Supply chain disruption remains a constant, albeit unwelcome, companion to the fashion industry. How companies navigate a shifting landscape of labor issues, extreme weather, and trade disputes may well determine who succeeds and who fails over the next decade, as the potential for disruption—and the consequences of unmet demand—only intensifies.

During the summer, a series of port stoppages and strike threats pushed labor negotiations in shipping and ground transportation to the brink of collapse, underscoring an urgent need for fashion companies to strengthen their contingency planning.

“Even if a strike doesn’t happen, the history of the last three years tells us there will be a new shipping crisis around the corner,” said Inna Kuznetsova, CEO of ToolsGroup, a Boston-based supply chain planning and optimization software firm. “None of us can predict, we can just bet on the fact that something will happen and put things at risk again. We need to start using that event as a trigger to rethink our overall approach.”

The onset of the COVID-19 pandemic in 2020 was soon followed by labor issues, and the combined effect forced companies to overhaul their contingency plans due to major supply chain disruptions. Notably, last year saw significant problems at West Coast ports, which experienced periodic disruptions over stalled labor negotiations between the International Longshore & Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). The situation remained challenging for months until U.S. Labor Secretary intervention helped broker a tentative agreement in June. Ratification was announced on Aug. 31, with 75% of the ILWU voting in favor of the new six-year contract.

Meanwhile, negotiations between UPS and its union representing 340,000 workers also went down to the wire before a deal was reached in late July, with ratification of the UPS agreement following on Aug. 22.

Yet labor disputes and supply chain disruptions are not new to fashion. Long-time observers attribute the industry’s delivery challenges to an outdated operational model.

“Over the last 40 years some things [in fashion production] just haven’t changed,” said Nick Vyas, executive director at the USC Marshall Center for Global Supply Chain Management. “We’re still dealing with long lead times, from long design-to-delivery cycle times. From planning and sourcing to manufacturing, all the way from the first mile to the last, it is still an antiquated approach.”

As echoed in a 2022 state-of-the-industry report on fashion from McKinsey, “supply chains remain disrupted from the COVID-19 pandemic, elevating the need to invest in faster and geographically closer manufacturing systems.” The report added that although digital DTC channels remain a top priority, fashion leaders must diversify strategies to “maintain efficiency and market relevance.”

Fixing a decades-long problem may seem daunting, but for many fashion companies, legacy practices no longer suffice for building and sustaining a successful brand. Below are five expert recommendations for making fashion’s supply chain more resilient.

1. Flexibility

For brands importing from Asia, flexibility can be tricky given the many stages required to design, source, and deliver products, said Kuznetsova. Any small change in normal supply routes can disrupt the entire chain, she added.

“Doing everything in real time is critical to making the right decision,” Kuznetsova said. Flexibility can give a business time to “postpone the decision on when to delay shipment until the last minute. You may have an order and can’t fill it due to a strike. You could fill that order from another store, warehouse, or from a different supplier.”

“The apparel that’s going to be in stores in a handful of months from now underscores the level of planning that goes into the retail supply chain,” said Jess Dinkert, vice president of supply chain for the Retail Industry Leaders Association. It also highlights “how far out they really have to look at these contingency plans and be able to make decisions now in order to mitigate disruptions in the future.”

2. Move Up Delivery Schedules

Brands can bring in goods earlier and warehouse them to stay ahead of the fragile supply chain, according to Christopher Tang, professor at UCLA Anderson School of Global Management. Although costly, not having goods available when customers need them can be an equally expensive mistake.

“When you anticipate a potential strike, companies may need to move up their [delivery] schedules a bit earlier,” Tang said. “They can shift earlier to a warehouse just in case so that they will have more inventory available.”

Another way for some fashion brands to circumvent delivery issues is to produce significantly smaller quantities of trendy styles and ship them directly to U.S. stores and consumers. Fast fashion companies such as Shein and Temu ship goods weekly and can avoid import taxes if their shipments have a value of $800 or less, although lawmakers are investigating these practices.

3. Create a Digital Twin

Automation has come slowly to the fashion industry, with many companies still relying on antiquated systems for design, manufacturing, and product launch. To mitigate supply chain disruption risk, brands are advised to adopt digital solutions that help plan for unforeseen breakdowns.

Having real-time visibility into every step of the manufacturing process allows a company to make last-second decisions on shipping timing, delivery methods, or postponements. This can be achieved through a digital twin—software that creates a virtual representation of an operation, mirroring its real-world counterpart using real-time data and simulations, said Kuznetsova. Applied to fashion, digital twins help track apparel inventory across warehouses and stores, optimizing operations and decision-making.

Large retail players such as Amazon already have digital twin systems in place, enabling real-time supply chain tracking, said Kuznetsova.

“It gives them a competitive advantage,” she said. “The key is having full visibility of inventory, including goods in transit, to be able to make fulfillment decisions.”

4. Nearshoring

Moving apparel and footwear production away from places like China to smaller, less restrictive Asian countries or to Mexico and Central America has gained popularity as fashion companies seek to avoid disruption and shorten production journeys.

While China has been a manufacturing haven for U.S. brands due to labor costs and ease of transporting goods to the West Coast, uncertainties from trade wars have prompted a growing number of North American fashion brands to look elsewhere. Some are shifting production to Vietnam, Thailand, Malaysia, Indonesia, India, and Bangladesh, or nearshoring to Mexico and Central America for proximity to the U.S.

“There is a desire to rewire because companies are tired of not being in control of their destiny,” said Balika Sonthalia, senior partner at Kearney. “They want to be more in control, and that starts with moving your source closer to the point of consumption.”

Moderately priced clothing remains hard to produce domestically in the U.S. due to higher labor costs. However, manufacturing in nearby countries like Mexico is growing, Sonthalia said, because products can reach domestic outlets faster by land than if made in Asia and shipped by sea.

5. The Great Reset

The pandemic forced companies to become more proactive and to change supply chain management in a more meaningful way, Sonthalia said.

“Nowadays, we talk about the great reset every time we talk about supply chain,” she said. “There was a huge shock that we saw from both the supply and demand side, and we spent the last 2-3 years staying above water to meet customer demand and get products through the door. That’s what the last 2.5 years have been about, which included raising safety stock levels and storing more products just in case there is another issue.

“All of that is expensive, and putting the house in order in a patchwork way is never sustainable. If your roof is leaking, sometimes you have to change the roof rather than do quick repairs. And that’s what we’re seeing right now.”