Pandemic-induced supply chain disruption in the fashion world

– By Akhil Duggar Jain

The greatest impact of the Covid 19 virus has undoubtedly been on the health and well-being of people around the world. The lockdowns that have been imposed have had a ripple effect on all aspects of the social and economic fabric of communities. All sectors of the economy have fallen like never before and are still recovering from the onslaught. The world has lost over $4 trillion and India, the second most affected country after China, recorded a loss of 52.6 lakh crore in GDP.

The fashion industry is a vertical that has never had a dull day over the past few decades. The industry is so versatile and inclusive, consistently operating with a 100% market share, that it thrives no matter what. The very first experience of heading south came during the pandemic that shook the fashion industry from its complacency. Most other sectors have seen fluctuations of one sort or another, but this was perhaps the first major setback for this industry.

The travel tourism industry, along with the logistics industry, has perhaps been the hardest hit in recent times. With the abrupt shutdown of logistics, the fashion industry has invariably collapsed. The demand side of the business as well as the supply side of the apparel and accessories vertical have been hit hard. Demand bottomed out with shutdowns that led to social distancing, closure of retail outlets, customer savings and savings, and prioritization of essentials, among other factors. On the supply side, the halt in production, the disruption of logistics, import restrictions, the unavailability of raw materials and the sharp escalation in the price of raw materials and logistics, all this had a consolidated impact on the supply chain, affecting production.

Break in the supply chain

India accounts for about 16% of U.S. textile imports and about 5% of apparel and accessories, according to the Peterson Institute for International Economics.

India is the world’s second largest exporter of textiles and garments with a massive raw material and manufacturing base. The textile industry is an important contributor to the economy, both in terms of domestic market share and exports. It contributes about 7% to industrial production, 2% to GDP and 15% to the country’s total export earnings.

The pandemic has led to a complete unbundling of this industry’s supply chain. The shutdown of China, a major exporter of raw materials, followed by India, Bangladesh, Vietnam and Thailand has left the global fashion industry in a slump, especially in Western markets. Textile and clothing manufacturing units, the next link in the chain, have also closed. Of course, with freighters and airlines remaining anchored and suspended, international logistics came to a standstill. Inland logistics, mainly trucks, remained stationary, hitting the local movement of raw materials and finished goods.

Economic crisis

As a result, major apparel retailers and brands have postponed or canceled orders worth billions of dollars, including those already made and ready to ship, in an effort to minimize losses and satisfy customers. shareholders.

The fashion industry is always in a state of flux. Trends change at a very rapid pace. Therefore, design, sourcing and production are executed months before the finished product reaches the retail market. Payment for garments is not made until they have been shipped, which is standard practice. The consequence of this current payment process places suppliers and their workers in a very perilous and vulnerable position. Western brands, for example, are estimated to have canceled about $2.8 billion in existing orders as a result of the pandemic.

India’s cotton, silk and denim are hugely popular overseas, as are rough gems, and Indian design talent has found success in fashion hubs around the world. With the cancellation of orders from Western brands, the Indian fashion and apparel market suffered huge losses.

Although India constitutes a smaller fraction of imports compared to China, it still plays an important role in certain sectors, which makes it difficult to move supply chains outside the country.

Loss of livelihood

This industry is one of the largest job creators in the country, directly employing approximately 45 million people. However, those at the bottom of the supply chain have been hardest hit, as the pandemic has forced many suppliers to suspend or lay off millions of factory workers, often without compensation or pay. They pushed an already threatened group into hardship and greater poverty. Such an unfair system has been exposed during the pandemic.

At least 1.2 million garment workers in Bangladesh alone have been laid off, as reported by the Bangladeshi and Garment Manufacturers Exporters Association (BGMEA). Manufacturers’ associations, exporters and labor groups were urging brands not to cancel orders to mitigate the devastating impact on the 60 million garment workers around the world.

The recovery path

Unlike other industries, a smooth and robust supply chain is essential for the fashion industry to survive and thrive. A rapidly changing industry that fails to respond to changing customer demands and tastes is the surest path to backlash and setbacks. With the links in the supply chain restored, business is slowly picking up. Policy changes aimed at protecting the interests of the industry’s grassroots, in line with technological innovation and original thinking, will help restore the industry and restore livelihoods to millions of impoverished people.

(Akhil Duggar Jain is the Executive Director of Jain Amar Clothing Pvt Ltd which owns the western clothing brand, Madame).

About Julie Gray

Check Also

GXO Logistics customers doing well despite economic downturn buzz, CEO says

GXO Logistics customers are still doing well even as Wall Street fears the economy is …