Some 60 million employees, 17 million tons of textiles and 80 billion pieces of clothing every year - these are only three of many figures showing how important the global clothing industry is, an industry that is transforming. Globalisation, digitalisation and the end of trade restrictions, changing demand and short product cycles are increasing pressure and competition in the industry. The lion's share of textile production has long been shifted to developing and emerging countries, which export their produce to regions like Europe and the US. This results in complex and often non-transparent supply chains. According to The World Trade Organisation (WTO), China was the world's biggest exporter of clothing in 2019, with an export volume of 150 billion US dollars, followed by Bangladesh with a volume of 33 billion US dollars and Vietnam with 31 million US dollars. In Europe, Italy is the biggest exporter of clothing exports, with a volume of 26 billion US dollars, closely followed by Germany with 24 billion US dollars. Figures from WTO show that in 2019 the biggest importers of clothing worldwide were the US with an import value of 95 billion US dollars, Germany with an import value of 39 billion US dollars and Japan with an import value of roughly 30 billion US dollars.
Apart from reliability of lead times, quality and possible unit sales, attractive prices naturally continue to play a decisive role when it comes to the choice of country or region where orders are commissioned for the sourcing of clothing and textiles. According to consultants Accenture, production costs in Bangladesh almost doubled between 2005 and 2017, in China they increased by roughly one-third. The consequence is that new countries offering lower prices are gaining a foothold in the global sourcing market. More and more buyers are now looking to the sourcing potential of African countries with emerging textile industries like Ghana, Kenia and Ethiopia. Countries like Madagascar, Mauritius and Morocco have already established themselves for some time. An issue that is becoming more important is also how close sourcing countries are in terms of quicker deliveries and reliable supply chains. A survey conducted 2018 by consultancy McKinsey & Company reveals that some 80% of buyers believe that nearshoring, the practice of transferring a business operation to a nearby country, especially in preference to a more distant one, will have become increasingly important for sourcing by 2025, a figure established before the outbreak of the global Covid-19 pandemic, meaning that it is likely to have rather increased than decreased because of the pandemic and the resulting loss in trust in global supply chains. McKinsey & Company reckons that by 2025, the most important nearshoring sourcing markets for the US will be, apart from its domestic market, Mexico, Guatemala, Haiti, El Salvador and Honduras. For Europe, Turkey, Morocco, the UK, Portugal, Macedonia and Tunisia will have become more important sourcing countries.
For humans and the environment
There is another factor that will influence future ways of transnational buying. An important step towards protecting human rights was taken by the German Bundestag when it passed the German supply chain law on 21st June 2021. From 2030, German companies will have to make sure that human rights are protected alongside the entire supply chain. The new legislation dictates clear and viable professional duty of care requirements, which create legal certainty for both companies and parties concerned. Anyone who violates the law risks sanctions and image loss. In this way, the supply chain law is thought to contribute considerably to the protection of basic human rights standards like the ban on child and forced labour. France introduced a supply chain law as early as 2017, which obliges large companies operating in France including their French subsidiaries and sub-subsidiaries that have more than 5,000 employees in France or more than 10,000 worldwide to make human rights risks visible and prevent them along their supply chains. Australia also has a law regarding the supply chain, the country introduced the "Modern Slavery Act" in 2019. The law's goal is to make supply chains more transparent in order to contain present day human exploitation, trafficking and forced labour.
Another proven approach to increase the safety of workers and protect their health in general and in the textile and clothing industry in particular, while at the same time curbing impact on the environment, is the European Union's REACH regulation. It is a strict, modern and detailed regulation of all kinds of chemicals and chemical compounds, based on the principle that manufacturers, importers and third-party operators have to assume responsibility for the chemicals used in the production of the goods they manufacture, import and put into circulation. REACH also dictates strict and enforceable chemical concentration limits and provides a foundation for the evaluation of the potential risks of chemical groups. This also supports the free movement of chemicals, competitiveness and innovation.
