Television news reports, social media streams, radio stations, and more inundate us with messages and warnings about COVID-19 and remind us about its ever-changing impact on our lives. While this unrelenting news stream can leave us feeling exhausted with little energy to consume more on the topic, the truth is that we are still experiencing the effects of the pandemic and will for some time. For the apparel sourcing and production industry, we must have an ongoing dialogue about how to keep businesses alive as well as how to plan and support the health of the entire industry to ensure future successes.
The Impact of Cancellations
When analyzing the current landscape globally, the apparel sourcing and production industry is under siege. Before COVID-19, apparel production was already experiencing increased challenges from rising labor rates, higher costs for raw materials, diminishing numbers of experienced and competent factories, and variable shifting tariffs.
On the heels of COVID-19 were massive cancellations and production extensions from the United States and Europe. This product abandonment has created wide-scale factory devastation, especially for those that were already struggling to remain viable and profitable. Today, large shipments are simply sitting complete with nowhere to go, exacerbating an already tricky cash flow scenario for most facilities. Since factories are not collecting payment for the labor and materials they already invested, the factories cannot pay employees and overhead, forcing them to close.
Very little in the apparel production process is wholly vertical, so this has a direct ripple effect on upstream fabric and trim suppliers who are dealing with similar issues. Those that skirted the devastating cancellations are having to manage empty factories for multiple months with little to no revenue and nowhere to turn to help. This burden will impact future turnaround times, quality, and resources.
With factory closures and reductions in production, we can anticipate the problems to come. Manufacturing options will become reduced with fewer factories to partner, providing less competition, increasing prices, and lead time while decreasing overall production capabilities. Additionally, the abandonment of the factories that are undergoing the stress of carrying the cancellation loads will lead to stricter credit and payment terms, which are vital for many organizations to have the cash flow for operation and financial health.
Every decision has an impact. A short-term solution for one organization (such as order cancellation) will have long-term implications for the entire industry.
Demand Will Return
We are living in a digital age where the consumer has become comfortable with the ease and expedience of online ordering. Online environments pre-COVID-19 were already becoming an important revenue channel in the apparel industry, and the importance of online sales during the pandemic is vital.
With uncertainty about when the COVID-19 veil will lift, and with no crystal ball to tell us, retailers, and brands struggle to predict when the overall demand for the product will return, and how much demand there will be. The ambiguity and lack of buying confidence have resulted in rapidly diminishing inventories.
I’ve found that after talking with many clients, they report that despite the uncertainty and in-store decline, many are experiencing a rapid increase in online sales. As consumers continue to purchase, apparel stocks continue to empty. The demand will undoubtedly exceed supply and give us a new state of normalcy.
In an age where high volume and quick-turn options are not readily available, and in a landscape of increased competition, one can predict future panic in replenishing products.
How to Meet Production Needs in the Current Environment
It is always essential to take an active role in assessing global dynamics, the effects on your business, and explore necessary pivots to remain viable. At Stars Design Group, we help many companies in the industry map out such plans. Here are some tactics to consider in navigating the current/future strategy.
Adjust Production Timelines
As re-openings are beginning to occur in some countries, albeit slowly and in specific zones and cities, it is essential to recognize that many production workers are afraid to return to work. The current impact on production capacities relates to facilities operating from 30% to 60% of the previous norm.
Proper planning and adjusting previous expectations on manufacturing timelines will be critical. Though prior standard lead times were 90 to 120 days, many countries are seeing increased viral activities that are slowing production rates. Therefore, it is prudent to extend expectations for production times to 150 to 180 days.
At Stars, we developed a timing and action calendar to manage the timeline of the entire apparel sourcing and production process from design through production and delivery. Our calendar even considers significant holidays and events around the world that can impact the timeline. Knowing there are new dynamics affecting timing, we have made further modifications to our calendar. If you would like guidance to develop a time and action calendars for your business, reach out to us for help.
Once you have navigated the challenges of factory production, you need to deliver your products into the hands of your customers. With the massive reduction in flights worldwide, airfreight costs have skyrocketed (in some cases, three to four times the standard rate). Consider options other than airfare to keep things timely.
