Avery Dennison’s most recent research polled 65 global apparel companies and 7,500 consumers to unlock the consumer mind-set on key issues while uncovering current challenges and logistical issues in the supply chain.
The company found that stock inefficiencies and “inventory black holes” are further “exacerbating the supply chain crisis for apparel firms.” Avery Dennison said in its report, titled “The Missing Billions: The Real Cost of Supply Chain Waste,” that 6 percent of the stock is lost, “either through the 2 percent which is damaged or perished or the additional 4 percent which is overproduced. This loss is the equivalent of 3 percent of annual profits and is estimated as $15.3 billion in terms of the sale value of the lost stock.”
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The report is a wake-up call for the apparel industry, which has struggled under ongoing supply chain disruptions across the globe. Researchers at Avery Dennison found “that the biggest contributor to supply chain waste is faults with packaging, with respondents rating this as 5.3 out of seven in terms of severity of the concern. This was closely followed by inefficient transport and delivery and damage to products when handled (both concerns rated 4.9 out of seven).”
The authors of the report noted that respondents “are in a good position to judge this, since three quarters (74 percent) track supply chain waste.”
The data also showed that demand volatility was cited as the biggest disruption to operations by 29 percent of those polled. The report noted that “transport issues” and related cost increases were cited as the biggest disruption by 15 percent of respondents. And 15 percent cited “availability of transportation and logistics capacity” as the biggest headache.
With sustainability, 89 percent of those apparel companies polled “said they are coming under pressure to become sustainable and estimate that 27 percent on average of their total company sustainability impact comes from their supply chain activities.”
However, despite this awareness, authors of the report said apparel companies “are not investing the budget required to fix it. Just 4 percent of technology budgets are specifically dedicated to supply chain sustainability improvement.”
Francisco Melo, senior vice president and general manager at Avery Dennison Smartrac, said the current supply chain disruption is leading to a waste crisis in the apparel industry and elsewhere. Having visibility is key to optimizing supply chains for efficiency and sustainability, as well as helping to build trust and transparency with consumers. Digital identification solutions play a vital role in supply chain planning strategy, and it is encouraging to see that companies are committed to further drive this change through the increased use of RFID technology in the coming years.”
Regarding the consumer poll, the authors of the report said, “cost is a high priority for consumers globally when it comes to buying products. However, quality is ranked equally alongside cost as the number-one concern at 22 percent.” The report found that U.K. shoppers “are the most cost-conscious, with 28 percent listing it as the top priority, followed closely by France and Japan, both at 25 percent. China is a significant outlier, with just 6 percent of shoppers surveyed stating cost as their number-one concern.”
With sustainability, 16 percent of shoppers have it as one of their top three deciding factors when purchasing apparel, “and only 12 percent prioritize the ethical sourcing of their products. However, the research also points to a shift in the desire for durable products, with ‘durability’ ranked by one in two global consumers (48 percent) as a top five concern, suggesting there is an opportunity for businesses to shape the future of sustainability by putting a greater focus on product durability and in enabling the circular economy.” Transparency also scored high, but there were misconceptions, with 54 percent of global consumers mistakenly believing that “fast fashion is made entirely by machines.”