On site and online, global and glocal
Outsourcing is generally considered to be the most efficient way of outsourcing processes to lower-priced production territories and reduce costs as a consequence. What the practice also entails, however, is that there is little to no control at all, that companies depend more on their partners and that there are increasingly more incalculable economic and quality risks. This considered, various reasons become evident that speak for integrating production processes in-house. This so-called vertical integration has the goal to optimise value and supply chains. This means that companies integrate upstream and downstream stages of production that was previously carried out by external partners. The promising advantages are, amongst other things, technical complementarities, the prevention of transaction costs, higher responsiveness, higher quality and easier communication and coordination. By consequently verticalising their supply chains, large groups in particular and their company structures can increase their competitiveness. Smaller companies are not able to integrate production stages in the same way but can indeed profit from trends like glocalisation and digitalisation and in this way integrate processes into their supply chains.
Technological progress is smart, efficient and sustainable and is driving changes all over the world, in the textile and clothing industry as well. "In view of recent developments, we have understood that we need to do more. We need to follow the connection between the supply chain, the brand and the retailers. We have started to do so with a completely new setup of plm solutions – product life cycle management solutions – which create a collaborative development of products. At the same time, this is a kind of platform that is accessible for all possible business partners, suppliers, designers, retailers. To support of the idea of collaborations is the main purpose of these so-called plm solutions," said Holger Max-Lang, President Northern & Eastern Europe, Middle East at Lectra during the WWD Talkat Frankfurt Fashion Week.
For sourcing to be successful and contemporary, it is essential to react to past-paced trends quickly and to be up to date and on top of developments at all times. Trend forecasts can be made with the help of Artificial Intelligence (AI) and robotics, thus making buying easier and more accurate. Digital tools and data bases are basically making travelling redundant altogether. B2B platforms like Foursource and Sqetch offer benefits for all parties concerned. Textile and clothing manufacturers can create profiles that allow them to contact existing and new customers directly. Digital applications also have the potential to reduce sampling costs by 80 percent and help suppliers to keep track of the market. Digital sourcing also benefits buyers because tools offer a complete list of suppliers, prices are easier to compare and there is the possibility to create digital material libraries that can help speed up product development.
In our world, everything is connected, not least because of increasing digitalisation. But globalisation and its local and regional contexts are creating connections. "Glocalisation" stands for the link and interaction between globalisation and the related local implications and contexts of processes because everything that happens in the world is of regional, local, global and trans-regional significance. In the past one and a half years, the Covid-19 pandemic has showed clearly how fragile lead time-sensitive supply chains are and that there is room for improvement for many aspects of international sourcing. The origin of a product is now a relevant selling point and quality issue. In the textile and clothing industry, mega trend glocalisation is leading to shorter delivery routes, more transparency and synergetic cooperations, in short, to more ecological, economic and social sustainability - a development that can contribute to improving the entire sourcing and manufacturing process.
The entire industry under one roof
Messe Frankfurt's Texpertise Network covers the entire textile value chain, from research and development and yarns and fabrics to various textiles like clothing, fashion, contract manufacturing, home textiles, technical textiles and finishing and cleaning technologies. With more than 50 international textile trade shows located over all the world, more than 23,000 exhibitors and over 600,000 visitors in 2019, Messe Frankfurt is the market leader in textile trade shows. Texpertise Network's four areas Apparel Fabrics & Fashion, Interior & Contract Textiles, Technical Textiles & Textile Processing and Textile Care create the foundation for international trade show venues and sourcing.
As part of Texpertise Network's structure, Frankfurt Fashion Week, which premiered in July 2021, is also opening up new avenues of textile sourcing. The new event is the first fashion week with an approach to integrate the complete value chain. In its hybrid concept, the new fashion week ecosystem brings together trade shows, conferences, showcases and events, in this way pursuing the target of transforming the entire supply chain into a transparent and tangible supply chain. A target that will play a pivotal role in the future. That is also the opinion of Lukas Pünder, founder of Retraced, who said during the panel „Transparency. The Tech Solutions for New Supply and Value Chains“ at the Fashionsustain conference of Frankfurt Fashion Week, that: "Transparent communication of the product's supply chain and its impact has to become a core part of the consumer’s shopping experience. It is not surprising that more and more regulations are being worked on that deal with sustainability reporting standards and obligations. It is an exciting time that will increase the pressure on brands to become more transparent and sustainable."
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