The 2023 has unveiled a landscape fraught with challenges that have collectively disrupted the Fashion supply chain and subdued customer confidence. The repercussions have been profound – leading to a revaluation of strategies and a clarion call for unified action between manufacturers and brands that have never been so loud before.
After a tumultuous 2023, the Fashion Industry is set for transformative changes in 2024. The McKinsey State of Fashion Report emphasizes the need for collaborative efforts and resilient partnerships. Generative AI, regulatory compliance, sustainability, and technological integration are highlighted as pivotal forces shaping the Industry’s trajectory.
Collaboration to cope with fluctuating demands
According to the report, the unprecedented upheavals during the last year have underscored the pressing need for greater collaborative efforts. The bullwhip effect in 2023 magnified significant demand fluctuations, leading to reduced production capacities, factory closures and layoffs. However, whilst this necessary adaptive measure might have helped to keep businesses afloat, it also poses a potential challenge in the year ahead as manufacturers will need to scale up quickly to meet a predicted resurge in demand later this year.
To cope with fluctuating demands better, the McKinsey report suggests that brands could greatly help make their supply chains – especially preferred suppliers – become more resilient to future risk by actively encouraging more transparency and communication, pursuing longer-term contracts to improve cashflow and investing in digital technologies to facilitate reciprocal joint demand forecasting practices. In fact, according to another recent McKinsey survey, 70% of chief procurement officers believe that improving demand transparency with suppliers through systems and processes will be a critical component to successfully navigating market turmoil in the future.
Generative AI integration will probably extend beyond design to facilitate greater collaboration and transparency, optimise sustainability drives, facilitate more efficient resource allocation and successfully evidence compliance requirements in the years to come.
New regulations
The Fashion Industry stands at the brink of unprecedented transformation as a slew of new EU and US regulations are set to overhaul the whole global Fashion supply chain by mandating stringent compliance measures that demand greater visibility around the Industry’s emission reduction, garment worker rights, supply chain responsibility and product circularity.
Poised to profoundly reshape the Fashion Industry’s supply chain, these new regulations will undoubtedly necessitate increased digital transformation and much greater collaboration between brands and manufacturers, like never before, as the industry tries to align the best technologies and processes to hit all-new global compliance requirements as seamlessly as possible. Brands and apparel manufacturers that stay ahead of the regulatory game will consequently earn not only stronger consumer trust but also market leadership.
