It has now been more than 9 months since Covid-19 hit the US. It’s affected a wide range of things from the way we live to the way we do business. Nearly every industry has been impacted, and the fashion industry is no exception. 2020 is the year that has changed everything, and the fashion industry suffered its worst year on record. A report by McKinsey & Company and the publication Business of Fashion describes the Coronavirus pandemic as something that “has disrupted financial markets, upended supply chains, and crushed consumer demand across the global economy.”
COVID-19’s impact on fashion industry operations
The Coronavirus pandemic has brought to light how outdated fashion supply chains have become. Sourcing Journal referenced an article outlining the need for more resilient supply chains that states, “Unfortunately, many [companies] are facing a supply crisis that stems from weaknesses in their sourcing strategies that could have been corrected years ago”. This year, Asian apparel manufacturers lost billions of dollars’ worth of orders in cancellations by fashion retailers trying to curb their losses. Manufacturers around the world were hit with cancelled orders and retailers unable to pay their debts.
According to McKinsey Global Fashion Index analysis, fashion companies will sustain a 90 percent decline in economic profit in 2020, after a 4 percent rise in 2019. The BofF estimates that global fashion sales will decline by between 0 and 5 percent in 2021 compared to 2019. While this does not seem like good news, it is a hit the fashion industry can recover from.
With these massive losses in sales and wasted product being sent to landfills (at rates higher than ever), the fashion industry is feeling the pressure to implement more sustainable practices. Manny Chirico, Chairman and CEO of PVH Corp. stated, “The COVID-19 pandemic has severely affected every aspect of the apparel value chain. While our immediate focus is navigating the crisis and its human and business impacts, we must actively look for ways to capture opportunities that can accelerate our efforts to create a more sustainable future”.
Over the past year, consumer behavior has changed dramatically. People began working from home, sheltering from the virus, and their needs (and therefore spending habits) changed. Not only did their buying habits change, but also how they shopped. Digital consumption has continued its dominance and growth as brick and mortar stores continue to shutter. A company’s online presence has become key to surviving the effects of this pandemic, and companies must develop more engaging and social experiences to encourage consumers to connect with speed and sustainably in mind. As the Business of Fashion states, “the pandemic will accelerate trends that were in motion prior to the crisis, as shopping shifts to digital and consumers continue to champion fairness and social justice.” According to Cotton Incorporated’s 2020 Spring U.S. Coronavirus Response Survey, the majority of consumers (65 percent) have become more concerned about sustainability and environmental issues since the COVID-19 pandemic began.
So how can companies strengthen their supply chains while prioritizing sustainability and profit simultaneously?
How Exenta software can modernize your supply chain for a digitally focused year
Software technology implemented throughout the supply chain provides the perfect blend of technology and human labor by increasing productivity, decreasing waste, and therefore increasing profits.
Information gathered and recorded manually does not provide manufacturers with insights needed to make adjustments mid-shift or mid-production order. Shop Floor Control MES software tracks the progress of production throughout sewing operation, giving supervisors, managers and workers real-time information and notifications regarding WIP, including many aspects of workforce management such as employee productivity, labor costs, and pay rates. When Shop Floor Control MES is used, employees can scan barcodes on pieces or garments rather than writing everything down in a notebook or using gum sheets. This results in an immediate efficiency improvement, along with enhanced decision-making capabilities. Shop Floor Control MES enables sewing operations to experience productivity gains from 11% to more than 40%. Extra productivity translates easily into higher profitability. In a large corporation producing 100 million pieces per year, even the minimum 11% productivity gain would result in 11 million extra sewn products to sell each year—without any additional labor required. This increase in efficiency directly correlates to a decrease in material waste and environmental impact. A more efficient shopfloor results in reduced waste during the manufacturing and production process.
In today’s primarily digital marketplace, fashion brands need to be able to evolve with consumer demands. Exenta offers the only complete supply chain management (SCM) technology suite designed for the apparel and soft goods industry. Real-time visibility across your supply chain helps you continuously optimize operational decisions while balancing competing demands for cost, speed, and quality.
