Key Lessons to Learn from Supply Chain Disruptions in the Global Textile Industry

Milind K Marketing Manager Prophecy Market Insights & Santosh Bhul Content Lead

What is the Textile Industry and Its Global Supply Chain?

The textile industry is a complicated and vast network of activities, which is spread across the raw materials’ manufacturing, along with apparel production, fabric manufacturing, retail, and distribution. The supply chain is rapidly increasing worldwide, with countries like India, China, Vietnam, and Bangladesh playing important roles in the production and export of textiles and apparel. The crucial steps in the textile supply chain include Raw Material Sourcing, Fabric Manufacturing, Apparel Production, and Logistics and Distribution. Due to the complexity and interconnectedness of the supply chain globally, even small disruptions in one region can have high and destructive impacts on the global supply chain market. According to Prophecy Market Insights, the worldwide AI in textile market share will reach over USD 22.5 billion by 2035, growing at a CAGR of 24.8%. Artificial Intelligence (AI) systems are one of the options available in the textile industry to integrate the elements, such as production, quality, cost, information, statistical process control, just-in-time manufacturing, and computer-integrated manufacturing.

How Supply Chain Disruptions are Affecting the Textile Industry?

In recent years, the global textile market has witnessed some unprecedented challenges because of the different disruptions occurred in the textile industry’s supply chain process. The global textile industry, which is an important part of the global economy, is responsible for connecting various suppliers, manufacturers, consumers, and retailers across different regions. However, challenges like geopolitical tensions, the COVID-19 pandemic, a surge in raw material costs, and natural disasters have all contributed to supply chain disruptions in the textile sector. These challenges have forced the industry stakeholders to rethink their supply chain strategies and also find key lessons which can improve resilience in the future. 

The Impact of Disruptions on the Textile Industry

The COVID-19 pandemic was one of the leading challenges faced by the global textile industry in the past decade. The immediate measures to contain the spread of the Coronavirus had resulted in factory closures and delays in logistics and transportation and logistics. Some of the other initial impacts of the COVID-19 pandemic include:

• Factory Closures: 

Factory closures in the major manufacturing regions, including India, China, and Bangladesh, led to a decrease in production capacity. The imposed lockdown measures to stop the spread of COVID-19 further caused labor shortages and halted manufacturing operations, and it also delayed the manufacturing of raw materials, fabrics, and finished textiles.

• Delays in Shipping:  

The COVID-19 pandemic has led to disruptions in global logistics, with problems like container shortages, decreased air freight capacity, and congestion on ports. These challenges led to delays in raw materials’ delivery to factories and the distribution of finished textile/products to the retailers.

• Rapid Increase in Product Prices: 

Due to the disruptions in the global supply chain, the costs of raw materials like polyester and cotton increased after the pandemic. The pandemic also caused a surge in Freight and shipping costs, which led to higher costs of the finished goods, which raised the pressure on both producers and retailers. 

• Demand Fluctuations: 

The disruptions like the COVID-19 pandemic caused fluctuations in textile demand globally, and retailers find it difficult to manage their inventory levels. Owing to store closures and shifting consumer behavior, many retailers witnessed decreased sales, which led to overstocking and a lack of products in different regions.  Besides the pandemic, the other factors that hampered the textile industry include, U.S.-China trade war, Suez Canal blockage, and extreme weather conditions, which also played significant roles in disrupting the supply chain in the textile industry.

Major Lessons Learned from Supply Chain Disruptions in the Textile Industry

The global supply chain disruptions in the textile industry have stressed several lessons, which can be beneficial for companies to build more resilient and adaptable supply chains. These lessons are important for mitigating risks and preparing for unknown uncertainties in the future.

1. Expansion of Supply Sources

The importance of diversity in the supply source is one of the most significant lessons learned from the disruptions in the textile industry. Several companies rely heavily on specific countries like China, for getting raw materials and finished goods.  The companies operating in these regions have faced severe shortages in supply due to imposed lockdown measures. This diversification of supply sources can significantly decrease the risks related to the reliance on a single country or region. 

2. Creating Flexibility in Manufacturing and Distribution

The ability to quickly adapt to the changing circumstances has been a major feature of resilient supply chains. Multiple disruptions had been responsible for exposing the flexibility in the operations of several textile companies as they struggled to maintain production while the demand was shifting rapidly. Creating flexibility in production and distribution has been an important aspect of investing in advanced manufacturing technologies, which allow for more flexible and faster production schedules. The key players will have to need to consider in-house production to decrease their dependency on long and complex global supply chains. 

3. Improving Communication and Transparency Across the Supply Chain

For managing the disruptions, it is important to maintain effective communication and visibility across the supply chain. During the COVID-19 pandemic, most of the companies were struggling to track their orders’ statuses, along with inventory levels and shipments, because of a lack of transparency, which further resulted in inefficiencies and poor decision-making.  This can be resolved by increasing investigations on digital tools and technologies, which offer real-time data on production, inventory, and logistics, further improving communication and visibility. The companies can also use advanced analytics and supply chain management software to project potential disruptions and make plans accordingly. Flexible communication with manufacturers, suppliers, and logistics providers can also help in tackling delays and streamlining the supply processes.

4. Implementing Automation and Technology

Compared to other industries, the global textile industry has been slower in adopting technologies and automation, but the disruptions caused by the pandemic have showcased the need for digital transformation in the industry. Several technologies, including the Internat of Things (IoT), artificial intelligence (AI), and blockchain, can help in tracking the inventory in real-time, improve decision-making, and ensure transparency in the transactions. The growing use of automation in manufacturing and logistics can help in lowering the reliance on human labor that was a substantial challenge during the pandemic. Automation allows companies to have efficient manufacturing, a low number of disruptions caused by labor shortage, and faster turnaround times. 

5. Managing Supply Chain Risks

The global textile industry has been largely focused on cost reduction and efficiency optimisation. Although, the disruptions have increased the need for a more comprehensive approach for the purpose of managing the supply chain risks. The major players in the industry should identify potential risks and implement strategies accordingly to manage the risks if any kind of disruption occurs. Building a risk management framework that includes risk assessments, contingency plans, and recovery strategies is essential. For example, businesses can create buffer inventories of essential raw materials, establish backup suppliers, and invest in risk monitoring tools. Having contingency plans in place can help companies respond quickly to unexpected events and minimise downtime.

Conclusion

The global textile market has experienced substantial disruptions in recent years, which forced the companies to conduct a reevaluation of their supply chain strategies. The lessons that the companies should learn from these disruptions showcase the importance of diversification, transparency, flexibility, and high use of technology in creating robust supply chains. With the implementation of these lessons, the textile industry can actively prepare for upcoming challenges arising from natural disasters, geopolitical tensions, or pandemics, such as COVID-19 or natural disasters. An adaptable and resilient supply chain can improve operational efficiency, along with enhancing the competitiveness and sustainability of textile manufacturing companies in a rapidly changing global market.