Claudio Marenzi

MILAN “Preserving the supply chain [is essential] because it’s unmatched in the world. The Italian industry has considered fashion as a gemstone, but not so relevant on the industrial side,” said Claudio Marenzi, the outgoing president of fashion and textile trade association Sistema Moda Italia, introducing the “Fashion and Luxury Industry Outlook” summit, held here on Tuesday at the Unicredit tower venue.

The summit shared some insights gleaned from the global fashion supply chain design advisory board conducted by consulting agency The European House — Ambrosetti along with Lectra Italia, the Italian division of the France-based product lifecycle management and cutting machinery company and supported by Unicredit bank and Sistema Moda Italia.

“After all these years when retail and e-commerce have been at the forefront of the conversation, it’s fundamental now to talk about the supply chain,” insisted Fabio Canali, chief executive officer of Lectra Italia, explaining how the supply chain is able to create and add value to Made in Italy.

Accounting for 52 billion euros of the 90 billion euros the fashion industry as a whole generates, the Italian pipeline under the SMI umbrella generates 35 percent of European fashion production, totaling 25 billion euros of net exports.

“The fashion industry has undergone a very fast change in the production cycles – every six months, or less – but never adjusted to the shift in the processes,” explained Marenzi, highlighting how important it is to lead small and medium-size suppliers toward the fourth industrial revolution with tangible advice.

Digitalization, sustainability and traceability are the key topics that emerged from the study. In particular, innovations such as research into new materials, versatile production systems, streamlined and more frequent collections, the time-out market reduction and boost in distribution and online sales are among the new challenges and successful factors that define the current industry.

“The supply chain should work hand-in-hand with the design and merchandising teams in advance, with sustainable planning programs, as single operations are not further squeezable,” said Mauro Beretta, Versace’s group industrial operations director. The executive stressed the importance of cooperation, end-to-end visibility and traceability, both within the company and toward suppliers, which he believes are the most important mindsets a company should embrace to answer the customers’ demand for responsiveness.

In order to appeal to a younger customer base represented by Millennials and Generation Y — which together account for 2.3 billion people and potential consumers — it’s essential for brands to take identity, quality and sustainability into account.

The research pointed out how new customers within the luxury and middle markets are willing to justify a higher price point, provided that the products satisfy the “beautiful and well done” values. Italian fashion companies are therefore reshoring production, mainly from China, to help the supply chain be traceable with a higher level of quality control over the entire production process.

According to Matteo Montecchi, senior lecturer in fashion marketing at the London College of Fashion, transparency is particularly appealing. Montecchi cited the success of Antwerp-based online retailer Honest, which pioneered the transparency of its information about the supply chain and pricing of its products, information which can be found on the web site along with the items’ descriptions.

Propelling innovation and showing effective support of the Italian supply chain is high on the agenda of SMI. The textile consortium partnered with Unicredit, which introduced a “reverse factoring” program to extend the credit’s benefits to smaller suppliers. As the trade association’s councillor Michele Bocchese explained, “Fifty percent out of 1,000 suppliers could not access credit with the same benefits as the heads of the line [according to a research SMI realized in 2016], and we wanted to deliver financing programs capable of reaching a good turnout.”

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