Reducing Production Delays in Fashion Supply Chains: An Economic Perspective
Production delays are one of the main challenges facing fashion supply chains. When they happen, companies lose out on revenue and consumer trust and create situations that result in inefficiencies in operations. Production delays can stem from underlying economic concepts such as information asymmetry, coordination failures, and transaction costs. As global supply chains become increasingly complex, understanding the economic drivers of delay will help to improve supply chain efficiency and competitiveness.
One of the main reasons production delays occur is due to poor communication between different companies involved in the supply chain process. For example, designers, pattern makers, and manufacturers may be working from a different set of incomplete or inconsistent information, resulting in unexpected costs and delays. Here is an example of where information asymmetry is occurring because the different parties in a fashion supply chain have differing information levels. One way to resolve this problem is for companies to use a tool such as PLM for apparel industry to centralise all of their product data so that all of the participants in their supply chain will have the same access to accurate and consistent product data. By better managing this type of information gap, companies will be able to reduce their coordination costs and improve their production timelines.
One of the main uncertainties in production scheduling arises when there are limits to the production capacity of suppliers or manufacturers, resulting in some manufacturers being unable to meet the demand that has been forecast for a given product. From a financial perspective, buffers placed in production timelines help companies reduce their exposure to costs associated with unexpected disruptions. Although this may appear inefficient in the short term, it provides a higher level of reliability and reduces the risk of costly disruptions, reflecting a trade-off between efficiency and reliability.
A crucial part of reducing delays from suppliers is continual communication. By regularly interacting with suppliers, companies can verify the status of orders and identify potential bottlenecks early. This reduces transaction costs, as less time is required to resolve unexpected disruptions later in the production process. Increased communication between firms therefore improves coordination and reduces uncertainty across the supply chain.
Companies need to purchase their necessary supplies (like trims and packaging materials) in time to allow their operations to run without disruption, as these goods often have supply chain issues of their own, therefore not being able to obtain the necessary trims or packaging materials can halt production entirely. Demonstrating the interconnectedness of supply chains, an event occurring at one point may impact multiple other locations along the same route.
If companies work with multiple suppliers, they will be able to minimize their risk exposures. Using only one supplier for any one item creates a higher risk exposure to an organization's ability to continue production during a time of disruption, such as logistical or manufacturing interruptions. Companies develop resiliency in their supply chain through developing relationships with multiple suppliers for the same item while reducing the anticipated cost of disruptions from a risk mitigation perspective.
Product design and the efficiency of producing that product are also related. More complex product designs require more materials as well as more specialized labour and longer production cycles to manufacture than would otherwise be necessary if the end-product was designed in a simpler manner. The increased number of production delays is a byproduct of increased product complexity. Reducing the complexity of product lines may lead to reductions in production restrictions and improvement in overall production efficiency. The relationship between product differentiation versus effectiveness in operations can be viewed as a trade-off from an economic perspective.
Quality control procedures management will be essential in determining how much value is added by increasing levels of quality control. As quality improves, it could take longer or cost the business more to produce products. Therefore, there exists the need for the company to evaluate the benefit of improvements in production quality relative to the delays incurred and costs associated with those delays.
By using tracking systems, businesses can track the progress of their goods during their full life cycle to respond to issues quickly when they arise. Through timely, accurate tracking of the current status of goods, businesses will use their resources more efficiently by reducing the uncertainty associated with product output. Ultimately, tracking systems will increase the overall level of supply chain efficiency and a company’s ability to compete globally.
The ability of fashion companies to manufacture on time is one of the many unique issues within the supply chains of the fashion industry that is exacerbated by significant economic challenges related to information systems, integrated systems and infrastructure sophistication. By applying sound economic principles and maximizing their efficiency, companies can eliminate delays of production, increase efficiencies and ultimately gain a larger share of the global marketplace as a result.