Technology is key to driving the visibility, speed and accuracy required to adapt to evolving customer demands and a changing competitive landscape. Better supply chain management helps get products to customers faster which boost profitability. Vendors taking advantage of a cohesive end-to-end Supply Chain Management technology platform will be able to bring a higher quality product to market faster than ever before, with less waste and fewer returns.
See how Exenta’s cutting edge technology can streamline your supply chain and prepare your company for 2021. For more information, request a demo here.
Covid-19: How it started and where it is headed
According to the CDC, the first laboratory-confirmed case of COVID-19 in the United States was recorded on January 20, 2020, and reported to CDC on January 22, 2020. Since then, over 65 million cases have been reported worldwide and over 1.5 million fatalities. As countries around the world began to shut down last spring, cases seemed to decline or level off. However, the economic damage was far from over. With new shutdowns taking place in some parts of the US as the country experiences a new surge, the fashion industry may face its biggest pandemic threat yet during the traditionally profitable holiday season.
The pandemic has caused the largest global recession in history, with more than a third of the global population at one time being placed on lockdown. Supply shortages due to panic buying of supplies, price gouging, and delays in shipments of a variety of goods are all issues that emerged around the world and have continued sporadically in recent months. In February, stock markets worldwide saw their largest single-week declines since the 2008 financial crisis, according to CNN Business.
Now, as many parts of the world enter winter, cases have spiked again. According to CNBC, daily coronavirus cases have now topped 200,000 for the first time in the United States as of early December, and hospitalizations topped 100,000 for the first time.
The Impact of Covid-19 on the Fashion Industry
The virus continues to have a negative impact on the fashion industry as a whole. Brands and designer houses have shut their doors and postponed upcoming fashion shows. Popular fashion brands such as Brooks Brothers, Lucky Brand, and J-Crew have filed for bankruptcy. Around the world, department stores such as Neiman Marcus and Saks Fifth Avenue have permanently shuttered some locations. WWD states that fast fashion brands such as H&M report sales dropping nearly 60% from March 1st to May 6th due to a majority of its stores closing and consumers pushing for more sustainable practices. (https://wwd.com/fashion-news/fashion-scoops/how-coronavirus-effecting-fashion-industry-trade-shows-stock-prices-1203508244/)
Fashion companies aren’t the only ones reeling back. Consumers have been forced to reduce or change their spending dramatically. While high heels and work attire stay sitting on shelves, loungewear and workout wear is selling out. Consumer behavior is quickly adapting to these unprecedented times, and while some types of clothing and cosmetics are seeing double digit declines in consumption rates, online shopping has become all the rage. According to JP Morgan, “the pandemic has pushed more shoppers online, with e-commerce now accounting for 16.1% of all U.S. sales, up from 11.8% in the first quarter and this trend is likely to stick, even as brick-and-mortar stores open their doors again.”
While the trend towards e-commerce is evident and most companies have expanded their online presence, many still have not. PayPal Newsroom states that nearly “half (47 percent) of fashion retailers have not adjusted their e-commerce approach since the start of COVID-19, despite a massive consumer shift toward online shopping”.
Fast Fashion as we Know it Isn’t Going to Cut it Anymore
Many fashion companies would have to completely reinvent their supply chain in order to support an expanded online presence. Not only is it essential to many consumers to not go shopping physically in store for their own safety, but they also want it delivered at the rate they were provided pre-pandemic.
As this second wave of COVID-19 cases hit, the fashion industry is beginning to realize that this pandemic is far from over. Instead of surviving, fast fashion companies must adapt. Companies must now streamline their supply chains, reduce person-to-person contact, and keep profits to survive. Global Trade Mag states, “It’s no longer unusual to see Summer dresses on the shelves in February and Winter coats in the stores before August is out. And yet consumers, bombarded with the latest fashion trends at all hours of the day via social media influencers and celebrities, want fashion they can wear now, not in months’ time. In order to stay relevant, retailers are pressured to buy stock months in advance of when it’s needed, and then end up having to sell it off at sale prices just as it’s coming into season so they can introduce the never-ending round of latest trends.” After months of lockdowns, the fast fashion industry is finally forced to slow down and change their ways.
