Supply Chain Sustainability Risk,

and Resilient Management

Submitted By:
Mark Owusu Aniakwah
Students Number: W20051612
Module Code: MO9702
Lecturer: Sandy Hassan
 CONTENTS

1.0 Summary ................................................................................... 1

PART 1: Supply Chain and Resilient Management

2.0 Introduction....................................................................................... 2

2.1 Fast Fashion ................................................................................. 3

2.2 Supply Risks Associated with the Covid-19 Epidemic ................ 3

2.3 Risk Resilient Strategies......................................................... 4

3.0 Part 2- Sustainable Supply Chain Management .......................... 6

3.1 Sustainability Issues in the Fast Fashion Sector...................... 7

3.2 Environmental Impacts................................................................ 8

3.3 Social Impacts.......................................................................... 9

3.4 Economic Impacts..................................................................... 9

4.0. Sustainable Supply Chain Strategies ....................................................... 9

4.1 Circular Economy............................................................................. 9

4.2 Green Distribution............................................................................ 11

5.0. Conclusion ......................................................................................... 11

References .................................................................................................... 12-16

 SECTION 1
INTRODUCTION

1.0 Summary

This study emphasises the significance of sustainability practises and risk management
approaches in the supply chain managemen discipline. The fast fashion industry was chosen as the
topic of discussion because of its strong potential for disruption and because it encountered
numerous obstacles throughout the epidemic (Cline, 2012). Fast fashion employs about 60 million
people worldwide, with the majority of them being women, and it is regarded as one of the
industries with poor working conditions. The pandemic is having an effect on textile and garment
supply chain operations (Cline, 2012). Many countries have implemented movement and
assembly limitations, and top brands and merchants are cancelling purchases from various
supplier facilities. As a reaction, many clothing companies have stopped operations and laid off
their staff (Thomas, 2020). Although the industry is in turmoil, more focus has been placed on its
adverse ecological repercussions. Economic, social, and environmental expenditures compel us
all to rethink quickly and recognize the value of more feasible business ideas. This lack of
resilience is especially dangerous for the fast fashion industry, which will eventually fail to
recover. This inability, when exposed to repeated disruptions or shocks, results in a system's
steady demise. The recovery process becomes more difficult and invariably more expensive when
a system or community is vulnerable.

As long as resilience is strengthened or improved, a system will be more likely to survive shocks
while also recovering faster and at a lower cost than a vulnerable counterpart. To be resilient, you
must also develop sustainability plans that emphasize environmental, social, and economic
factors. Resilience refers to a company’s capacity to prepare for threats, absorb impacts, and
recover following disruptions, while sustainability refers to how it can satisfy today's needs
without jeopardizing tomorrow's (World Commission on Environment and Development, 1987).
Agile is most often used as a risk management method by fast fashion companies to provide the
flexibility to manage changing priorities in a highly volatile environment. However, using agile
poses challenges with high inventory levels.

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Circular economy and green distribution were proposed as ways to enable sustainable practises to
address the social, economic, and environmental repercussions. In recent years, circular
economies have gained popularity as a way to address sustainability challenges inherent in linear
systems, such as material scarcity, climate change, and natural resource depletion. Resources are
recirculated in a closed loop over and over again in a circular economy, eliminating the need for
virgin materials and resources. Green distribution strategies protect the environment by reducing
energy waste. Optimum fuel economy could range from loading vehicles or shipping containers
more efficiently to achieving optimal fuel economy during land transportation. These factors add
up to huge energy savings and lower carbon into the atmosphere, preserving the environment.

PART 1: Supply Chain and Resilient Management

2.0 Introduction

As a major problem in today's global economy, supply chains are also crucial for business
sustainability. Due to this, it has become a major source of concern for some organisations (Clark,
2012). Supply chains are a collection of organisations responsible for driving innovation,
procurement of natural fabrics, which is converted to product, and delivered to constomers
(Swaminathan, 2001). Nevertheless, supply chains in a dynamic and turbulent market are difficult
to manage because of unanticipated factors (Clark, 2012). Disruptions in the delivery of products
from suppliers to purchasers can result in significant financial losses for both parties involved in
the transaction (Porterfield, Macdonald, & Griffis, 2012). Information exchange is critical to
removing interferences in supply chain operations, which is why companies must communicate to
resolve supply chain risk scenarios. The first section examines supply chain risk and approaches
to managing it. The second section delves into the challenges and solutions involved in
establishing sustainable supply chain management operations. The final section ends with a
conclusion.

