasons.

Dominated by the likes of WGSN and Stylesight, who shed light on the latest fashions, it has been a thoroughly instinctual affair, but not anymore.

Now it’s all about data-driven analysis. Forecasting agencies pour over information collated from retailers’ IT systems, and supply chains. We also live in the social media age where online communities are easy to follow and access because they live on Instagram. It’s a marriage of both quantitative data and qualitative analysis both for short and long-term predictions.

The integration of artificial intelligence, machine learning with fashion is still a nascent science. Right now, algorithms are playing a complementary role in the fashion design department. Will the ingenuity of exciting designers prevail over the homogeneity of data-driven algorithms? It remains to be seen.

AI is yet to generate creative concepts itself, designers are unlikely to be out of a job in the years to come and need to keep on innovating and experimenting. However, with the ability to analyse spending patterns, preferences, and trends in seconds, AI-driven insights will continue to power forecasting at lightning speeds.

Heuritech works with the likes of Louis Vuitton, Dior, and Adidas. The company’s data also helps fashion labels make decisions on purchasing, marketing, and stocking products. It does this by offering guidance about how far and long a trend might run and who exactly may be receptive to it.

The French start-up’s technology can scan three million Instagram images every day. The company then uses AI to predict whether a specific style will sell or fail. Heuritech scans text used in hashtags and posts, as well as visual content to filter out commercial posts and seasonal trends. That way it gets to the images it can really focus on.

The Paris-based company has raised over US$4 million recently. Visual search is and will play a significant role, both for fashion brands, trend forecasters, as well as consumers going forwards. With social media accelerating at a rapid pace, with so much content as well as the rise and fall of mini-fads, fashion companies are struggling to stay on trend.

Learn more

Download LiveArea’s 2019/2020 Future of Fashion white paper to explore the trends, transformation, and technology changing the fabric of fashion.

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