After the pandemic and through the current economic uncertainty, retailers are looking to speculate heavily in relationships with their supply chains to create a greater future. SHEIN, the worldwide fashion and lifestyle e-commerce company, is leading the charge for a more reconceptualized approach for his or her business that stretches from design conception to the finished product.  

Throughout the “Agile Supply Chains: The Way forward for the Fashion Industry” webinar, executive vice chairman at SHEIN, Donald Tang, spoke on a panel with Divya Demato, the founding father of GoodOps, and Veronique Yang, managing director and senior partner at Boston Consulting Group. 

To set the stage for the session, the panelists cited a recent study from Boston Consulting Group, titled, “Agility Is Fashion’s Latest Source of Competitive Advantage.” The study checked out how the style industry will be more competitive by constructing a supply chain that’s customer-orientated and puts in place end-to-end mechanisms for changes in demand. The BCG study discussed Shein’s supply chain model and digitalization capabilities to realize supply chain agility.

Moreover, the BCG study highlighted three key avenues through which an organization can change into more agile. Firstly, the intelligent push, an archetype with a contemporary twist on the more traditional fashion model, utilizes digitization to offer a more accurate landscape to raised predict demand based on initial sell-through and make sure supply chain steps virtual. Secondly, the fast-fashion push strategically and rapidly adapts runway fashion trends for the on a regular basis consumer. Lastly, the on-demand digital direct-to-consumer approaches small minimum order quantities of 100 to 200 pieces to check the market and replenish orders on demand to secure minimum stock levels and production waste.  

To read the companion story to this text in Sourcing Journal, CLICK HERE. 

Tang discussed how the corporate has adapted to the shopper— especially amid changing demand. Customers want more options and at reasonably priced price points. Tang has seen firsthand that “the battle for the hearts and minds of consumers” has intensified. To raised adapt to customers’ changing demands, SHEIN has consistently employed small-batch initial order tactics. Because the production process becomes more agile, it improves efficiency, resulting in reduced deadstock and waste, in addition to cheaper price points for patrons. 

Recent economic uncertainties are also impacting consumer behavior by making shoppers seek more affordability. “In a survey that now we have done recently with our customers, 87 percent of the respondents have modified to cheaper options after noticing the fee of living has increased significantly,” Tang said.  

As for the physical product itself, Yang sees a shift in how consumers are in search of more diverse and inclusive items from retailers. “They’re expecting more inclusive products that may cater to the needs of various ethnicity, culture, sizing and more as also they are expecting this product offering to are available in a much faster way — as the style trends are diffusing much speedier fashion with the rise of social platforms.”  

Fittingly, SHEIN’s mission is to “function a frontrunner within the industry and produce fashion into the trendy era.” One in all the ways the corporate is achieving this is thru the reimagining of the provision chain. All businesses witnessed firsthand the problems of not having a productive and good working relationship with their manufacturers through the pandemic.  

Now within the “recent normal,” despite Tang admitting that nobody has the answers, SHEIN has led the best way in maintaining close relationships with their manufacturing and provide chain partners. They helped digitize small and medium factories to assist them see their very own capacities more seamlessly and efficiently. Furthermore, the factories have higher liquidity because they’re being paid faster by the retailer. In keeping with the BCG study, SHEIN achieves a list turnover of around 40 days, significantly lower than the retail fashion industry average of 108 to 121 days between 2019 and 2021. 

Demato labeled the SHEIN business model to be revolutionary as she believes that more corporations can be adopting the same model/method for his or her businesses after seeing the recognition with consumers and equal partnerships with their manufacturers and factories.  

The normal fashion production timeline for specific seasons and products typically takes about 12 months from design to putting out a finished product in retailers. But this timeline has now change into vastly outdated, especially in today’s social media climate, and the Generation Z-focused retailers are searching for to capture.  

“It was a really linear system before and I believe that corporations which can be still operating linearly, will lose out and have continued to lose out,” Demato said. “When it comes to how those traditional orders and seasons had been in for many years, just doesn’t work anymore by way of meeting these needs of the patron, especially in fashion.”   

Demato noted that Gen Z is kind of a unique group than Millennials and Gen X. The Gen Z cohort grew up with technology within the palm of their hands and never had to attend for anything. Thus, their demands are much higher for fashion retailers.  

One would assume these on-demand DTC systems could be more costly, but SHEIN has implemented digitization to streamline the method. A lot of the costs related to clothing production come from the fabrics. Tang notes the corporate has consolidated the fabrics through digitization, which helps cut costs significantly.  

“What we see is digital really plays a task to assist resolve these issues on the material side. It consolidates the material based in the marketplace demand forecasts they usually construct online fabric digital platforms,” BCG’s Yang explains. “All of the suppliers are pre-qualified, checked and consolidated. Their suppliers and manufacturers can directly place orders to all the material suppliers.”   

Speaking on the changing of production lines, Yang said that digitalization helps streamline supply chain tasks and save time for suppliers. For instance, an internet fabric ordering database and order system makes it effortless for suppliers to perform material preparation ahead of production. 

Tang said that every one these changes in the provision chain start with a philosophical change of mind. SHEIN is aiming to deal with on-demand agile manufacturing that minimizes waste. Through this approach, SHEIN can pass along those savings to the patron.  

To summarize SHEIN’s approach, Tang said, “In case you discover a method to do good if you are doing well, or do well, while are you doing good? That’s a lovely thing.” 

To learn more about SHEIN, click here.