Fast Fashion Supply Chains

The supply chain represents a network of raw materials, components, suppliers, manufacturing plants, warehouses and distribution centres, stores, and end users.

To ensure the timely, accurate, and secure delivery of goods. Involves, the coordination and collaboration with channel partners; that may be suppliers, intermediaries, third-party service providers, and of course customers.

Supply chains are another facet of competition, and the success or failure of supply chains is ultimately determined in the marketplace by the consumer. 

Getting the right product, to market, at the right price and the right time. To consumers across multiple time zones, and geographies is not only the lynch pin to competitive success, but is also the key to survival.

However, for supply chains to be successful, requires, “decision dominance” by the primary controller of the supply chain. In the context of the fashion industry, it would be the fashion retailer.

Hence, in fashion, this may be Zara, Gucci, Coach, or H&M.  In the food industry, Waitrose, Sainsbury, Harrods, or Ocado. In the automotive industry Tesla, Mercedes, Aston Martin or Lexus and so on.

The primary objective for any supply chain management system is supply chain optimisation. That is optimal profitability, quality, speed, and capacity utilisation.  There are several components to achieving this;

1. Dis-incentivising the Local Optimisation Efforts of Individual Organisations

The creation of programmes that dis-incentivise individual members of a supply chain. From pursuing, disparate, conflicting and competing objectives at a local level.

Facilitates the optimisation of the overall objectives of the supply chain to take prominence. Over the individual requirements of any single supplier.

In return for compliance, suppliers are rewarded with higher sales, predictable revenue streams, and access to new markets.

Essentially organisations incumbent within the ecosystem of a supplier network. Operate as a group of strategically aligned companies focused on capturing clearly defined market opportunities.

The controller of the network of suppliers can exert considerable market power over the hundreds of suppliers that comprise their ecosystem.  This power is transmitted through culture, the control of the IT and logistics systems, by the primary controller of the supply chain. 

Hence in the case of fast-fashion brands like Zara, Asos, Boo.com, H&M and Misguided.   Suppliers are expected to produce low priced, fashionable, quality products quickly and punctually.

2.   The Adoption of Leagile Manufacturing

Integrated supply chain strategies separate demand patterns into base and surge elements. Capacity demands are smoothed by intelligent switching of “base production”.

Leanness means developing a value stream to eliminate all waste. That is time and materials to enable a level schedule.  It is used to manage the base demand elements of production. This tends to be predictable, utilises classic lean procedures to achieve economies of scale from low-cost suppliers in Asia.

This process is characterised by long-term planning, long - time horizons, and large batches to exploit economies of scale and scope.  In manufacturing, leanness is all about the maximisation of profits via the reduction of costs.

Agile production involves using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile marketplace. It is deployed to manage surge demand, which is unpredictable, characterised by high levels of variety and utilises agile production techniques.

In this context, apparel is manufactured by suppliers in locations which are in close proximity to the stores where they are sold and are skilled in the production of fashionable goods.  

Agile manufacturing is concerned with maximising profit by providing what the customer requires at the right time. 

Thus Inditex with the Zara brand, implemented an apparel manufacturing strategy, that separated agile and lean production activities. With agile production methods deployed to produce fashion ,garments. That presented characteristics associated with, unpredictability, variety and speed. In response to changing consumer preferences. 

Lean manufacturing productions methods, are deployed for the production of garments with predictable production cycles, with long planning time horizons.

3. Transforming Uncertainty & Unpredictability into a Competitive Advantage

Responsive, business models, supported by leagile manufacturing as epitomised by the Zara brand. Enables, internal designers, to begin the process, of designing new clothes in-season. Whilst signals, from the market regarding a fashion trend are evolving. 

Compared to competitors that design garments, months in advance. The ability of Inditex to exploit, this narrow window of opportunity.

Facilitates, significantly shorter design lead times. From design to production, with delivery times of just 10- 15 days compared to 30 – 60 days for competitors. Reduces the risk and uncertainty associated with producing large batches of garments that do not sell.  Hence the successful adoption of leagile manufacturing is a key component of a fast -fashion apparels manufactures business model. 

Leagile Apparel Manufacturing

Using Zara as an example, the manufacturing of apparel is strategically split into two streams. To exploit the leagile production methodology.

The integration of agile and lean production methods. That is leagile manufacturing is critical to the success of the business model.   