Establishing close relationships with freight forwarding partners is essential in today’s shifting landscape. Working with a team of global freight experts to secure placement for shipping in advance will ensure vessels have available space.
Cory Watkins, Director of Logistics, comments, “By leveraging the strength of these long-term partnerships, we have avoided the vessel rollovers or air deferrals that others may be facing at current. Through the ongoing COVID-19 pandemic, Stars Design Group has maintained a 99% on-time delivery rate to all clients.”
In today’s world, you must have an experienced and dedicated team working for you across the entire global supply chain, to achieve and maintain on-time deliveries.
Explore the opportunity to help the suppliers and yourself by looking at fabrics that were affected by cancellations. This opportune purchase of material could help alleviate piece goods delays from mills and counteract slower assembly times.
Have an open dialogue with your suppliers about where they feel bottlenecks will occur in production. They are often closely linked and communicating with supply chain partners and can help you steer clear of new issues.
Manage Production Flow
Consider staggering production quantities. Since production can start and then suddenly stop if there is a viral flare-up, breaking up production quantities and establishing a flow can ensure that some of the overall style purchase is in transit if there is a work stoppage.
Revisit the Collection
Embrace a collection of better basics that can be trans-seasonal to reduce the pressure to liquidate if sales do not materialize as expected at specific points during the pandemic.
Having a strategy to respond to positive sales in an unstable environment requires some planning and partnerships with your manufacturing facilities. The key is to combine initial inventory in garments while backing up raw materials and trims that can quickly move into production, as sales materialize.
Another option is to consider just-in-time manufacturing. There are incredible state-of-the-art facilities that can react to demand while providing quality and value through innovation. By using technology, these facilities reduce human labor costs, offering a more affordable solution in a compressed timeline.
At Stars Design Group, we have the expertise and resources to be your just-in-time manufacturing partner. Please reach out to us for more information and let us show you how we can help.
Support the Echosystem as a Whole
Now is not the time to abandon relationships. Instead, lean into them. The entire supply chain is suffering and fighting for survival during this unprecedented time. Multiple solutions can ease the pain, depending on the situation and wherewithal.
- Repurpose current production fabric and trims into future deliveries, providing either revised styles and/or new dates for your partners.
- Pay for fabrics and trims and delay production on actual garments.
- Sell fabric and trims in local markets at discounts while working with others in the industry to manage reduced losses.
- Work with your supply base to move the delivery of any completed items that can transcend seasons.
- Focus on enhancing your online platform to reduce store closure challenges.
- Track supply and demand carefully because canceling products may not be the best answer.
Significant challenges remain ever-present. Bankruptcies, economic downturns, and now pandemics can affect any robust and stable business. Involving your manufacturing partners in the solution is vital. The result can be better finance terms, value pricing, priority production perks. Quality partners survive and can continue to help you provide apparel your clients will love.
The bottom line is to “value relationships.” If you are struggling or are looking for a new partner to help you propel your business, contact Stars Design Group to see how we can help.
Bret Schnitker, CEO and President of Stars Design Group is a fashion industry executive with nearly 30 years working in all facets of the sector. During his tenure at a $3b retail organization, Bret managed greater than $1b in retail as Director of Design and Development, which cultivated his design aesthetic and aptitude for trend forecasting. In his role with Stars Design Group, he brings vast technical expertise in all categories of the apparel industry, fulfilling design and manufacturing for major brands and retail on a global footprint.
About Stars Design Group: Founded by industry experts, Stars Design Group global fashion design and production house that helps clients bring their apparel to market. We consult, design, and facilitate production and delivery.
Understanding that the apparel industry is about evolution and not revolution, we continue to refine the way the industry does business. Embracing the latest 3D design and development software, we help to refine the design and approval process in a digital landscape, paving the way for rapid decisions and execution of programs while reducing mistakes, improving fit, minimizing returns, and increasing profit margins.
With a network of 67 factories in 14 countries worldwide, our relationships are generations deep. Being diverse in our manufacturing locations, we are nimble in an ever-evolving landscape and provide ethically manufactured apparel and accessories.