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Fast fashion retailers have changed traditional operating models by speeding up time to market and adopting flexible supply chain strategies to cope with longer lead times in some parts of the world. Companies such as Inditex and H&M use a flexible, multi-pronged strategy to cope with many of the challenges retailers face.
European fast fashion retailers have split their supply chain in a very smart way, said Munir Mashooqullah, chief executive of Synergies Worldwide. Both Inditex and H&M source fashion items that require a fast turnaround and quick replenishment in countries closer to home like Turkey, Morocco, Portugal and Tunisia. But the companies also incorporate the cost-conscious Asian powerhouse countries into their broader strategy, manufacturing basics that change less frequently in countries like Bangladesh, Vietnam, China and Pakistan.
“Academics like to refer to the garment trades as ‘chasing the lowest cost of needle.’ While this is true to some degree, the modern retailer has become much more strategic in their thinking about where geographically to place apparel orders,” said Rick Helfenbein, president, Luen Thai USA. “With labor generally comprising only one third of a typical garment cost, a 50 percent lower weekly wage rate only yields about a 16.5 percent lower garment cost, and can add weeks to the transit time – if made in a remote location – thus reducing the accuracy of getting the right apparel item to the...