THE PANDEMIC SUPPLY CHAIN DISRUPTION IS A HANGOVER THAT KEEPS HANGING

The fashion industry was hit hard by COVID-19 when the demand for garments worldwide plummeted. Accessories and all other “non-essential” items were either left to collect dust in the back of the closet or became casualties of shopping cart abandonment. 

So, how do these events still affect supply chains today? While mandated lockdowns and wearing face masks are mostly a thing of the past, the pandemic’s supply chain challenges continue to be felt worldwide over four years later.   

Problems brands and retailers are facing now

Rich Ringeisen, Charming’s President, highlighted a few key problems facing brands today as a result of the pandemic.

“Raw material availability and forecasting are two of the biggest challenges brands are battling as a result of lingering supply chain issues since 2020,” Ringeisen said.

These challenges, plus incredibly domineering online shopping channels, are part of the “new normal” we’re living in since 2020. Brands and retailers that cannot integrate new sourcing and logistic strategies to overcome these post-pandemic supply chain disruptions are quickly becoming obsolete. 

Raw material availability 

China is the world’s largest apparel exporter. The pandemic resulted in a major slowdown of the Chinese economy, contributing to global supply chain disruptions. In a post-pandemic world, the demand for raw materials has rapidly increased due to the transition to more green energy sources.  

Producing raw materials is a slow, expensive process. Combined with inflation, brands and retailers face pressure to increase costs without turning away from their market. A polarized market combined with hesitant consumer spending is causing individuals to buy the best they can afford, often forcing customers to settle for the cheapest products retailers offer.  

Accurate demand forecasting

While demand forecasting remains critical to retailers, it is more challenging to execute than ever. Once relevant historical data is bordering on unusable, as wildly fluctuating supply demands have caused unprecedented unpredictability.  The pandemic-induced supply chain disruptions have made machine learning central in adapting to changing consumer demands. 

E-commerce domination  

Digital shopping is here to stay. COVID-19 drastically reshaped in-store and online shopping behaviors because of perceived health risks and social distancing rules. Individuals continue to rely on “alternative shopping methods,” including curbside pickup and home delivery for quicker turnaround times and to avoid the hassle of going to the store, trying on clothes in unflattering lighting, and then waiting in line to check out.

Global e-commerce sales have steadily risen since 2021, with $4.98 trillion recorded for the year. Sales are expected to rack in $6.3 trillion by the end of 2024, with numbers projected to climb just below $8 trillion in 2027. 

While online shopping did not completely replace visits to brick-and-mortar stores, 25% of surveyed shoppers increased their online shopping. Customers want a seamless and personalized shopping experience that is best delivered through omnichannel shopping. 

Strategies for overcoming current supply chain issues

Ongoing post-pandemic supply chain challenges have exposed vulnerabilities in traditional logistical systems, testing the agility and adaptability of global brands and retailers. As they integrate new strategies through product source diversification and leveraging artificial intelligence to improve demand forecasting, brands and retailers are making themselves stronger against future shocks.      

Diversifying product sources

Diversifying product sources and maintaining strong relationships with suppliers are a must to overcome scarcity. Companies have relied on the “just-in-time” supply chain approach by producing goods to meet consumer demand with minimal excess. However, these outdated supply chain models do not adequately account for large societal and weather-related shocks and overcome them gracefully.   

Working with multiple suppliers gives retailers an edge and more options in the wake of frequent bottlenecks. Not to mention, this strategy is the most cost-effective as companies find a new rhythm for updating their demand forecasting models. 

Digitalization 

Digital transformation and the Internet of Things (IoT) require quick response times, which is challenging to do manually. Leveraging new technology that can handle dynamic supply chain concerns, including digital passports and machine artificial intelligence, is the answer to success.

The accelerated shift to online shopping has created new patterns in consumer behavior that are best mapped out by artificial intelligence. Machine learning is still in its early stages, but it can handle larger data input from diverse sources, helping retailers predict cyclical sales behavior. Any irrelevant data is immediately discarded to provide the most accurate performance indicators.  

Organizations can also leverage Radio Frequency Identification (RFID) technology to keep their supply chains flowing smoothly. Talk to our Charming Team to learn more about how Charming Truecount, an RFID-enabled software, can get you moving toward efficient supply chains in no time.

Looking to the Future 

Resilient supply chain strategies will depend on proactive strategies to address these lingering post-pandemic challenges. At Charming Trim, Ringeisen shared that a key initiative has been to expand production locations for quicker, more efficient delivery.

Brands and retailers must prioritize supply chain agility by investing in intelligent forecasting tools and exploring alternative raw material sources. By acknowledging and pivoting to embrace these challenges, supply chain leaders can position themselves for long-term success by creating a more sustainable and responsive supply chain ecosystem.

Editor’s note: This content was originally published in December of 2021, but has been refreshed and updated on October 11, 2024.