With 20% of apparel produced by low-cost contractors located in Mexico and Asia. The remaining 80% is produced by fast subcontractors located mainly in Europe and North Africa. For a comparison of the different business models of fast fashion retailers, Zara, H&M and Benetton. Please see below.

Enabling Inditex via the Zara brand to produce goods in small batches. And test the level of demand for garments prior to ramping up production across the network of stores globally. From, concept, design to the store in a time frame of just two weeks. 

The vertical integration of the supply chain, and total end to end ownership from material to store. Plays a significant role in the ability of the Inditex to achieve this feat.

4. A Vertically Integrated Supply Chain

To capitalise on the fast fashion phenomenon.  Fashion retailers like Zara vertically integrated key internal and external components of their business model. This begins at the point of sales.

The store collects information received from the customer and transmits this to design centres and commercial departments in real time.  This enables specialist design teams, to constantly collect customer feedback. According to (Christopher 2000) Inditex engages cross-functional, self-managing, teams encompassing; fashion, commercial and retail specialists.

The teams collaborate with Zara’s design department.  All real-time information, gathered from the stores are handled by 700 creative professionals. Who liaise with product development to adjust their activities according to demand. This is how Zara leverages data and information to gain a competitive advantage.

The deployment of a vertically integrated supply chain.  Enables Inditex to control all aspects of the manufacturing of the 450 million pieces of apparel produced each year. Within the organisation from the initial design, delivery to 7,475 stores and sales to consumers.       

The marrying of agile production methods, for the manufacture of low volume, high variety, unstandardised unpredictable fashion garments.

That are characterised by shorter production life-cycles and short production runs. To mitigate the uncertainty associated with rapid changes in fashion consumer preferences. 

With the deployment of lean production methods to for the manufacture of high volume, standardised, garments with predictable demand. Plays a significant role in the elimination of waste, improvement in capacity utilisation, flexibility and improving time to market. 

Mirroring internal operations with in the field reality of satisfying different types of consumer demand.  Is closely linked to the financial performance of firms. This essentially is about matching the demand characteristics of a product with the responsiveness of the supply chain.  Hence for Zara the brand.

Enabling Inditex to produce goods in small batches. And test the level of demand for garments prior to ramping up production across the network of stores globally.

From, concept, design to the store in a time frame of just two weeks.  The vertical integration of the supply chain, and total end to end ownership from material to store. Plays a significant role in the ability of the Inditex to achieve this feat.

Fashion retailers that successfully pioneered the fast fashion concept such as Inditex owner of Zara, Massimo Dutti and Bershka, H&M, TopShop ASOS, and BooHoo.com. Are all heavily invested in an online, multi-branded and fast fashion offering.

In response to the decline in the length of fashion product life cycles.  A consequence of this is, the number of seasonal collections increased from the traditional 2 to up to four or even six collections per annum according to Runfola & Guercini (2013).

4.  Culture and Governance

Culture plays a critical role, in embedding a collaborative atmosphere across the network of internal and external supplier relationships. And fast-fashion retailers, have developed programmes and policies to reward behaviours which optimise the performance of the supply and demand side of their supply chains.

The aim is to eliminate waste such as time and materials and implement continuous improvements in the quality of goods and customer service. Inditex, for example, implements a combination of programmes that are designed to go beyond just the development of market relations.      

Changing Consumer Behaviours & Fashion Influencers

Consumers that procure the products of fast fashion companies such as TopShop`, Zara, Forever 21, are very fashion forward. These fashionistas are prone to impulse purchases, influenced by celebrity endorsers, online bloggers, vloggers, and fashion influencers on Instagram and are extremely fickle. 

Furthermore, fast fashion retailers have conditioned consumers to visit stores on a weekly basis. and purchase products as soon as they’re available. Due to the high turnover of designs to match the rapid change in consumer preferences.   

The different elements alluded to above, enables apparel manufacturers to, utilise information from within and outside their network. To make demand driven decisions within a short window of opportunity.

Maximise the diversity of apparel offerings, and minimise, lead-times, expenditure, cost and inventory. This is achieved by encompassing the operations strategy, IT infrastructure, logistics, culture, policies and governance procedures within the network of a fashion retailer.

Outsourcing non core key components to reliable 3rd parties. Along with the management of the data traversing within and between the network of suppliers. That comprise the ecosystem of the fashion brand.