Fashion Industry - The Era Of Chasing Low-Cost Supply Is Coming To An End.

The latest research report on fashion supply chain issued by Boston consulting company (BCG) has passed the title and theme The bold conclusion is that the fashion industry goes to the crossroads: the end of the supply era of low cost countries. This is exactly the opposite of the "follow the low cost pointer" rule that the industry has been following in the past few decades. The following figure shows the trend of labor costs in several Asian countries:

The report clearly states: "if global fashion manufacturers want to increase production efficiency and expand speed, they can no longer shift from this low-cost country like they used to to the next low-cost country."

The innovation of garment production enables fashion companies to arrange manufacturing centers around target consumers to improve their reaction speed. Accordingly, the report recommends that "fashion companies must adopt new cost tracking frameworks to control costs and provide incentives for key production partners to improve productivity."

The report pointed out that the choice of supply areas was to maintain low labor costs as the primary consideration so that product prices could remain competitive, and when a country's labor costs increased, fashion companies had to shift their production areas.

"Perhaps this migration will soon be over. Low cost The labor force has become more and more rare, and the low cost countries are also decreasing. To cope with this trend, fashion companies must make full use of existing equipment to improve production efficiency, speed up the expansion of the market and eliminate the pressure of labor cost management.

BCG believes that the current challenges require market companies to examine their production processes and production partners from three strategic perspectives.

Innovation: Innovation in garment production allows fashion companies to place production facilities closer to the market, increase their responsiveness to the market and better manage the demand for raw materials. The report said that even if cost advantages continue, problems such as power failure, telephone and Internet network collapse may cause additional costs and obstacles to the supply chain. In severe cases, harsh production conditions were fatal. The collapse of the building in Sarwar, Bangladesh in 2013, fully confirmed this. Political instability is also a potential threat in many areas. " The current fashion cycle is shortened, but in the emerging low-cost countries (such as Burma and Ethiopia), the production cycle is longer. This contradiction makes people start looking for new ways to obtain low-cost supply. "Their cost advantages are spanient and may be eroded by the increase in non labor costs."

Cooperation: increase cost spanparency. New techniques and new technologies, from digital design, 3D printing to anhydrous dyeing and automatic tailoring, are cutting production costs and accelerating turnover. A new clothing pricing method beyond the standard labor cost model allows fashion companies to set up a new benchmark for apparel production based on minutes.