Fashion is a popular style or practice, especially in clothing, footwear, accessories, makeup, body, or furniture. No other industry changes as rapidly as fashion. What’s hot today is blasé tomorrow. Innovation becomes retro. Seasons change. Hemlines rise and fall … and so do the sales figures. A celebrity makes a fashion statement on the red carpet and suddenly the financial statements are covered in red. The apparel and footwear industry is truly global in scope, in that manufacturers can now sell different products that are produced in different countries and spanning many different continents. A global procurement strategy requires processes combined with offshore and contract domestic production processes. This combination of domestic plus near shore plus offshore production often create complex, inefficient and hard to monitor value chains.

To be on top of the competition is the biggest challenge in the fashion industry today. The five forces which affects the competitiveness in fashion industry are:

  • Buyer power — the ability of buyers to decrease the prices they pay
  • Supplier power — the ability of suppliers to increase the cost of their product or service
  • Competitive rivalry — the intensity of competitive activity which might affect how much business a company receives, or how high sustainable margins are
  • The threat of new entries/entrants — the threat posed by new entrants in a market
  • The threat of substitution — the threat posed by the possibility of substituting a product or service in one market with something else
  • To remain competitive, apparel and footwear companies must assume the role of coordinator (for internal processes) and focus also on intercompany processes. This means a major turn for those companies, shifting their main focus and competencies away from pure production and more onto planning, controlling, and textile monitoring in the overall value chain. Areas of more importance, such as production planning, product development, control and coordination, quality assurance, finished goods and raw material requirements planning, and transport optimization are most often kept at central headquarters. This more vertically integrated approach makes partner collaboration and data flow in the textile supply chain complicated, but extremely critical to the success of companies in the apparel and footwear industry.

    Other major challenges retailers face are labor and outsourcing problems. Outsourcing and multilevel division of labor are common practice in the apparel and footwear industry. Companies optimize their production processes in order to cut costs and achieve financial success. Automation of the production of shoes and clothing can also only be done to a certain degree and level, which quickly limits savings potential.

    Because of this limited savings potential, companies began outsourcing their product production to lower wage countries – reducing costs, but compromising quality and production process transparency. Largely spread out global production locations naturally complicate production process supervision and monitoring, resulting in more expensive and longer transportation routes and unmet production delivery deadlines.

    Finally, due to the fact that the fashion industry is constantly and sporadically changing, seasonality is one of the most important aspects in the apparel and footwear trade. Companies must be able to cope with the unpredictable seasonal fluctuations, variations in design, forecast uncertainty, shortages in stock, and inevitable costly markdowns in prices.



    CPI Consulting Associates; specializes in SAP solutions which help fashion companies to verticalize their businesses and shorten the time from concept to customer, boost collaboration across the supply chain, and offer end-to-end visibility, flexibility, and speed. We help companies to drive transformational results by leveraging best in class industry solutions , with out fashion domain specialization and effecive delivery model.