Brands Bet Big on Supply Chain Investments in 2022

Fortune Favors the Bold in the Next Normal

The only guarantee for the apparel industry in 2022 is that the challenges triggered and exacerbated by the pandemic will continue. In 2021, the industry saw record-high shipping costs, the disappearance of available containers, labor shortages in transportation and manufacturing, and factory closures due to virus outbreaks. While some supply chain tensions have eased, many obstacles remain, and new ones may arise.

“The world has been shaken up, not unlike a snow globe,” Paul Magel, president of business applications and technology outsourcing division at CGS, wrote in Fortune Favors the Bold, the 2022 annual report on supply chain trends and technology. “And when the snowflakes settle, we’ll once again face a new normal.”

As companies prepare for these challenges, they can take part in shaping the new normal, according to findings from the report. It will be the bold ones that survive and thrive, and it will take investments in technology and data to improve efficiency and resilience.

The report is based on results from our annual survey, in which we asked fashion and consumer products executives about their vision for the future, including their growth opportunities; business improvement and technology investment goals; and confidence in the supply chain. This year, just over half said they trust their supply chains to function effectively, suggesting that many are wary of setbacks and looking to invest in strengthening operations.

The report provides guidance to companies looking to address these concerns and adapt to new market conditions. Here are some of the key takeaways.
 

GROW BY GOING DIGITAL

Companies’ attention to improving the digital shopping experience has not changed since 2021, and for another year in a row was ranked as their greatest opportunity for growth. Respondents ranked three forms of digital shopping as their greatest growth opportunities for 2022, including eCommerce through company-owned websites, online marketplaces and social media.

A newer development is the expansion of online shopping into social media. Demand for new platforms was evident in our 2021 consumer survey, which found that 48 percent of Millennials are interested in shopping through livestreams on apps like Instagram, Twitter and Pinterest.

With the wide availability of vaccines and general acceptance of masking, many consumers are returning to brick-and-mortar stores. Yet, digital platforms are where executives see the most growth potential. To harness this opportunity, companies must update their digital presence to meet consumers where they are—on the internet.
 

SUPPLY CHAIN VISIBILITY AND SUSTAINABILITY

After the immense shortages, bottlenecks and backlogs of the past two years, it makes sense that in 2022, supply chain visibility is executives’ top priority for improvement.

Edward Hertzman, executive vice president of Fairchild Media and founder and president of Sourcing Journal, knows the value of information and created the publication to provide reliable news about the market. As an industry expert, he urges companies to invest in technology to make their supply chains more transparent.

“My biggest concern is: Have retailers learned their lesson?” Hertzman said. “Are they going to be lean with their inventory? Are they going to be agile with their supply chains?”

Increasing supply chain visibility can decrease waste and increase efficiency, linking these investments directly with sustainability—a concern weighing on consumers more than ever.

Data shows that more consumers want sustainably sourced products and are willing to pay for them. Across the world, 60 percent of people think sustainability is important to consider when making a purchase, with U.S. consumers just above the global average, according to the 2021 Global Sustainability Study from Simon-Kucher & Partners. One-third of global consumers are willing to put their money where their mouth is and pay more for sustainable products.

The executives who completed our survey say they are responding to this demand. “Ethical, sustainable product sourcing is key,” one survey respondent told CGS.

Flexible and transparent sourcing, therefore, not only saves companies money, but also helps them meet their customers’ preferences.
 

TECHNOLOGY IS KEY

Whether improving the online shopping experience or maximizing efficiencies, technology is at the root of the solutions.

“There is a focus on digitalization from design to the shop floor all the way through to the showroom and consumer,” Magel said. “People need visibility into where all of their goods are throughout the supply chain, so they can pivot in response to disruptions and maneuver much better.”

Three technologies essential to integrating business processes and workflows, as well as making the supply chain more transparent, are Enterprise Resource Planning (ERP), Product Lifecycle Management (PLM), and Shop Floor Control (SFC). Our survey found that most businesses are investing in ERP and PLM technology, and 30 percent of respondents are in the process of expanding SFC technology. These are quickly becoming foundational tools for maximizing flexibility, efficiency and productivity.

The companies highlighted in our report, including LT Apparel and Attraction, are already taking advantage of these technologies and investing in their future. Their ability to adapt nimbly to shifting market conditions has been essential in a globalized economy, and even more so in the pandemic era.

Since the start of the pandemic, the industry has reassessed its priorities, making 2022 a year for not only the reconstruction of existing systems, but also the adoption of new ones. This year companies must boldly seize upon the opportunities that have emerged from the upheaval of the past few years, in order to create a more resilient future.

For more insights and actionable intelligence—including achieving growth, business improvements and technology investments—download your copy of the report, Fortune Favors the Bold: 2022 Supply Chain Trends and Technology.