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2.1 Fast Fashion

Many companies, including Zara, employ the fast fashion method as a business strategy as they
have the capability of continually advancing their production techniques (Idacavage, 2016). Fast
fashion is now embraced by most major own-label merchants in the UK and Europe, focused on
minimizing the buying cycle to bring new products to customers as quick as possible. As a result,
merchants advertise themselves as "rapid response" merchants and have an efficient supply chain
that ensures affordable fashion is readily available. Fast fashion businesses engage in exploitative
supply chain activities, use intellectual property from rival fashion companies, and fuel the
demand for more products (Cline, 2012). Lead times for developing new collections were
shortened to keep up with the changing collections, leading to a decline in performance (Cline,
2012). The fast fashion industry primarily targets the youth and youngsters, but they likewise
satisfy consumers from all cultures. Clothing collections are varying in price at Zara and Gap, for
example, so everyone can find something they like. Fast fashion requires businesses to cut every
cost. Thus, the entire supply chain is at risk, resulting in exploitative tactics and intellectual
property theft (Idacavage, 2016).

2.2 Supply Risks Associated with the Covid-19 Epidemic

After travel and tourism, COVID-19 has the greatest influence upon luxury goods and services.
Asian was one of the first countries to be solely afflicted by the Covid outbreak, which dealt a
severe blow to fast fashion. This is because the majority of fast fashion businesses had suppliers
in those countries, and the effects of the pandemic caused significant interruptions in product
sourcing due to governmental restrictions and embargoes placed on product shipment
(Martinez-Pardo et al., 2020). Companies such as H&M have the majority of their suppliers in
Bangledesh, and as a result, they were badly impacted by the catastrophe, forcing them to close
down most of their operations, resulting in a significant financial loss for the company (Majumdar
et al., 2020). Furthermore, companies who purchase bottleneck products for their manufacturing
and production have been adversely affected, as they have had to cancel the majority of their
customers' orders due to their inability to fulfil on time. Companies that source non-critical
commodities, on the other hand, may have a higher chance of survival (Jackson et al., 2020).
Financial data from well-known fashion firms revealed the extent of the pandemic's impact. To
minimise the amount of time individuals spend in stores and to lower the incidence of infection,
governments around the world halted sales of certain items, including apparel, forcing most

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 fashion businesses to halt production, lay off staff, and close factories (Chakraborty & Biswas,
2020). Data provided by companies revealed the severity of the pandemic's impact. As COVID-19
has pointed out, South Asia is dependent on garment manufacturing for economic growth. Among
others, Lost Stock has responded to a possible philanthropic calamity by distributing final
products to the marketplace in the form of "mystery boxes" (Lost Stock, 2020). The practice of
corporations picking up the tab for employees in need, on the other hand, not only promotes myths
that undermine textile employees, but also shows customers as highly dominant (Brooks, 2007;
Chowdhury, 2014).

Figure 1: Demonstrates the impacts of the Corona Virus on important metrics in Europe's
fast fashion industry in the second and third quarters of 2020 (Statista, 2022).

2.3 Risk Resilient Strategies

Managing global supply chains and logistics involves dealing with risks and disruptions. A resilient
supply chain, as described by Macdonald and Melnyk (2015), emphasizes speed, as well as the
ability to withstand and recover from these risk events. The figure below shows Michigan State
University's proposed resilient supply chain tree.

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 Figure 2: Tree of Supply Chain Resilience (Michigan State University)

Adopting the Agile technique is an efficient way of dealing with disruptions in a changing
environment and enabling responsiveness for managing unpredictability (Prater et al., 2001).
There has been an evolvement in the fashion industry to pilot shorter life cycle commodities,
increasing the diversity product, unstable market conditions, low volume with increased returns
ratios, and product innovation to ensure a strategic competitiveness (Pearson et al., 2010). The
Agile technique will assist businesses in efficiently assessing risk, putting them ahead of any
incoming calamities and finding strategies to deal with the treat ahead of them (Fan et al.,
2007). There is free communication across all phases of the supply chain activities in Agile.
Improved collaboration among suppliers aids in the transmission of information and the
decision-making process (Baramichai et al., 2007).

A more Agile SC allows for better coordination and control due to improved information
delivery (McLaren et al., 2002). Fast fashion companies can benefit from flexible SCM in
diversifying their product portfolios; however, premium brands like Burberry and Gucci will
have greater influence on product reliability, allowing them to maintain their reputation and
heritage. A study found that due diligence in supplier identification and implementation (Luo et
al., 2009), as well as optimizing strategic planning, including equipment and talent
management, helped improve stock management (Mehrjoo & Pasek, 2016), thereby ensuring
robustness in the supply chain. In addition to inventory management, Just-in-Time can improve
communication routes and reduce informational obtuseness (Power et al., 2001), lowering risks
such as the bullwhip effect.

