Stitching the Future of Apparel Manufacturing with Digital Supply Chain

Stitching the Future of Apparel Manufacturing with Digital Supply Chain

Styles are updated every season in the realm of fashion, yet behind-the-scenes the apparel manufacturing process has remained largely unchanged over the decades. The industry, often associated with manual production techniques and analog supply chains, is now facing a growing call to move into the digital age.

However, updating the manufacturing process is easier said than done. The garment manufacturing industry is a complex web of raw materials suppliers, fabric mills, embellishment processing facilities, and finished product manufacturers, supported by a robust domestic and global logistics ecosystem to move materials and products across factories and warehouses and to transport products to customers. Any brand looking to minimize wastage of materials and time while providing consumers with quality and affordable products needs to have the ability to track and maintain oversight of their entire supply chain in real-time. 

It is no wonder that McKinsey and Company found that more than 70% of fashion brands’ chief purchasing officers (CPOs) expect supply chain digitization to be the most important capability for suppliers to acquire.

Dawn of digitalization
Digitalization is an inevitable transformation, and companies that can successfully unlock its potential have leveraged it to pull ahead of their peers. For example, in the retail sector, traditional brick-and-mortar stores may struggle to compete with the growth of e-commerce and changing consumer shopping preferences. Going digital enables the brand to establish an online presence, implement relevant e-commerce strategies, and embrace omnichannel retailing to reach a broader customer base. Inventory management has also benefited from digitalization by receiving real-time insights, and avoiding stockouts or overstock situations.

However, it was only after the COVID-19 pandemic which exposed gaps in demand management and supply chains, that apparel manufacturers felt compelled to invest more heavily in digitalizing their operations. In the past, factories often utilized basic tools such as Excel for record-keeping and inventory management.

While they performed basic functions, such tools were limited in their ability to help manufacturers optimize resources and inventory levels or make better manufacturing decisions. Furthermore, such tools did not facilitate information exchanges across different parts of the supply chain, nor were they able to seamlessly connect manufacturers with buyers, brands, and customers on the demand side.

Fast fashion giant Shein is growing its US presence with a new office in Seattle that will serve as a hub for its fulfillment and logistics processes and speed up its delivery times to consumers.

Shein’s head of US fulfillment and logistics, Andy Huang, explained: “This expansion underscores our commitment to efficiency across our operations, and we look forward to contributing to the local community and fostering innovation in the heart of the Pacific Northwest.”

He added that the US is an important market for Shein, and said, “We are thrilled to establish a presence in the Seattle area as we continue enhancing our fulfillment process and improving the customer experience”.

The Seattle-area office joins a growing team of over 1,500 employees across the country and a network of Shein locations across the US, including corporate and warehouse facilities in cities such as Los Angeles, San Diego, Philadelphia, Washington, D.C., and Whitestown, Indiana.

Shein anticipates the new 10,000-square-foot office space will host over 50 professionals by the close of 2024. The company is actively seeking skilled individuals to fill various roles, particularly those that will support logistics and distribution efforts nationwide.

Under one roof – an advanced supply chainThe fragmentation within the supply chain and opacity between actors on the demand and supply sides have resulted in higher-than-necessary costs and other inefficiencies in production and logistics delivery. They also contribute to sustainability-related problems such as excess inventory and deadstock waste.

A fully integrated supply chain addresses these concerns by enabling the apparel manufacturer to minimize any mismatch between customer demand and merchandise supply. With its integrated supply chain, SHEIN produces an ultra-small batch of each style (100-200 pieces) and gauges market response in real-time, only responding with larger-scale production to meet demand if warranted.

Should there be surges in demand, SHEIN can distribute production across its network of third-party suppliers via an in-house developed supplier management system. By producing the amount of clothing to accurately match sales, SHEIN can significantly reduce production waste and excess inventory, and also price its products affordably, without markups to account for unsold pieces.

An integrated supply chain that can consolidate information across the supply chain and effectively track the production process also allows SHEIN to have a better grasp of existing inventory levels at each tier of production. This, in turn, informs the centralized purchase of materials from upstream suppliers such as embellishments and fabric at a whole-of-supply-chain level, thereby lowering costs for the brand and its customers due to economies of scale.

Following the production of apparel lies the last mile of delivery, the final leg of an optimized supply chain. Digitalization here too plays a crucial role in generating customer satisfaction through transparency.

Customers place great emphasis on ensuring that goods arrive on time and in good condition, with clear and simple procedures to facilitate returns if required. Getting this right requires meticulous execution by a consolidated supply chain network that brings together SHEIN’s supplier factories, and warehouses, as well as international and local delivery partners. Information is shared with customers through SHEIN’s app, which allows for tracking of the delivery stages in real-time, and to also register returns, which can be efficiently routed to logistics providers. Naturally, an integrated supply chain system would also be able to take stock of returns at warehouses, and once these are sorted and inspected for quality, can even be directed to fulfill new orders from customers in a nearby location.

It's now or lose out
Digitalization of a supply chain requires much effort, especially for brands that have many suppliers across the value chain. But it is undoubtedly an investment worth making – BCG concluded that by building an agile supply chain (a customer-oriented, end-to-end mechanism for responding to fluctuating demand) fashion retailers can gain a powerful competitive edge.

Today, whether by developing their in-house systems or by tapping on new solutions in the market to optimize all processes within an advanced supply chain – from manufacturing to delivery and even returns – companies can improve efficiencies, reduce their environmental impact, and transform their bottom line.

By Annabella Ng, Senior Director of Global Government Relations at SHEIN.