As a result, our teamconsistently referred to the material covered in this course when writing this essay inorder to gain a deeper comprehension of the supply chain that we utilize and t
INTRODUCTION
About Shein
Shein, which was once known as ZZKKO or SheInside, a global fast-fashion and lifestyle e-retailer, was founded by Chris Xu in 2008 in Nanjing, China Since 2012, Shein has changed to become a fully integrated retailer The Wall Street Journal reported that Shein generated US$24 billion in revenue in 2022—nearly as much as well-known shops Zara and H&M.
Following a fundraising round in April 2022, Shein was estimated to be worth $100 billion The business maintained its supply networks and warehouses in China but relocated its whole headquarters from China to Singapore in 2022.
Shein offers a wide range of clothing in all sizes, including rare plus size models, men and children's categories, and home decorations With a global warehouse network, Shein can ship to over 220 countries and regions worldwide.
A Piper Sandler survey showed that Shein is the fifth most popular clothing brand among teenagers, after Nike at the top and Lululemon in second place Over 50% of Shein's customers are members of Generation Z.
Shein in Vietnam
In Vietnam, according to the Network Information Monitoring and Analysis System(Reputa), Shein reached the top 10 most popular e-commerce companies on social networks in October 2022 Shein builds an e-commerce system including website and mobile app In addition, Shein promotes for tactics such as Social Commerce,Ecommerce Marketing, Affiliate Marketing, KOC, and others to boost the visibility of the brand and create more attraction among customers.
Products
Shein is a new brand in China and a well-known manufacturer of clothing and beauty goods such as dresses, t-shirts and accessories Furthermore, Shein also has some products related to beauty and health like trapping, care personal devices, so on.
Clothing
Shein’s signature item is its line of clothing.Many users love the Shein brand's outfits, they provide many trendy clothing which is suitable at the current time Moreover, Shein serves customers with varieties of clothing including t-shirts, skirts, jeans, modern wear and many strange styles Shein's clothes not only bring satisfaction to consumers in terms of quality but are also reasonable in price.
Accessories
Beside producing clothing goods, Shein also sells a lot of products of accessories The line of accessories is variable and beautiful meeting the needs of customers like neglects, rings, bracelets, earrings and other lovely jewelry Numerous customers buy them at Shein instead of jewelry stores because of the cheaper price and having more unique designs.
Beauty and health goods
Shein's beauty and health goods are also one of the most favorite products of consumers At Shein, consumers can freely choose beauty products such as powder, foundation, eyelash curler and other beauty products Furthermore, Shein also provides high-grade perfume lines but the prices are extremely suitable for buyers Additionally, this is also one of Shien's famous products that consumers love and choose.
Figure 1.5 Shein beauty and health goods
Markets
Shein has grown very quickly in Vietnam in recent years By 12/2022, Shein was the leading fashion shopping application in Vietnam, ranking at number 8 out of the 10 most popular E-commerce platforms on social media.
Here are some of Shein's file field analysis tools in Vietnam:
Age:Shein is mainly favored by young consumers, from 18-35 years old.
Gender:Shein is loved by both men and women.
Income:Shein attracts both high and low income users.
Location: Shein is commonly used in big cities such as Hanoi, Ho Chi Minh City and Da Nang.
-> Shein is continuing to expand its market share in Vietnam by expanding its product portfolio, improving product quality and customer service.
Table 1.1: Most popular international B2C e-commerce sites in Vietnam as of 1st quarter 2021, by monthly websites (in millions)
Table 1.2: Revenue in Fashion segment ( 2017 - 2021)
Workers
According to public information, Shein has about 7,000 employees in Vietnam,including warehouse and office staff.
Shein's warehouse staff in Vietnam mainly work at warehouses in Di An, Binh Duong and Que Vo, Bac Ninh They are responsible for receiving goods from suppliers, inspecting goods, packaging goods and shipping goods to customers.
Shein's office staff in Vietnam mainly work in the office in Ho Chi Minh City They are responsible for tasks such as:
1 Marketing and sales: Manage online and traditional sales channels, build marketing, advertising and customer care strategies.
2 Product development: Market research, product design, product manufacturing.
3 Warehouse management: Manage warehouse systems, control inventory and transport goods.
4 Technical support: Answer customer questions about Shein products and services.
Shein, a prominent global e-commerce enterprise, maintains a robust presence inVietnam For Vietnamese workers, this company is opening up a lot of job opportunities.