Sustainability has become a hot topic for consumers over recent years, and Coronavirus has amplified it. As consumers around the world look to each other for support and survival, they have begun to realize now more than ever the impact fast fashion has on the environment. Constant overproduction of fast fashion to keep up with trends has heavily impacted the planet on a global scale. Millions of tons of waste from clothing go to landfalls each year, and millions of gallons of water are contaminated with chemicals from fabric treatments then dumped in oceans and rivers. Knowing this, consumers are now demanding change from retailers.
The COVID-19 pandemic has forced the entire fashion industry to finally stop, address its issues, and start looking for solutions to benefit both the company and their consumers. In order to do this, fashion companies must look to technology.
How Fast Fashion is Adapting with New Technology
In order to become more sustainable, fast fashion companies need to adjust their supply chains. “There is an underlying demand for retailers to not only be more transparent but to also make the information they are providing as accessible as possible for the average consumer,” Samantha Dover, a senior retail analyst at market research company Mintel, tells CNN Business. This has led to some brands using blockchain technology to track their supply chains. This online public platform creates a permanent and unchangeable record of transactions by time-stamping them and making them unable to be altered. A t-shirt manufacturer in England shows CNN Business how they use robots and technology on the production floor to manufacture only what is needed by consumers, therefore reducing waste. They take it a step further and offer free postage to customers who return unwanted items, rather than throwing them out.
So, what are other ways technology can reduce waste and hinder the spread of COVID-19 while increasing productivity and profits?
In fashion and soft goods manufacturing, effective workforce management is key to meeting customer expectations. Whether a brand operates its own manufacturing facilities or contracts with third-party manufacturers (3PMs), customer relationships are built on keeping a promise to deliver the right products at the right time and the right price.
Shop Floor Control MES software tracks the progress of production throughout sewing operation, giving supervisors, managers and workers real-time information and notifications regarding WIP, including many aspects of workforce management such as employee productivity, labor costs, and pay rates. When Shop Floor Control MES is used, employees can scan barcodes on pieces or garments rather than writing everything down in a notebook or using gum sheets. This results in an immediate efficiency improvement, along with enhanced decision-making capabilities. Exenta Shop Floor Control MES leverages an innovative Android™ app, management dashboard, and off-the-shelf tablets running on Wi-Fi to collect production data and empower workers, supervisors and managers with up to the minute production visibility and control. Having this software on the manufacturing floor allows for less person-to-person contact, as each worker’s tablet sends real-time information to all sectors of the manufacturing floor. Shop Floor Control MES also enables sewing operations to experience productivity gains from 11% to more than 40%.
Exenta Supply Chain Management (SCM) technology provides the real-time information companies need to make critical decisions that affect the business, its customers, and the bottom line. SCM allows collaboration with vendors by sharing access to tech packs, product documents, and images.
Exenta SCM software allows users to maintain control over schedules and costs with real-time visibility into product development, planning, procurement, production scheduling, inventory, and WIP. Pinpoint exactly where adjustments in the supply chain could make a positive impact on timeliness, quality, and costs.
Keep your company ahead with advanced state-of-the-art software. Click here to request a demo.
Grand Forest, a client of Exenta’s since 2016, is a premier manufacturer of chainsaw protective clothing and distributor of quality outdoor brands. Before becoming an Exenta client, Grand Forest utilized an older Enterprise Resource Planning (ERP) system and a Time and Attendance package to track labor rates. Because the ERP was a standalone system, data had to be integrated manually, a tedious and time-consuming process. We spoke with Grand Forest’s CEO Carrie Bovender recently to understand how the company utilized the previous systems and to learn how implementing Exenta software created greater visibility and saved valuable time not only on the shop floor, but throughout the entire organization.
Before Exenta, Grand Forest struggled with two standalone systems that forced employees to waste their time with manual data entry, ticket scanning, and tracking for incentive pay. After dealing with these issues for a period of time, Grand Forest decided to make a change and selected Exenta ERP and Shop Floor Control (SFC). We provided a fully integrated system, which, according to Bovender allowed the company to “get goods to [their] customers more quickly, because [they knew] when something was available to be shipped as soon as possible”. This enormous increase in efficiency (nearly 80%) has freed up essential time for their employees across the board.
Bovender explains how Grand Forest sees Exenta as a “true partner”, and we feel the same way! Click here to read more about Exenta and Grand Forest’s partnership through the implementation of our state-of-the-art apparel and soft goods manufacturing software.