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Increasing inventory levels is one of the main limitations of Agile SCM, increasing portfolio
supervision and overheads and increasing the likelihood of product deterioration (Carvalho et
al., 2011). The goal of Agile supply chain operations is to adapt supply chain to varied settings
and scenarios. Keeping a huge inventory within a SC can result in significant losses and reduce
the flexibility of the firm (Cabral et al., 2012). The degree of inventory capacity that is
appropriate for an organisation's operations should be considered, given an acceptable increase
in holding and administration costs. Several corporations also employ forging agreements with
several other firms to split operational activities and take advantage of their synergies as a
replacement Sgile supply chain management solution.

Part 2

3.0 Sustainable Supply Chain Management

The late 1980’s comprehensive explains Sustainability as simply safeguarding the requirements
of the present without jeopardising the needs of the future. It was proposed by the World
Commission on Environment and Development in 1987 and has received considerable
criticism. What assumptions are used to form the demands of future generations, for example?
How do we know what their needs are? Is it assumed that today's needs will be the same as
those of future generations, causing global differences in needs? Are we basing this need solely
on our needs or does it depend on the demands and expectations of individual countries and
cultures (Washington, 2015). Resent demands without endangering future generations' ability
to meet their own needs. The implementation of the triple bottom line idea aids in determining,
carrying out, and reviewing activities that add value to the three key elements of sustainability:
humans, nature, and wealth (Savitz, 2014). Elkington (1997) devised the method, which has
now spread around the globe (Chabowski et al., 2011; Svensson & Wagner, 2015). This model
can be used by organisations transitioning to sustainability to build long-term strategies based
on three fundamental principles of sustainable development: ecological integrity, social
inclusion, and financial rewards (Elkington, 1998).

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 Figure 3: Triple Bottom Theory (Sandhul et al., 2014)

Companies that work on ESG (Environmental, Social, and Governance) efforts need to use
metrics. Businesses can track progress and prove their efficacy and impact by utilizing metrics.
The metrics used to evaluate their sustainability performance can be categorised into these main
categories (United Nations Development Programme, n.d.). These are the primary categories of
metrics used by firms to evaluate their sustainability performance and this metrics are the human
development index, the ecological footprint, environmental performance index and geuine
progress index.

3.1 Sustainability Issues in the Fast Fashion Sector

Due to its upgradeable performance when it comes to green practices in the past and today, the
fashion industry offers significant promise when it comes to sustainability. Few industries face as
many sustainability challenges as the fashion industry, according to Johansson (2010). As part of
the sustainability discussion, we will analyse the effects of fast fashion activities on climate change
and supply chain ethics using the theory of the bottom line for environment, social, and economic
assessment.

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3.2 Environmental Impacts

Fast fashion has many negative environmental externalities due to its low cost and easy
accessibility. Cotton and polyester production have significant environmental impacts (Bick et al.,
2018). Cotton and polyester both have significant environmental effects during the production and
manufacturing processes, because cotton requires a lot of water and chemicals to grow, whereas
polyester requires a lot of oil to manufacture since it is a synthetic fiber. Dye emissions into local
water sources, leading to the release of heavy metals and supplementary chemicals that can
negatively affect the well-being of wildlife and other neighboring inhabitants (Bick et al., 2018).
Furthermore, they must use a large number of dumping sites to keep waste and garbage, which
results in the release of carbon-dioxide into the atmosphere after burning unsold clothes (Siegle,
2018). 1.2 billion tons of CO2 are estimated to be emitted by the fast fashion industry each year. In
March of 2018, the big brand retailer H&M reported that it still had $4.3 billion in unsold clothing.
Omelich (2020) reports that microplastic fibers are found in the water every year as a result of the
extraction and transportation techniques used in the fast fashion sector. This results in the emission
of carbon-dioxide gases into the atmosphere.

3.3 Social Impacts

As part of supply chain ethics, it is critical to ensure good working conditions. Poor working
conditions are a major social impact, caused in part by poor ventilation in manufacturing facilities,
which exposes workers to serious respiratory and musculoskeletal hazards (Bick et al., 2018).
There is also the risk of factory collapse (often in developing nations), with notable industrial
disasters like the Triangle Shirtwaist Factory fire of 1911 and the Rana Plaza collapse of 2013, in
which 1134 Bangladeshi workers perished (Goodwin, 2021). Violence and extremism are also
frequent occurrences in fast fashion sectors that have significant societal impacts (Hobson, 2013).
Some employees are forced to work under harsh conditions in some situations, particularly in
Bangladesh, Brazil, China, Indonesia, and Vietnam (Omelich, 2020). More specifically, these
employees (often young women) have been abused and even locked in their offices, which are
similar to jail cells (Hobson, 2013). There is also a high rate of sexual harassment and verbal abuse,
leaving workers fearful and uncertain. In addition, many of these incidents remain uninvestigated
since the proprietors of these facilities have the power to prevent inspections from taking place
(Mikolajczak, 2019). In the retail industry as a whole, extremely low and unlivable wages are
commonplace (Omelich, 2020).

