What: The fashion industry has a massive supply chain problem and change begins within a company, starting with C-suite executives and the value system they create.

Why is it important: A persistent lowest-cost mindset over the years created gaps between buyers and suppliers, which deepened amid the global pandemic. The outcome is a trail of imbalances and one-way practices imposed by brands and retailers on supplier networks to cut their own costs and risks, squeezing factories and their workers. The overhang of lost or damaged trust between buyers and suppliers is still with us, a concern that is a major obstacle to a more sustainable future.

Survey results published in a report from BoF Insights, found that 70% of fashion industry executives polled said strengthening supplier relationships was one of the top supply chain priorities.

The Gen-Z consumer crescendo for sustainability has changed everything, there is a generational demand for end-to-end transparency, trust, and accountability, superseding operational language for efficiency alone. Executives must ensure that their business models go beyond seasonal, transactional contracts. The alternative is to be more “relational,” inclusive of end-to-end, mutual incentives for long-term investment.

Over the course of global research and case studies, Harvard production expert and Stanford guru of supply chain metrics, encountered indifference among fashion chief executive officers to primary drivers of market value, such as speed-to-market, order cycles, working capital and forecast accuracy. These were of little interest to merchants insistent on volume, lowest prices and highest incoming margins. The favoured C-suite perspective was demand creation, not supply flexibility.

The short answer to finding a solution is, culture. The internal values of a brand hold the key to a tipping point. Cultural leadership is the prerequisite for meaningful, non-incremental change. Culture matters more than strategy and marketing. It is the basis of a sustainable business model. Fashion must strive for continuous learning, seek and adapt knowledge outside of its industry, and partner in the spirit and reality of value creation with suppliers. Buyers and suppliers, together, create a new equilibrium.

Fixing fashion’s supply chain with company culture