Import and Export
Shein imports products from other countries to Vietnam to serve its business activities. Shein's imported products mainly include raw materials, accessories, and equipment.
According to statistics from the General Department of Vietnam Customs, Shein's import turnover from Vietnam reaches 1.5 billion USD in 2022, an increase of 20% compared to 2021 Shein's main imported products include fabrics, fibers, metals and machinery.
Shein exports fashion products from Vietnam to other markets around the world, including the United States, Europe and Asia Shein's export products are mainly produced in factories in Vietnam, using cheap and abundant labor.
According to statistics from the General Department of Vietnam Customs, Shein's export turnover from Vietnam reaches 3.7 billion USD in 2022, an increase of 25% compared to 2021 Shein's main export products include pants clothing, shoes, accessories and jewelry.
Shein is a rapidly growing company, so the demand for its goods and services is also huge This creates many export and import opportunities for Vietnamese businesses. Below are some of the development potential of Shein's import and export in Vietnam:
Export: Shein plans to expand the scale of operations in Vietnam, so demand for exported goods from Vietnam will continue to increase.
Import: Shein plans to invest in manufacturing plants in Vietnam, so the demand for raw materials, accessories and equipment imported from Vietnam will also increase.
To take advantage of these opportunities, Vietnamese businesses need to improve the quality of products and services to meet Shein's needs.
Suppliers/Manufacturers
The founder Chris Xu has had good relations with suppliers who make Shein clothes of good quality with a relatively less turnaround time This has helped him secure excellent quality goods from vendors while keeping the prices low With the massive success of Shein now, the brand has a set of apparel vendors who make clothes based on the designs submitted by the Shein team These vendors are given a strict turnaround time of ten days to finish and ship the clothing Most of these vendors belong to the Guangzhou district of China.
1 Quanzhou Youfan Import and Export Trading Company
- Specializes in: Women's clothes, sportswear, caps, socks
- Specializes in: Yoga clothes, women's underwear, women's t-shirts, etc.
3 Fujian Surprise Network Technology Ltd.
- Specializes in: Ladies' fashion jewelry and accessories
4 Zhejiang New Joys Trading Co., Ltd.
- Specializes in: Women's sweaters, blazers, long coats, pants, and other knitted
- Specializes in: Jeans, shirts, dresses, jackets
6 Dongguan Wojieya Clothing Co., Ltd.
- Specializes in: One-piece dresses, shirts, t-shirts, long tops, coats, sweaters
7 Guangzhou Weixin Garment Co., Ltd.
- Specializes in: Ladies' latest dresses, jumpsuits, jackets, pants, and tops
- Specializes in: Dresses, jackets, bodysuits, blouses, t-shirts
- Specializes in: Women's dresses, leggings, tops, sportswear, and fitness and yoga wear
10 Quanzhou Yongchun Yuxin Trading Co., Ltd.
- Specializes in: Dresses, jumpsuits, co-ord sets
Shein produces an astounding number of items on a daily basis—the primary reason why the company has an unsustainable model According to Molly Miao, CEO of Shein, each item is only made in tiny batches—between 50 and 100 pieces every day—until it becomes popular and is then mass-produced However, the manufacturers leave behind approximately 6.3 million tons of carbon dioxide annually due to their large oil consumption and rapid use of virgin polyester This amount is far less than the 45% target to reduce global carbon emissions by 2030 that the United Nations has stated fashion companies must meet in order to slow global warming.
SUPPLIER COMMUNITY EMPOWERMENT PROGRAMwas created to foster the vital partnerships with suppliers in the SHEIN ecosystem and support their supplier partners and their communities in the different stages of their development journey. Through the program, SHEIN has been implementing long-term initiatives to empower their partners across four key pillars: factory enhancement, technology innovation, training support and community engagement At the end of 2022, SHEIN announced an additional commitment of US $15 million in funding over four years to the Supplier Community Empowerment Program to facilitate material improvements to factories In 2022, SHEIN spent US $1.3 million to upgrade 83,000 m² of supplier workspace covering 29 facilities and approximately 4,500 workers.
