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CGS’ Latest Annual Supply-Chain Report Reveals Surprises, Solutions

By California Apparel News


Numbers tell stories in precise ways. Consider this: Only 23 percent of apparel executives have high confidence in their supply chain. How to ameliorate this? Well, 70 percent of the same industry leaders plan to implement process digitalization, which should also help calm the inflationary concerns that trouble 85 percent of them. These figures come from the 2023 Supply Chain Technology Trends Report from CGS, the global provider of business applications, enterprise learning and outsourcing services, and is a vital annual report for decision-makers in the fashion industry.

The California Apparel News spoke with Daniella Ambrogi, global marketing director at CGS, to discuss the key findings in this year’s report as the industry grapples with challenges—and opportunities—from all sides.

CAN: What are the main takeaways from this year’s report?

DA: First off, that e-commerce is the number-one growth opportunity for the industry. However, what surprised us was that environmental and sustainable initiatives, which last year were the number-six priority for the industry, this year jumped to number two. So companies are taking these issues very seriously. And economic uncertainty, inflation and labor shortages were also right at the top.

 

CAN: How do we know that sustainability is driven by legitimate concern as opposed to zeitgeist hype? Do we really know why it jumped?

DA: I was recently at an apparel conference and a large manufacturer was taking this very seriously, looking at everything from water consumption to salt in their dyes, so I think companies really are making the change to more-sustainable practices. Made in America has also become very important for brands, who are nearshoring production in order to reduce their carbon footprint. This also picked up with COVID and the shutdown in China, which forced companies to rethink their supply chain. And there’s also consumer pressure from Generation Z, which now has strong buying power. I think we’re just taking baby steps right now, but all this will become the norm.

 

CAN: Speaking of the supply chain, the report found that only 23 percent of respondents have confidence in their supply chain.

DA: Nobody paid attention to the supply chain before COVID; now everything is about it. Companies began to look more closely at where and how their items were being made and then realized they’re not digitized. People in design only cared about design, and people in sourcing trusted their manufacturers and didn’t care what subcontractors they were using. Now brands are becoming accountable for their manufacturing footprints.

 

CAN: It never ceases to amaze how 2020—in another reference, perfect vision—shed the light of transparency on so many things.

DA: That was the silver lining of COVID—it accelerated the digital transformation of the industry. Apparel is usually the latest to adopt new technologies because it’s been doing things the same way for many years so why change? Also, the supply chain became visible because COVID led to many canceled orders, which broke the trust between brands and manufacturers. Now what we’re seeing is the start of a more collaborative relationship. Previously brands and retailers were always pushing for the lowest cost, and now they’re looking into value-added and introducing technology to their partners for more visibility so they can collaborate better. These were findings we found very interesting and that hadn’t appeared in our surveys before.

 

CAN: Everything is related, and these issues lead directly to another chief concern in your report and that is the desire to cut costs.

DA: Yes, and now it’s not just cost-per-unit, which used to be the only thing when signing a contract. Now it’s more like, “Is this the best, most cost-effective product I can get? And how are the labor practices?” This has been very enlightening to us.

 

CAN: Who should look at the details of the report?

DA: It’s really an executive report, for C level, VPs and directors. As far as the demographics of the 350 people surveyed, it was about 50 percent manufacturers and wholesalers, and the other half was a mixture of brands, retailers and e-commerce. Their titles were mostly in finance, IT, sourcing and supply chain, and product development. The reach is over a thousand people. We promote it for about four months but still keep it live. Once people download the latest report, they tend to download the last one so they can compare. So this report has a long shelf life.


This interview was published in California Apparel News May 18, 2023. CGS, Inc. is a member of SPESA.


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