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McKinsey report finds apparel industry needs to revamp sourcing strategies

McKinsey report finds apparel industry needs to revamp sourcing strategies


A recent global survey by McKinsey & Company of apparel chief procurement officers (CPOs) highlights five key themes shaping the industry's approach to sourcing. The findings indicate a significant shift towards prioritizing efficiency, supply chain resilience, and sustainability, with a growing emphasis on collaboration with suppliers.

Key challenges

Demand volatility: Fluctuations in consumer demand and the bullwhip effect disrupt the supply chain, leading to shortages and overstocking. 

Geopolitical tensions: Rising geopolitical instability is prompting brands to diversify their sourcing footprint to mitigate risk.

Sustainability regulations: Increasing regulations require brands to ensure ethical and environmentally friendly sourcing practices.

Competition: Fast-fashion giants like Shein are disrupting the market with rapid innovation and lower costs.

Five themes shaping apparel sourcing

Efficiency amidst volatility: Brands are prioritizing efficiency across the sourcing process to combat volatility and rising costs.

Rebalancing footprint: Brands are looking to diversify their sourcing bases to mitigate risk and improve speed and agility. Nearshoring is gaining traction, but challenges remain.

Strategic supplier relationships: Brands are forging deeper, long-term partnerships with suppliers to improve planning, resilience, and efficiency.

Sustainability: Sustainability is a growing priority, with brands working with suppliers to meet environmental and social responsibility goals. Data transparency is crucial for effective sustainability efforts.

Digitalization: Brands are embracing digital tools like 3D modelling and data analytics to improve decision-making, transparency, and efficiency.

To move ahead brands need to adopt certain strategies. To begin with they need to utilize data-driven strategies to establish sustainable sourcing goals that deliver economic value. Collaborate with suppliers for value-backed sourcing, material innovation, and cost optimization. Engage in transparent price discussions with suppliers using cost analysis tools. And build strong, mutually beneficial relationships with suppliers through value-sharing models and joint planning.

As the apparel industry transforms brands along with suppliers need to adopt new strategies, prioritize collaboration, and leverage digital solutions to build a more resilient and sustainable future.



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