What is the Fast Fashion Supply Chain Model?
Fast fashion has changed the way consumers look at fashion and how companies produce and manufacture apparel. No longer are there just four seasons in the fashion industry, there are dozens. The weather no longer has a direct impact on what consumers wear or when they shop. The market has quickly adapted to a style of consumption that performs at breakneck speeds to keep up with increasing consumer demand, pushing inventory out as quickly as they make it. In order to keep up the pace, companies have compressed their supply chains to focus on agility, profit and growth. This process allows shoppers to expand their wardrobes constantly in an affordable manner and at a high speed.
Many companies in the fashion industry have perfected this fast-production supply chain model, opening multi-level stores across the globe and having an even larger ecommerce site. Brands like H&M, Missguided, ASOS, and Forever21 are churning out garments priced as low as $2, and items can sell out in a matter of minutes. According to the Fashion Law, fast fashion giant Zara creates nearly 450 million items a year, with most orders delivering within 48 hours. As clothing is pushed through the supply chain so quickly, these large fast fashion retailers will automatically send customers emails notifying them certain items are selling out quickly and need to be purchased immediately. This successfully pushes product out and keeps desired margins as brands clear inventory without having to slash prices.
In order to keep these margins and keep up with consumer demand, the fast fashion supply chain must have a quick turnaround on trends, a high inventory turnover rate, and strong relationships with business partners vertically or the ability to carry out operations in house. It is essential for companies turning out new product daily to have advanced data-driven trend forecasting software or AI to stay on trend. This forecasting is constant and references historical data. A collaborative system must also be in use to share forecasting with all parties in the supply chain. To keep profits and continue adding new styles, companies must be able to push out older product quickly through discounts and different marketing strategies. A high turnover rate keeps those desired margins. A vertical integration model is key for a fast fashion company to keep this supply chain model. It is essential for fashion companies to have strong relationships with all parties involved in the supply chain and strong contracts to keep short shipping times. As for labeling, packaging, etc., it is often kept in house to keep a tight grip on warehouse activities and low costs.
However, with such an advanced, speedy supply chain comes a lot of waste. In the past, working to keep waste low and focus on reducing their environmental impact was associated with a loss in profit.
So what does the fast fashion supply chain model do to the environment?
The Consequences of the Fashion Industry Supply Chain
The fashion industry is the second largest industrial polluter after aviation, accounting for up to 10% of global pollution, according to phys.org. Over 92 million tons of waste are produced per year and 1.5 trillion liters of water consumed. Up to 85% of textiles go into landfalls each year, and nearly 25% of all materials shipped in the global fashion supply chain are wasted.
Consumers are now more aware than ever the environmental impact of their shopping habits and have begun pushing companies to reduce their carbon footprints. In response, companies like H&M are beginning to roll out new green initiatives, and small companies are emerging that are more sustainable and eco-conscious. While it is easy to think big businesses are the root of the environmental issues caused by fashion, companies of all types and sizes can be to blame. Even well-intentioned fashion companies can struggle to enforce ethical standards without clarity in each stage of the production process. In order to reduce waste in their supply chains, fashion companies of all sizes are looking to cutting-edge software technology.
What Fashion Companies Are Doing to Combat Supply Chain Waste
The benefits of reducing waste are abundant, and companies are becoming more aware. CB Insights states that over 65% of consumers are willing to pay more for sustainable products, with 42% of millennials and 37% of Gen Z saying they want to know what goes into products and how they’re made before buying them. Large fast fashion retailers such as H&M and Nike have announced plans to reduce carbon emissions, use more recycled materials in clothing, and take textile byproduct and manufacture it into new garments. Consumers are also looking to companies to have more transparent supply chains, so they can see the garment’s journey, for example from an alpaca farm to knitting and assembling in a studio. In order to cut back on waste and have a more transparent supply chain, companies need technology.
