The coronavirus has put fashion brands in check. It has done so by closing its stores or by an online channel that, as the only driver of sales, has become more demanding. But without a doubt, the supply chain of fashion brands has embodied one of the main challenges for the sector. The industry, so dependent on the Asian market, opens the door to relocate its production to avoid cuts in the supply chain.
This relocation gives the industry giants greater flexibility when it comes to managing orders or modifying collections based on customer demand in stores. It allows fashion to adjust its capsule collections more and better and put the customer at the center of its decision-making.
But for now, China remains the top fashion supplier, closely followed by Bangladesh. Southeast Asia defends its territory in the supply of the fashion sector, competing thanks to very low production costs.
In the 1990s, Spain had a powerful productive fabric. 80% of the production was local but it entailed a significant logistical effort, explains the president of the Acotex textile employers' association, Eduardo Zamácola, in an interview with Business Insider Spain. “The entire sector worked with the same dates to make the summer collection and the winter collection. It implied a saturation for the factories at certain times while at other times they were empty”.
In this context, the Asian textile production muscle bursts in: they sewed quickly, they could produce large quantities, they delivered it on the precise date and, on top of that, it was 25% cheaper than producing in Spain.
Most of the fashion companies chose to relocate at this time. “Large orders were needed. You only access these providers with certain volumes”, explains Zamácola. “It is a long production cycle process, around 10 months. It implies little flexibility to react and change something. You have to anticipate with great precision the demand that you will have”.
In the 90s and 2000s, fashion was focused on products and trends, but the situation has changed. "Now we study the client and make the product that he is asking for", explains the president of Acotex about why, suddenly, it is important that the supply chain is flexible.
In recent years, purchases were 20 or 25% cheaper in Asia, but this implied very big problems, such as the need for minimum quantities, or much in advance to predict demand. In any case it is a flexible zero model. "If what I've made is sold, it's great, and if I don't have to do promotions to get rid of those collections," explains Zamácola.
Now we are no longer talking about two seasons a year, spring-summer and autumn-winter, but rather capsule collections, with a lot of rotation and several mini-seasons. Immediacy plays a fundamental role.
So it is that the fashion sector has been relocating the supply chain for several years to be agile. In order to be able to produce more garments of a category if it is well received by customers and not lose production if it is poorly received.
This is something that Inditex has understood very well. The Galician giant has long boasted of its flexible sourcing. The owner of Zara is undoubtedly the titan of fast fashion, with capsule collections that are renewed in stores twice a week and a focus on consumer demand.
In the 2018 annual report, the latest available, the group states that its supply chain was made up of 1,866 suppliers and 7,235 factories grouped into twelve clusters. The case of Bangladesh or India is striking, where a priori it seems that a small number of factories work as Inditex suppliers. However, they constitute the production centers that bring together a greater number of employees
57% of suppliers are local, group sources explain to Business Insider, with Spain, Portugal, Morocco and Turkey as the main production centers for garments that respond to fashion trends. Which is why a quick response is needed to respond to the demands. The group also produces in Southeast Asia, China, and Latin America.
InditexSpain
Portuguese
Morocco
Türkiye
India
Bangladesh
Vietnam
Cambodia
Chinese
Pakistan
Argentine
Brazil
The former Grupo Cortefiel, renamed Tendam, has production centers throughout the world. To manage all this operation, the company stores and distributes its collections through its logistics centers in Madrid, Toledo and Cuenca and its international platforms in Mexico and Hong Kong.
The latter manages the entire part of the supply chain from Asia. This multi-brand consolidation center cross-docks the merchandise from Asian suppliers to the company's franchise network, according to the group.
Meanwhile, the distribution center in Mexico distributes the merchandise in the country's stores. Bulgaria, Greece, Italy, Romania, Laos, Sri Lanka, Tunisia, Ethiopia, Madagascar and Peru concentrate only 1% of purchases from suppliers while the bulk comes from China, Bangladesh, Myanmar, Cambodia and Spain.
TendamBelow you can review the suppliers by country and the distribution of garment purchases by origin:
Chinese
Bangladesh
Myanmar
Cambodia
Spain
India
Pakistan
Türkiye
Vietnam
Portuguese
Morocco
Macedonia
Thailand
Bulgaria
Greece
Italy
Romania
Laos
Sri Lankan
Tunisia
Ethiopia
Madagascar
Peru
The number two in fashion has 750 independent suppliers who manufacture the garments for its collections in 1,400 factories across Europe, Asia and Africa. The bulk of the group's fashion production is concentrated in China, Bangladesh and India, while cosmetic products are manufactured in the European Union.
The Swedish group has up to 1.6 million employees in its factories. Suppliers include production factories but also fabrics, printing or printing threads. In Sweden, its home market, the group has a total of 15 production sites.
H&M/GoogleThese are the factories that the H&M group had in February 2020.
China: 621Bangladesh: 260 India: 233Turkey: 142
Italy: 92Indonesia: 81Portugal: 73 Vietnam: 49
Myanmar: 44 Cambodia: 41 Pakistan: 35 Romania: 27
France: 16 Sweden: 15 Ethiopia: 12 Germany: 9
Sri Lanka: 8Bulgaria: 7 Poland: 7Spain: 7
South Korea: 5Morocco: 5Lithuania: 3 Czech Republic: 2
Denmark: 2Estonia: 2Greece: 2Hungary: 2
Kenya: 2Netherlands: 2Taiwan: 2 Thailand: 2
USA: 2Finland: 1Croatia: 1 Georgia: 1
United Kingdom: 1Luxembourg: 1
The low-cost fashion chain, owned by AB Foods, has made the low supply prices offered by production in Asia its main weapon. His business model is based on garments that he sells at very low prices and that he buys in large quantities from his suppliers, so the production price also plummets.
After tense negotiations when the coronavirus crisis began, including the indefinite suspension of payments, the company finally opted to continue paying its suppliers. In this way, Primark promised to pay for the orders produced until April 17 and those that are in transit. The inventory of the Irish chain amounted to 1,500 million pounds (1,719 million euros).
The group has 1,033 factories spread over thirty countries.
PrimarkChina: 525India: 145Bangladesh: 107
Türkiye: 92 Pakistan: 23 Vietnam: 23
Cambodia: 22UK: 16 Romania: 13
Myanmar: 12 Italy: 8Morocco: 5
Moldova: 5Portugal: 5Ireland: 3
Germany: 2France: 2 South Korea: 2
Laos: 1 Netherlands: 1Indonesia: 1
Tunisia: 1Spain: 1Greece: 1
Slovakia: 1USA: 1Mexico:1
Georgia: 1
