Workers are able to return to garment factories in Bangladesh if physical distancing is adhered to © Getty Images
Workers are able to return to garment factories in Bangladesh if physical distancing is adhered to © Getty Images

Covid-19 gives fashion industry ‘opportunity to reshape sourcing’

posted by Charlie Hart
13 May 2020

The Covid-19 crisis provides the fashion industry with an opportunity to create more sustainable and agile sourcing, according to a report.

The report by McKinsey said the crisis could accelerate the transformation toward a demand-driven supply-chain model.

“The industry has started to change its out-of-date sourcing model characterised by long lead times, maximising order sizes, and relatively low flexibility,” the report said.

The industry’s short-term priorities in the wake of the outbreak have been securing inventory, managing the ramp-down and ramp-up of supply chains, optimising cash flow along the supply chain and managing financial risk.

However, the report said stakeholders have indicated sourcing volume will shift from China to other Asian countries over the next year, and many expect “at-scale and highly capable” apparel-manufacturing clusters to emerge in nearshore markets, such as Eastern Europe and Central America, the report said. 

It added the industry will see a “move away from purely transactional relationships” as fashion brands aim to forge stronger supplier partnerships to foster innovation and secure supply. 

Closer relationships would allow for “partnering on issues like end-to-end process improvement, finding new investment models, and making industry-wide progress toward social and environmental sustainability”.

The report said: “To succeed in the next normal, beyond Covid-19, fashion players need to join hands with suppliers and invest in strategic partnerships and innovation. 

“Tough questions need to be asked and answered to understand exactly how this next normal operates in practice, but executives should not waste this opportunity to completely reshape sourcing practices for the long term.”

The report comes as thousands of workers returned to garment factories in Bangladesh despite concerns over coronavirus spread.

More than 500 garment factories in Bangladesh reopened at the end of April following a month-long shutdown. The government said factory operations would be allowed to resume if physical distancing is able to be maintained and workers adhere to the country’s ban on public transport. 

According to a report by The Guardian, workers have been forced to return to work in cramped conditions, with no physical distancing or masks to wear. 

Workers at garment factories in industrial areas on the outskirts of Dhaka allegedly told the newspaper handwashing at the entrance was the only new measure imposed, and no physical distancing measures were being enforced.

In April consultants said coronavirus had “unravelled” garment supply chains and buyers had to rebuild relationships with suppliers.

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