By John Manners-Bell
August 8th 2019
Fashion supply chains are on the verge of a major transformation which will have dramatic effects on the associated logistics industry.
Fashion supply chains are on the verge of a major transformation which will have dramatic effects on the associated logistics industry. These changes are being thrust upon manufacturers and retailers in the sector due to the growing unease about the environmental impact which the trend of fast fashion, in particular, is having. In a world in which sustainability is becoming engrained in many companies’ business models, the ‘buy, wear once and then throw away’ model which has become the norm for the industry is becoming regarded as increasingly inappropriate. Of course, waste does not just occur at the finished product/post-consumer stage. Initiatives are being undertaken at all levels of the supply chain, all of which will have an impact – positive and negative – on the associated logistics industry.
Upstream, steps are being taken to cut down on the amount of waste which is being generated by the manufacturing process. One estimate puts what is euphemistically called ‘pre-consumer leftovers’, at 25% of total consumption (perhaps more). However, it is believed that it will soon be technically possible to recycle the majority of all textile leftovers and this will have a major impact on the demand for virgin materials.
Downstream, ‘circular fashion’ will also increase levels of recycling. One of the major problems involved in recycling second hand clothing is identifying the materials used in its production. A barcode may describe certain product attributes, such as size, style and colour but as they were never meant for use post-sale they contain little specific information about materials. One solution to this is to tag products with identifiers which do contain this information and link to the product’s digital identity on the internet as part of the Internet of Things (IoT). The result of this is that recycling becomes much easier and less goods are sent to landfill.
Another major new market to develop in recent years connected to ‘circular fashion’ is online clothing rental, estimated to be at around a billion dollars in 2017 and set to grow to almost double that by 2023. Rental services are aimed at consumers who cannot afford to buy a new outfit on a regular basis or, crucially, choose not to on the basis of thrift or sustainability. Logistics processes have to be slick in order to enable high inventory velocity, with returned items often received, cleaned and made available within a day. Major players include Rent the Runway and Nuuly in the US, Front Row and Tchibo in Europe and Yeechoo and Pret-a-dress in Asia.
Each of these initiatives has logistics implications. For instance, clothing rental could provide a huge opportunity for companies involved in the last mile and returns sector. Whereas in the traditional fashion supply chain multiple items are delivered to a single store in a single consignment, online rental requires an item to be delivered, most probably to a home address. When the item of clothing has been worn, it then requires a return to a processing centre where it will be assessed for damage, wear and cleaning. Once the cleaning is complete, it can then be returned to the warehouse and listed on the WMS as available to rent. So, not only is there an additional transport element but there are several steps and value adding processes within the returns warehouse.
Upstream, however, the trend to more recycling has negative implications for the industry. Vast amounts of textile raw materials are produced and transported each year internationally. By cutting down on the waste of by-products, as highlighted above, less materials will be required to be moved from places of origin to processing hubs and garment manufacturing facilities.
There are also implications downstream. More recycling could mean that fibres which were designed to be renewable and sustainable could be re-used in the production of new garments. The business case for recycling would be improved if the manufacturing process was re-shored and
international shipping costs were eliminated. This would mean that the collection and re-cycling of materials would occur close to, or in, the markets of final consumption. There would be a transformation of fashion supply chains from global to regional, some based on recycled materials and some still based on the use of virgin materials.
If this indeed occurs, intercontinental freight forwarders, shipping lines and air freight carriers would lose out. In contrast domestic or regional carriers (particularly trucking companies) would benefit both from the movement and storage of recycled materials to locally based garment manufacturers as well as from the storage and distribution of finished products.
This briefing is a summary of a more comprehensive whitepaper prepared for subscribers to Ti’s Global Supply Chain Intelligence Portal in August 2019.