Executive Briefings

How Fast Fashion Exposes Retailers to Supply Chain Compliance Risks

Once upon a time, new fashion collections were introduced in the fall and spring. Socialites followed the runway shows to select looks for their charity balls. Families went "back-to-school" wardrobe shopping. Spring looks showcased lightweight fabrics and pastels. A smaller winter show featured cruise wear.

Gone is that fairy-tale world of well-in-advance collection planning, as fast fashion is the new normal. Today, trends take shape in real time, and these fast-fashion looks compress planning cycles and threaten to burn off profits.

Fast fashion demands that retailers release new lines four to six times per year, or every two to three months. As retailers embrace this trend, manufacturers have adjusted their design and merchandising processes accordingly. Yet the impact on the supply chain exposes significant compliance risks that threaten long-term success.

The hidden costs of fast fashion
Fast fashion means getting new looks to market quickly. Design, sourcing and manufacturing occur at hyper speed. Items arrive at point of sale in record time and are sold at lower margins. Meeting the new mandate for fast fashion can easily lead to:

  • Increased transportation costs
  • Deteriorating quality
  • Not delivering the best available product

Companies manufacturing overseas have absorbed significant increases in transportation costs. For example, opting for air vs. boat can shave six weeks off the delivery schedule, but there's a high price associated with this option. After goods arrive from overseas locations at a central U.S. distribution center (DC), they must then be broken down and shipped to stores and fulfillment centers. We're seeing a substantial rise in direct shipments from Asia to stores that include smaller orders sent in more batches, which drives up costs.

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Gone is that fairy-tale world of well-in-advance collection planning, as fast fashion is the new normal. Today, trends take shape in real time, and these fast-fashion looks compress planning cycles and threaten to burn off profits.

Fast fashion demands that retailers release new lines four to six times per year, or every two to three months. As retailers embrace this trend, manufacturers have adjusted their design and merchandising processes accordingly. Yet the impact on the supply chain exposes significant compliance risks that threaten long-term success.

The hidden costs of fast fashion
Fast fashion means getting new looks to market quickly. Design, sourcing and manufacturing occur at hyper speed. Items arrive at point of sale in record time and are sold at lower margins. Meeting the new mandate for fast fashion can easily lead to:

  • Increased transportation costs
  • Deteriorating quality
  • Not delivering the best available product

Companies manufacturing overseas have absorbed significant increases in transportation costs. For example, opting for air vs. boat can shave six weeks off the delivery schedule, but there's a high price associated with this option. After goods arrive from overseas locations at a central U.S. distribution center (DC), they must then be broken down and shipped to stores and fulfillment centers. We're seeing a substantial rise in direct shipments from Asia to stores that include smaller orders sent in more batches, which drives up costs.

Read Full Article