5 Ways to Overcome Challenges Relating to CNY Shutdown

February 8, 2021

The apparel sector has dealt with a myriad of struggles over the past year. The coronavirus pandemic brought the world to its knees as 2020 ushered in an era of unprecedented uncertainty. World economies are struggling with rising unemployment and China was the only major economy to grow in 2020. In the US, more than three dozen retailers filed for bankruptcy, the largest number in over a decade.

Over one year into the pandemic, we have seen how easily traditional supply chains can be disrupted. Supply chain problems and unexpected cost increases are setting retailers back just as they begin to regain their footing. Shipping costs are rising and the shift to e-commerce is both capital and operationally intensive. Major shipping ports are congested and there is a shortage of truck drivers and warehouse capacity tying up working capital. The coronavirus pandemic, a shipping crunch, and Chinese New Year have collided to create a perfect storm. With decades of supply chain experience under our belt, here at SILQ, we see both the big picture and understand the nuanced intricacies that comprise the world’s supply chains. Our regional experts on the ground in India, China and Vietnam provide market intelligence, mitigate risk, and enable us to adapt quickly in dynamic environments. We share five sourcing best practices to set your brand up for success in these trying times:

  1. Pick a plan: An effective strategy will guide you towards where your time and resources are best spent. Determine your end goal and outline the steps you need to take to work backwards to get there. The further ahead you plan, the more flexibility you have to model multiple scenarios and consider alternative options. Adapt as the world changes, but knowing what your options are under pressure because you have done the heavy lifting is priceless. As legacy systems and outdated processes have emerged as bottlenecks for retailers, tool and technology implementation is a critical part of the strategy and planning process.
  2. Communicate: Supply chains are global and it is important to engage your partners -- fabric mills, manufacturers, sourcing agents, logistics providers -- both to build an empowered network of experts to execute against your strategy but also to gain critical market insights and mitigate risk. Your supply chain partners are thought leaders, who along with SILQ’s localized support delivering intelligence, can set you up for success
  3. Commit: No decision is a decision. Commitment is an enabler to flexibility. Developing strategic relationships and investing in capacity and raw material commitments pays off through increased flexibility, costing savings, and reduced compliance risk. 
  4. Simplify and Diversify: This isn’t business as usual anymore. Identify areas to reduce manual processes, duplicated efforts, and diversify your source base. Reconfigure existing processes and products to create something new. When you simplify, you create room to see the world through a different lens.
  5. Visibility and Transparency: A key barrier to getting ahead of supply chain issues is lack of end to end visibility due to siloed operations and limited use of technology between companies in the upstream apparel supply chain. Visibility is an imperative in the fashion industry with recent regulations banning products produced in China’s XUAR due to forced labor allegations. In supply chain management, if you realize something is already a problem it is too late. The key is to develop mechanisms to detect these issues before they happen and this concept is fundamental to our work at SILQ.