How Exenta’s innovative end-to-end software is helping fashion companies reduce their environmental impact while creating a streamlined supply chain
Enterprise Resource Planning software provides real time information with automatic reports, cutting time from the manufacturing process and keeping all parties in the supply chain aware. ERP software allows fashion companies to streamline order-to-cash, improve financial controls, and automate critical processes. With the rise of fast fashion, traditionally defined seasonal calendars are being replaced by continuous development cycles that deliver greater and more frequent product innovation. Order management and fulfillment is far more demanding in the era of omnichannel retailing. To address these new realities and build sustainable success, retailers, brands, and manufacturers know that they must leverage the latest information technology to streamline processes and manage costs.
Another technology that is creating a streamlined and efficient supply chain while reducing waste is Product Lifecycle Management (PLM) software. Exenta PLM REVO™
software streamlines companies’ development cycles, reduces production costs, and has a calendar all parties can track and manage to stay up to date. As consumers demand ever faster and more innovative products, fashion and soft goods brands and retailers are challenged to evolve with the times. To remain competitive in these fast-paced and competitive markets, companies need to find better ways to grow revenue while reducing costs, such as an advanced PLM system. Exenta PLM REVO provides a collaborative platform and increased communication between designers and other parties involved in the design and manufacturing process, reducing miscommunication and therefore faulty samples and wasted product.
Click here to read our supply chain Whitepaper and learn more about how Exenta technology reduces waste and streamlines the fashion supply chain. The future of fashion, and our planet, is in innovative software technology for the supply chain.
The cyber threat landscape has vastly changed in recent years, and the apparel manufacturing industry is seeing a large uptick in cyber-attacks. These attacks are costly, ranging from around $50K on the low end to as high as $2M in immediate damages, including the impact to operational productivity when a target is unable to ship product for several weeks. According to Cybersecurity Ventures, cybercrime damages are predicted to cost the world $6 trillion annually by 2021, up from $3 trillion in 2015. Global ransomware (one of the fastest growing types of cybercrime) damage costs are predicted to hit $20 billion in 2021, up from $11.5 billion in 2019. Ransomware attacks saw a 350 percent increase in 2018, according to one estimate. Cybersecurity Ventures expects that businesses will fall victim to a ransomware attack every 11 seconds by 2021, up from every 14 seconds in 2019.
To understand the problem, you must first understand the cause. There are two primary causes of cyber-attacks:
1. Credential stealing via “phishing”, which is the fraudulent attempt to obtain sensitive information or data by disguising oneself as a trustworthy entity in an electronic communication
2. Breach of systems that are not properly secured
Protecting against any and all potential attacks is a complex process, but below are some basic areas to address as a best practice:
Educate your users
A common way for cyber hacking to happen is via email. Emails are being sent to users which seem to come from recognizable vendors such as Microsoft, Zoom etc., in which the recipient is prompted to reset a password. These emails direct users to a phishing website, where they inevitably enter credentials such as a username and password, which is immediately received by the attacker who will then use that information to access your systems. To protect against phishing, companies must establish clear protocols with email users:
• Inform users of the dangers of clicking links in emails or opening attachments they aren’t expecting and ask them to forward anything suspicious to your IT team. Remind all users regularly of the importance of being vigilant and their responsibility to help protect your company from the potential impact of a breach.
• When onboarding new staff, provide very direct instruction on the dangers of opening or engaging with the wrong email.
• Send fake phishing attacks into segments of your users, then educate the people who still fall for it, do this quarterly.
Add rules server-side
As an added step to educating users, companies may want to add rules to their mail servers to quarantine emails or add “warning” headers to inbound emails.
• Add a warning header to every inbound email alerting recipients that the email is not from within the company, and reminding that that, before clicking any link or opening any attachment, they should contact the sender or IT support to confirm that the email is legit.
• Add checks for impersonation attacks: Each inbound email should be checked against the company’s complete user list – if a name matches, a header can be added to the inbound mail with a warning that the email is potentially an impersonation.
• Add extra checks for any email purportedly from a vendor, such as a verification check to confirm that the email is being sent from a legitimate source.
• Block emails from free top-level domains such as .tk, .ga, .ml.