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3.4 Economic Impacts

According to previous sections, the fast fashion business has a huge impact on both the
environment and society. However, as a direct result of creating low-cost clothing, the numerous
health hazards to which employees and the general public are exposed result in significant
worldwide health expenditures. Moreover, the environmental cost of global textile manufacturing
is substantial, including the cost of dealing with contaminated water, the excessive use of oil
required to manufacture polyester, and the cost of disposing of millions of tonnes of garbage in
massive landfills (Bick et al., 2018). Furthermore, the $4.3 billion in unsold clothes reported by
H&M in March 2018 is yet another indicator of the costs associated with fast fashion, since the
industry's major competitors record significantly bigger volumes of unsold clothing that eventually
wind up in landfills on an annual basis (Siegle, 2018).

4.0 Sustainable Supply Chain Strategies

As a result of global concerns, the fashion industry will need to reform at the system level and
develop a new fashion paradigm based on sustainability. However, this transition is difficult due to
the worldwide character of the industry and its many segments. A fashion industry transformation
has been signaled, addressing its impacts, and these techniques and innovations need to be scaled
outwards and higher.

4.1 Circular Economy

In an attempt to reduce the costs associated with each clothing item's diminished existence, circular
economy can be introduced into the fast fashion sector in an attempt to reuse garments to lengthen
their useful lives and thus reduce environmental impact (Ellen MacArthur Foundation, 2017). In
order to promote a circular economy, three fundamental principles have to be followed: eliminating
waste and contamination, reusing products and materials, and renewing natural systems. Circular
economies emphasize landfill disposal as a first step in waste management. A second step is to
improve byproducts and link them to the development and use of fresh raw materials. The
bioeconomy model approach replaces unreplenishable resources, including fossil fuels, with raw
materials derived from renewable resources, in order to dispel the linear economy model.

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In a nutshell, the circular economy model is "formed by the 3R (reduce, reuse, recycle) principles
across the entire cycle of production, consumption, and resource return" (Koszewska, 2018).

However, it faces significant obstacles, including the fact that the economy will never be able to
catch up with the rapid growth of the fast fashion business (Ellen MacArthur Foundation, 2017).
Also, there are conceptual contradictions between circular economy and sustainable development,
despite their many similarities (Geissdoerfer et al., 2017). Although sustainable development
explicitly includes environmental goals such as biological diversity preservation, social equity, and
intergenerational fairness, these are outside of the concept of material flow circularity
(Buchmann-Duck & Beazley, 2020). Due to the physical flows of materials and energy across
organisational and geographical barriers, we often experience problem displacement and problem
shifting, particularly in the fast fashion business. There can be no sustainability if environmental
and social advances in one national or regional economy have resulted in environmental
degradation in another area of the world due to global supply chains and product life cycles.

Figure 4: Circular Economy Concept.

Source: Adapted from ( Elena Salcedo, 2014).

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As an example of a circular economy application, the Monitor for Circular Fashion is used. The project
involves top fashion firms and supply chain actors, with the support of the Sustainability Institute. In
collaboration with the sustainability consultancy Eco-Age, the Monitor for Circular Fashion is able to
engage a broad cross-section of the Italian fashion sector at all stages of the supply chain (Enel, 2021).

4.2 Green Distribution

Within the fast fashion supply chain, green distribution is viewed as a big challenge because of the
quick reaction tactics, shorter lead times, and the shorter season cycles than traditional fashion. In order
to have a green distribution system, more efficient transportation systems are needed, as well as a
reduced carbon footprint (Popescu, 2015). In order to transport fast fashion products by water or rail,
cleaner and more efficient modes of transportation, such as ferries and trains, can be used more
frequently (Shen, 2014). Shen (2014) reports that H&M developed a direct shipment system that
avoided intermediate warehouses, resulting in a 40% drop in ocean and air shipments and an increase
in goods shipped by rail, which helped reduce CO2 emissions. The smart mobility concept can enable
and boost developments in environmental data collection, analysis, and synchronisation when it
collects and synchronises information from both transportation service providers and consumers.
These quick fashion retailers can therefore better address their quality and environmental standards in
distribution (Popescu, 2015).

However, a company may implement SSCM techniques for a variety of reasons, such as new market
prospects, increased customer satisfaction, or premium pricing. Additionally, SSCM implementation
can provide competitive and marketing advantages, reduced pressure from external agencies, and an
improved corporate image (Kumar et al., 2015).

5.0 Conclusion

Sustainability and risk resilience are important supply chain practises because they help fast fashion
companies be aware of how their activities affect the economy, society, and the environment, as well as
building a very strong risk resilient in their operations to ensure the flow of activities in any changing
business environment. Furthermore, due to frequent setbacks and constraints in deployment, fast
fashion companies should make a commitment to constantly develop and incorporate innovation
sustainable and risk-resilient solutions at all points of their supply chain activities.

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