Training
In 2022, SHEIN conducted over 380 training sessions for workers in the supply chain, covering topics including enterprise management, organizational structure and business processes, such as quality inspections and quality assurance certification offered by third-parties such as Intertek and SGS In 2023, they planned to conduct more than 480 training sessions for workers in the supply chain, incorporating workshop courses that focus on lean production models.
In addition to material improvements to factories, SHEIN'S Supplier Community Empowerment Program works to support suppliers in their technical innovation, waste reduction, training and operational management and production efficiency optimization The program has enabled many suppliers to meet market demand more efficiently while reducing waste and conserving resources.
Shein in Vietnam : Competitors
Vietnam is a country with an abundant young population, along with fashion trends that are increasingly growing and blooming Therefore, Vietnam offers a potential and effective market for leading fashion brands With the emergence of more and more e-commerce platforms in Vietnam, there are many competitors to Shein in Vietnam, such as Lazada, Shopee, TikTokshop, etc.
Table 1.3: Ranking of popular e-commerce platforms (multi-industry) on social networks in 2022
This is some information about competitors.
● Shopee officially entered the Vietnamese market on August 8, 2016 with
Shopee offices in Hanoi and Ho Chi Minh City.
● On Shopee we can buy almost everything from household items, appliances - beauty cosmetics, men's and women's fashion, children's fashion, pregnant women's fashion, sports products, etc including electronics, household electrical appliances, kitchen equipment and food Currently, Shopee is piloting fresh food sales in some districts of Hanoi and City HCM.
● Lazada Vietnam was established in March 2012 and is considered a branch of Lazada Group in Vietnam.
● Products of Lazada: a Electronic devices (mobile phones, tablets, laptops, cameras, game consoles ). b Electronic accessories (mobile accessories, lens accessories, computer accessories ). c TV and household electrical appliances. d Health and Beauty (skin care, hair care, body care, medical equipment, functional foods ). e Mother, Baby and Toy Products (diapers, diapers, carriages, chairs, slings, baby toys, educational toys ). f Grocery supermarket (food, candy ). g Household and lifestyle goods (electrical tools, lamps, lighting equipment, home decoration, furniture, books, stationery ). h Women's fashion and accessories (women's clothing, women's jewelry, accessories, handbags ). i Men's fashion and accessories (men's clothing, men's watches, accessories, bags ). j Children's fashion and accessories (costumes, shoes, sandals, bags ). k Sports and tourism (sports apparel, sports shoes, equipment, sports accessories ). l Navigation equipment, cars, motorbikes.
● On February 28, 2022, Tik Tok officially launched Tik Tok Shop
● TikTok Shop's products are similar to Lazada and Shopee, however TikTok Shop pursues the Shoppertainment model, which is a combination of Shopping and Entertainment, different from the usual online shopping model.
● Revenue from February 2022 to Third quarter 2023 : 10.112 trillion VND (Revenue increased 16% after 1 year of launch).
● Tiki.vn was established in March 2010.
● Tiki Trading retail unit and Trading Floor provide 10 million products from 26 industries serving millions of customers across Vietnam.
● In September 2012, Sendo launched to consumers, originally an e-Commerce project developed by FPT Online Services Joint Stock Company (FPT online).
● Sendo application brings you a super warehouse with 31 essential categories, more than 10 million products from the largest shop community in Vietnam with more than 200,000 shops for you to freely choose to buy.
With the analysis table from Reputa, we can see that the top competitor is Shopee,followed by Lazada and TikTok Shop and Shein is not in the rankings This is a challenge for Shein in the Vietnamese market Shein needs to have a strong consumer policy to attract and widely promote consumers to be able to compete directly with the giants in the industry.
SHEIN SUPPLY CHAIN MANAGEMENT
Supply chain network
With the introduction of new web technologies and the explosion of e-commerce, last-mile logistics drew much attention from not only online sellers but shipping companies, placing them in a position to either exploit a ‘cannot-miss’ opportunity to gain a tactical, competitive advantage, or else succumb to the dire consequences from missing out on sales and profits at the hands of rival companies who would not skip on the golden prospect to improve their business operations It is the final stage of the delivery process, involving the transportation of goods from distribution centers to customers' doorsteps Efficient last mile logistics is crucial for customer satisfaction and can significantly impact the overall success of a supply chain In this one of the fiercest and most competitive arenas, you either had to be the hunter or be the hunted. Consequently, ecommerce companies had to consider, plan, and make investments in their logistics if they wished to succeed and outperform their rivals.
