The 5 Worst Effects of the Fashion Supply Chain Disruptions

The fashion industry has been hit hard in the wake of the Covid-19 pandemic. Global supply chains have been disrupted, leaving many brands scrambling to find new suppliers. The fashion industry is inherently complex, with many parts that need to come together to create a product. A disruption in any one of these parts can have a ripple effect throughout the entire supply chain. This article will explore five effects of the fashion supply chain disruption. It will also explain how small brands can mitigate the risks associated with these disruptions.

WHAT EXACTLY IS A FASHION SUPPLY CHAIN, AND HOW DID COVID-19 DISRUPT IT?

A supply chain is the sequence of activities that brings a product or service from its conception to its final destination. In the case of the fashion industry, it encompasses everything from raw materials and production to shipping and retail.

A supply chain is a network of businesses that work together to create and deliver a product or service. The supply chain starts with the suppliers, who provide the raw materials for the product. These suppliers then send their products to manufacturers, who assemble them into a finished product. Next, the distributors pick up the finished product and sell it to retailers, who then sell it to consumers.

The Covid-19 pandemic has disrupted this network in at least two ways. First, many suppliers have been forced to close their doors due to travel restrictions or lack of workers. This has led to a shortage of raw materials and increased prices for available ones. Second, the pandemic has forced many factories to close, either because they are in areas with high infection rates or because their workers have resigned en masse. This has led to a shortage of finished products and increased shipping times.

Though life is slowly returning to normal in some parts of the world, the effects of Covid-19 are still being felt in the fashion industry. The ongoing Russia-Ukraine conflict is also expected to exacerbate the problem as crippling Western sanctions on Russia have already led to a spike in oil and gas prices, which is likely to cause more inflation and higher prices for clothing.

WHAT ARE THE EFFECTS OF THE SUPPLY CHAIN DISRUPTION?

Now that we have a basic understanding of what a supply chain is and how Covid-19 disrupted it, let's take a look at five of the worst effects of these disruptions:

1) Increased prices: The disruptions in the supply chain have led to increased prices for both raw materials and finished products. With fewer suppliers available, brands are forced to pay more for materials. This has resulted in price hikes on everything from clothing to accessories. As a result, consumers are feeling the pinch at the checkout counter or when they order online. Prices have increased by 7.5%, the highest inflation rate in more than 40 years.

2) Shortages: When you shop on Amazon or in a physical store, you expect to find what you're looking for. However, the supply chain disruptions have led to shortages of many products. This ranges from clothes to cosmetics and everything in between. "Out of stock" signs are becoming more common as retailers struggle to keep up with customer demand.

3) Delayed shipments: The supply chain disruptions have also led to delays in the delivery of goods. In some cases, products are taking weeks or even months to arrive. This is especially true for items shipped from overseas. Did you know that China is the source of 36.5% of all the imported clothing items in the United States? It's followed by India and Malaysia at 6.5% and 5%, respectively.

4) Canceled orders: The supply chain disruptions have led to canceled orders for both raw materials and finished products. This is because suppliers cannot meet the demand or because factories are closed. The data shows that more than $3 billion worth of orders from garment factories has been canceled. Garment manufacturers are most harmed by this since they often pay up front for manufacturing costs.

5) Layoffs: The Covid-19 has led to a significant rise in online shopping, putting pressure on brick-and-mortar retailers. Many of these stores have been forced to close their doors due to the pandemic. As a result, tens of thousands of workers have lost their jobs. The situation was more acute in the supplier countries, where most of the workers are employed. As a business owner, you can no longer afford to ignore how your suppliers treat their employees. It's important to ensure that their working conditions are safe and humane not just for the workers but also for your business. Studies show that consumers are increasingly interested in knowing about the working conditions of the people who make their clothes.

WHY SMALL FASHION BRANDS ARE THE MOST VULNERABLE?

Small fashion brands are the most vulnerable to supply chain disruptions because they don't have the resources to stockpile inventory. They also rely on a limited number of suppliers, so any disruption in the supply chain can significantly impact their business. In addition, these brands often lack financial stability and cannot absorb the increased costs associated with the supply chain disruptions.

In brief, despite the fast rollout of the Covid-19 vaccines, new variants of the virus such as Omicron continue to emerge, threatening to further disrupt the global supply chain. Geopolitical factors such as the ongoing Russia-Ukraine conflict and the US-China trade war also add to the uncertainty. The fashion industry, which is already facing many challenges, will continue to be affected by these disruptions in the coming months.

Smaller brands can use services offered by Stateless to design and develop their lines, and connect with a global network of suppliers. This can help them weather the storm and come out stronger on the other side. What makes Stateless stay ahead of industry-wide challenges is the relationships it has built with reputable suppliers, who have a long history of supplying quality products and materials. With a strong supplier network in place, Stateless is better positioned to help its clients mitigate the adverse effects of global disruptions. Reach out to Stateless today to learn more about how we can help you manage your fashion supply chain.