The shift in garment production to “frontier” manufacturing is stretching garment sourcing in ways few would have imagined a decade ago. China is being forced to move up the value chain, under siege from garment apparel manufacturers in countries like Burma, Cambodia, Vietnam and Bangladesh. For logistic providers, this requires a global re-stitching of supply chains.

For years, garment retailers have been juggling productions costs and quality with the time it takes to get their finished products to market. It’s a perpetual balancing act, and one that has become ever more complicated as labor costs in China have spiked and consumer demands for near immediate gratification of trendy, fashionable clothes at everyday prices – so-called fast fashion – have grown.
This has led to both a diversification of sources and a partitioning of production. Greater automation, technology and robotics play a growing role as well, all working to shrink the actual labor component. On the horizon is widespread use of 3D printing, now the exclusive domain of high fashion, which will allow the production of a piece of clothing at home with the exact specifications of the person wearing it.

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Everyone is scrambling, including the logistics providers who are under constant pressure to get the goods from factories to stores faster and cheaper. Add to all this growing demands for social compliance, including worker pay, factory conditions and human rights. The biggest concerns are aimed at many of the fast-growing producing countries, notably Bangladesh and, most recently, Myanmar.

There are several trends coursing through the trade at the same time. None of these are new or revolutionary, but are working to gradually transform the garment industry into a truly global undertaking.

“It’s an ongoing process we’ve seen over the past several years,” said Vinod Rangarajan, with the fashion and apparel consultancy 703 Advisors.

China remains by far the world’s largest garments producer. Last year, it exported some $175 billion worth of clothing, 50% more than the European Union, and 39% of global totals.

So saying, many labels continue to gradually shift production especially of lower cost apparel to frontier markets, most notably Cambodia and Vietnam in Southeast Asia and Bangladesh and Sri Lanka in South Asia. China’s efforts to move production inland to cut costs hasn’t proved a suitable antidote either, as it adds to transport time and expense.

In 2015, according to the WTO (World Trade Organization), clothing exports from China declined 6%, while Vietnam’s increased by 10% and Cambodia by 6%.

With labor costs one-third that of China, Myanmar is coming on strong. Its exports grew by almost 50% in 2015, but from a much smaller base. Myanmar’s garment exports last year totaled a tad shy of $1.5 billion, while Vietnam’s hit $28 billion and are expected to touch $30 billion in 2016. Bangladesh appears to have recovered from the disastrous factory fire three years back and exported $26 billion last year, a 6% gain. Cambodia exported almost $6 billion in 2015.

China has honed its garments-related shipping as well as production, with everything from expedited customs and efficient freight forwarding to onsite distribution facilities. Vietnam has poured huge sums into port and container terminal building and modernization, although it continues to suffer from poor roads and feeder infrastructure.

It’s a far different story in Myanmar’s major port of Yangon, where growing trade has overwhelmed the strapped and inefficient facility. Earlier this year, shipping companies reported loading and unloading delays of anywhere from five to 10 days. The port struggles with dilapidated equipment, inadequate terminals and low worker productivity. Because the country imports – mostly from China - pretty much everything necessary for garments production, the supply chain can get hung up at many different junctures. Complicating the process even more, containers exported from Myanmar to Europe and the US, tend to get transshipped from Singapore, Malaysia or Sri Lanka.

So, shippers must factor in even longer transportation lead-times than usual to make sure they get their products into stores on time. If a producer can’t make up that difference somewhere else in the supply chain, it means decision-making must be made earlier, which further increases the risk of guessing wrong on trends or missing out on them altogether.

Fast Fashion and the Race to the Bottom

Of course, moving the lower end garment production to the lowest cost producers is nothing new. Critics call it a race to the bottom. Some predict Africa will be the next destination of choice for cost-sensitive producers. A study a decade ago by the United Nations Industrial Development Organization called this “global apparel value chain.”

However, that chain is becoming more complex as time and not just quality becomes increasingly important.

Fast fashion is the antithesis of the way the modern-day apparel trade developed. Pioneered and still dominated by the Spanish retailer Zara, fast fashion strives to place a piece of clothing on retail shelves in as little as two weeks after its design, with the ability to change patterns or colors pretty much on the fly, depending on demand. Lines can be tinkered with, changed or dropped entirely. Almost real-time data analytics can drive changes.

That’s in stark contrast to the six months’ advance apparel retailers usually commit to for about half of a typical seasonal line, according to Columbia Business School professors Nelson Fraiman and Medini Singh, who published a study on Zara several years back.

They called the goal of fast fashion “high-concept fashion at mainstream prices.” The goal is to sell at affordable prices, but not be forced to discount heavily on what doesn’t sell, by producing smaller batches.

Zara succeeds by sourcing half of all its factories within easy striking distance of its headquarters in the Galicia area of Spain and clustering them together, trading much higher wages for proximity to design and distribution. Other retailers are being pressured by customers and competition to offer the same kind of quick-change artistry. But they don’t have the luxury of a group of factories within a short drive of their operations.

For fast fashion, said Rangarajan, one key is to have the basic fabrics in place at the factories, even before designs are ready. By prepositioning supplies, apparel companies can save the four to six weeks it would take to manufacture and ship the fabric to a factory, he said.

Fast fashion seeks to get consumers to change their wardrobes even more often than the seasons. Implicit in this is an almost disposable nature of clothes. That has provoked a backlash among those calling for a more sustainable industry. Manufacturers and retailers are beginning to respond. Some are turning to so-called “green” suppliers of everything from natural dyes to sustainable fabrics such as organic cotton, hemp and bamboo.