• Enforce SPF and DKIM policies – either tag or don’t deliver emails that fail
However, monitoring email alone is not enough. Best practices include a look at other channels that may create opportunity. Bad actors will use a multitude of platforms for phishing and may even target individuals on multiple platforms at the same time. For example, a user might receive a phishing email with an attachment they would be interested in, and at the same time, they might also receive a message on a social media account (Twitter, Facebook or LinkedIn, etc.) referring to the email and further enticing the recipient to check it, and the cyber-criminal might even take the bold step of looking up the recipient’s phone number and giving them a call to ask them if they received the email and to prompt them to open the attachment. Contact details and social media profiles are more readily available online today than ever before and a very clever hacker might be able to reach a recipient simply by calling a company’s switchboard. The more steps someone takes to make an attachment appear legitimate, the greater the likelihood that a recipient will ultimately open it and in doing so, compromise the company’s entire network.
Breach of systems that are not properly secured
Secure your backups
Backups should only be accessible one-way, and be away from everything. The set-up should ensure that backup server can access the machine being backed up, BUT the machine being backed up cannot access the backup server. Additionally, the server should be in a different physical location to the data being backed up. If the network is breached, the backup server could be scanned, flaws could be found, and the backup server could be breached and erased. In fact, this is a common scenario with crypto attacks. Generally, having the backup server in a separate physical location is a sound practice. If there’s a fire in the building or a natural disaster at the office, the backup server is at risk for damage or destruction.
Know what you have and control it
Install an agent on every single computer that can a) pull data from any machine at any time, b) install/uninstall applications, c) review these systems, and d) shutdown systems that are no longer in use.
Have a patching strategy
Once you’ve identified all your systems, make sure they are always up-to-date. Use the agent to enforce updates and reboots and to alert you if systems aren’t adhering to the policy.
Have a firewall strategy
Ensure all servers and workstations only have the necessary firewall ports open. Use your tool to identify any systems that are not adhering to policy.
Identify and minimize your endpoints
What systems are open to the internet? Do you know? If there are open systems, they need additional policies in place, such as faster patching or a web application firewall. Systems open to the internet should be kept to a minimum. If your users aren’t responsible for a breach, one of these endpoints most likely will be.
Close down direct RDP Services
Remote desktop is vital for many organizations, you should continue to use it – but all users should go via a gateway rather than directly to an RDP machine.
Use a safer password policy
We know passwords can be cracked easily, so having a memorable longer password or even a phrase is key – one that the user will not have to write down to remember. Using biometrics where possible is even better. It’s important to note that enforcing password rotations leaves us with poor passwords because users will nearly always just add “1”, or “2”, or “!” to the end of an existing password.
Audit your accounts
When a user leaves your organization or a service is removed, disable all associated accounts. Your team should run regular audits to ensure any and all accounts belong to something or someone. If an account is for a service and not a user, make a note of the associated service so it’s easily identifiable when you remove that service.
Use next-gen anti-virus protection
Solutions such as CrowdStrike allow your system to join a large security cloud which updates quickly when new 0-days are found. Anti-virus solutions also monitor what is actually happening in real-time when an application runs. If an application is performing actions that look suspicious: escalating access, scanning multiple machines, or renaming multiple files. Cloud security platforms will raise an alarm and do their best to stop suspicious activity.
Aim for a Zero Trust security model
It is best practice to assume a bad actor is already in your system one way or another, and rather than relying on a ring fence approach (a firewall surrounding everything with nothing in the middle), configure every system so it’s as locked down as possible, educate the users to be wary, and ensure the user experience is as easy and safe as possible.
(Zero Trust is a very in-depth concept. More information on Zero Trust can be found here)
The Exenta Difference
Manufacturers and distributors are being actively targeted by cryptolocker attacks, don’t be the next one hit!
At Exenta, we are passionate about our customers and our goal, every day, is to ensure that our customers fully experience the impact our robust, industry-specific solutions have to not only streamline operations and increase revenue, but also deliver a higher-level of job satisfaction and work-life balance to your entire workforce. Our approach to training and support is second to none. In our many years of operation, we have replaced every known competitor, but have never been replaced by one.
Exenta is supported by a dedicated support staff, ensuring you have one point of contact for any issue, backed by our team’s deep expertise guaranteed to resolve any issue quickly. We see every inquiry through to a satisfactory conclusion. At Exenta, we offer 24/7 personalized support to help defend your company against cyberattacks. Experience the Exenta difference today.