How Supply Chains Adapt to a New Normal

By SPESA

Over the past year, the Covid-19 pandemic tested global supply chains, revealing problems and magnifying vulnerabilities that for years went unfixed or even unnoticed. Companies have had to reevaluate how they operate with the goal of becoming more resilient and prepared for unknown hurdles on the horizon.

Behind the Seams has continued to keep a pulse on the industry during this time. And in this month’s SPESA Speaks we’ll dive into some of the key trends we’ve seen when it comes to shifts in supply chain strategy.

A Greener Way

There’s no denying it. Efforts in sustainability are here to stay. And they should be. According to a Business Insider article from 2019, the apparel industry is responsible for emitting 10% of the world’s carbon emissions. It’s also the second-largest consumer of the planet's water supply.

While some feared the pandemic would force companies to sideline efforts in sustainability, many others argue the opposite. They say Covid-19 pushed companies to pause, reset, and re-strategize, with many of them now labeling sustainability as a critical business need.

The demand for greener supply chains has a lot to do with risk management. When Covid-19 struck fast in 2020, it exposed how unprepared we are in the face of a global crisis. And what is now being recognized is that the threat of climate change has much deeper roots. This sentiment was echoed in a recent piece by WhatTheyThink’s Cary Sherburne: “…But as the frailties of the global supply chain were laid bare, and brands, retailers and suppliers alike suffered huge losses, many industry stakeholders were urging an acceleration of these plans.”

Transparency

Without a doubt, Covid-19 exposed weaknesses across supply chains — many of which were a result of a lack in supply chain transparency. It is crucial that companies gain better access and control over their full supply chains, and understand who their suppliers are, where they are located, where they source from, their risk exposure, etc.

Increasing supply chain transparency helps address the two challenges we’ve already noted: assessing supply chain risks/weaknesses and implementing sustainability initiatives. It can also limit a company’s exposure to social issues such as forced labor in factories — an issue that has become more and more important recently as media and political attention is drawn to specific regions such as Myanmar and the Xinjiang Uyghur Autonomous Region in China (featured in last month’s Trade & Policy Round-up).

Seeking out, ending, and preventing forced labor in your supply chains not only make you a good global citizen, they protect your company’s reputation, and could help minimize your risk as governments around the world look to enforce varying supply chain due diligence legislation.

Closer to Home

Reshoring and near-shoring have continued to be major points of discussion across the sewn products industry. We’ve talked about it in great depth in Behind the Seams. And much of what we’re hearing has to do with the role reshoring and near-shoring play in creating shorter supply chains.

There are many benefits to shrinking supply chains, two of which we’ve already discussed here: sustainability and transparency. Removing links in the supply chain means less waste, less energy used, and more visibility into supply chain operations and suppliers. It also means less room for error and disruption. Right now, global businesses are being hit hard due to a container shortage that is causing substantial delays in shipping. A demand for goods — that ramped up in the second half of 2020 and the first quarter of 2021 — along with logistical hurdles caused by Covid-19, exposed a supply chain incapable of keeping pace.

Consumers are also looking for their products to be made closer to home. Last November, Sourcing Journal shared findings from a recent consumer survey noting 52 percent of respondents said they would prefer to buy American-made goods with 46 percent saying they would prefer to buy locally-made goods.

While disruption from the pandemic still lurks, we find ourselves settling into a new normal of sorts. One thing though appears to be clear: gone are the days of quick-fix solutions when it comes to supply chain maintenance. Changes remain inevitable, but a more refined focus on strength and resiliency is here to stay.