Navigating turmoil in 2024

Geopolitical tensions could cause supply chain disruptions anytime and anywhere in 2024. Credit: Shutterstock.

While the global apparel sourcing sector rarely sees abrupt changes, Dr Sheng Lu, associate professor at the Department of Fashion and Apparel Studies at the University of Delaware believes there will be a gradual shift in 2024.  

Economic uncertainty is the major driver for this. Lu says the World Bank and International Monetary Fund is estimating the world economy will maintain slow growth of around 2.6% to 3% in 2024, although he believes that consumer demand for clothing could perform much better than expected. “Companies need to be ready for all occasions,” Lu argues.  

He says that geopolitical tensions could cause supply chain disruptions “anytime and anywhere”. To counteract this, he believes fashion companies need a more flexible and agile supply chain. The extent to which fashion companies will further reduce their exposure to China is also a key topic for Lu. “On the one hand, it is no surprise that companies are reducing finished garment sourcing from China as much as possible,” he says. “However, fashion companies also admit it is difficult to find practical alternatives in the short to medium term.”  

Alice Cowley, managing director at Accenture’s UK retail industry practice, also believes that many apparel companies will use 2024 to diversify their supplier base, moving to Bangladesh, India, Cambodia and Sri Lanka as alternatives, as well as nearshore options in Eastern Europe and Africa. She admits China remains one of the biggest importers, however she says, “as well as diversifying their supply chains, fashion retailers will need to continue to respond to the need for more agility in newness, while building their longstanding, traditional relationships for items that form part of their continuous assortment.”  

Cowley argues that “more than ever, companies are being tasked with reporting on sustainability KPIs with new regulatory and reporting requirements coming into effect.”  

She believes this will require an ongoing and open dialogue with suppliers. She adds: “This transparency is fundamental to building loyal foundations for successful partnerships.”  

Changing consumer demand will be another key theme in 2024. Stanley Szeto, executive chairman at Lever Style, says we are living in an “increasingly unpredictable world” and apparel companies will need to keep inventory lean in order to adapt. “That calls for supply chains that can flexibly accommodate low volume production for test orders, quick response for immediate replenishment, and the ability to easily change countries of origin to address shifting geopolitics,” Szeto says.  

“The days of chasing the lowest Free on Board cost and putting up with long lead times and large minimum order quantities are over.”  

Gerd Willschütz, COO and co-founder at DMIx by ColorDigital, believes that digital transformation will be the biggest driver of change in 2024. “In the wake of the pandemic, embracing digital platforms that facilitate seamless collaboration and production optimisation will all be crucial,” he argues. Plus, he’s confident that digital product creation tools will drive competitiveness, stating:   “Transitioning to digital material handling and 3D design will enable firms to shorten time-to-market, slash costs and quickly adapt to shifting consumer demands.”  

He believes companies might find a particularly accessible opportunity in digital colour communication and quality management. “The ability to nimbly respond to consumer trends will further define success. Conversely, those resistant to the urgency of digital and sustainable shifts in the apparel industry will lag behind,” Willschütz warns.  

Michael Colarossi, vice-president, innovation, product line management and sustainability, apparel solutions at Avery Dennison, argues that the pandemic, and its subsequent supply chain disruptions, have forced a “re-evaluation of the conventional notion of global supply chains”.  

“There’s a discernible shift towards regional supply chains that goes beyond an immediate response to challenges and signifies a broader restructuring driven by the need for resilience in the wake of unforeseen global events,” Colarossi explains.  

In 2024, Colarossi believes this trend for transparency will accelerate. He says this will be driven by evolving customs regulations as well as new legislation and consumer demand. He adds: “The shift is not merely a trend but represents a fundamental change in the way businesses operate, aligning with an increasingly ethical and environmentally-conscious consumer base.”  

Matthijs Crietee, secretary general at the International Apparel Federation (IAF) suggests market conditions will be tough in 2024. “Opposing forces are tugging at brands’ and retailers’ sourcing structures,” he says. He believes this will push some brands and retailers to increase their share of sourcing from countries with lower wages.  

“On the other hand,” Crietee adds. “The need for shorter lead times will drive sourcing towards countries closer to the world’s major markets.” He believes that key markets in 2024 will include Uzbekistan and West Africa, although he adds: “Generally, the appetite for new entrants to the global production systems is limited.”  

Next year, Crietee can see the role of garment manufacturers in improving business performance becoming clearer. He explains: “Sometimes brands and manufacturers will need to pay suppliers more to obtain the products that make more money on the shopfloor.”  

Stephen Lamar, president and CEO at the American Apparel and Footwear Association (AAFA) predicts a “generational sourcing shift” in 2024 as apparel diversifies away from traditional suppliers.  

Lamar highlights a positive change would be if the US government decides to get back into the trade policy game by renewing expired and expiring trade preference programmes. “Unfortunately, companies have been forced to work to build competitiveness and resilience without the support of government. Unless things change soon that will continue,” he adds.  

However, not all experts are predicting fundamental changes in 2024. Rick Horwitch, chief of supply chain and sustainability strategy at Bureau Veritas Consumer Products Services, argues the opposite may be true.  

“Based on discussions with sourcing executives in the US, Europe and Asia, I do not believe there will be any significant shifts in the sourcing landscape in 2024,” he says, adding: “Movement away from China and regional nearshoring will continue.” That said, he does not believe the next 12 months will be easy, concluding: “In fact, 2024 will be as challenging than previous years, if not more so.”

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