In order to gain trust from customers and increase sales, e-commerce businesses have to highlight prompt, dependable, easy delivery as a key component of their business plan Because of this, a lot of these online retailers offered delivery times that were assured, much like Amazon's same-day delivery, as a cutting-edge strategy to beat off rivals, especially those who had traditional brick-and-mortar retail storefronts.
The upstream supply chain encompasses activities associated with suppliers providing raw materials to manufacturers Involved in this process are raw material suppliers, intermediate component suppliers (second and first–tier suppliers) Before being manufactured, the designs are achieved by customer listening tools, 3D design, digital sampling, modular sampling, pre-designed mockups and patterns and library of colors, fabric and trim Shein has its own dedicated clothing designer who sketches unique and impressive designs consistent with online data and trends until sample patterns are made, this process usually takes around 11 days The clothing designed by Shein will then undergo strict quality assurance testing by professional designers, and models are invited to try on clothing to achieve a perfect appearance in order to promote their products on distribution channels.
Garment manufacturing is shortened in cycles of 7-10 days of production and ready for pre-sale as soon as production is completed using advanced machinery technology, ensuring the highest precision and design details, bringing the best quality products to users The finished products are then shipped to distribution centers in varying quantities.
The downstream supply chain involves distributing finished products to wholesalers, distributors, retailers (first and second–tier customers) and lastly, customers It encompasses processes such as distribution, order fulfillment, and sales One of the key features of the downstream supply chain is its focus on customer-driven operations, aiming to meet the demands and preferences of end consumers.
While Shein initially gained popularity as an online fashion retailer, they have been experimenting with brick-and-mortar stores to provide customers with an offline shopping experience Shein has started to expand its presence by opening physical stores in certain locations However, the availability of Shein physical stores may vary depending on the customer’s location Some key points about Shein's physical stores includes:
● Locations: Shein has opened physical stores in select cities around the world. The specific locations and number of stores may change over time as Shein continues to expand its offline presence It's recommended to check Shein's official website or contact their customer service to find out if there is a physical store near you.
● Store Experience: Shein's physical stores typically offer a curated selection of their fashion items, allowing customers to browse and try on clothing and accessories before making a purchase The store experience may vary, but it generally aims to provide an extension of the online shopping experience in a physical setting.
● Additional Services: Shein physical stores may offer additional services such as in-store pickup for online orders, assistance from store associates, and the ability to return or exchange items purchased online.
Shein has implemented a strategy shift by sending more low-priced apparel and home goods to U.S warehouses from China to speed up shipping times for shoppers, expanding its bulk shipments to the U.S in a bid to compete with established retailers on delivery times as it eyes an initial public offering Shein has managed to narrow the speed gap with retailers such as Amazon, as their shipment to the customers who pay for their Prime Membership service now takes only one or two days to arrive.Virtually, all came from China, where Shein relies on a network of suppliers to produce its expansive assortment of low-priced merchandise In Vietnam, Shein advances in its ecommerce advantages in order to reach customers' demands, thus maintaining its gradually growing profit at the cost of environmental damage and cheap labor.
Distribution center
For large corporations, distribution centers play a crucial role in the supply chain, handling everything from order fulfillment to product shipping and storage Shein has been successful in keeping and growing its global distribution center across borders as a multinational corporation The majority of packages are shipped from the main warehouse, which is more than 10,000 square meters in size, in Nanjing, in eastern China.Specifically, the expanded warehouses in the USA, Spain, France, Russia, Germany, Italy, Australia, Switzerland, and the Middle East have expedited logistics shipping and product delivery worldwide.Having been established with the goal of producing high-quality goods, Shein acknowledged the need to modernize its shifting system by fusing direct online customer shifting, along with theirstrategic leverage supply chain.
Distribution centers serve as the final destination for Shein products Shein has made significant investments in the infrastructure of distribution to handle and transport packages from Guangzhou to customers worldwide Along with other direct-to-customer shipping businesses in Guangzhou and China, it has also been able to take advantage of its size to reduce costs and speed up delivery for clients In addition, Shein has been able to deal directly with the manufacturers without the use of brokers, middlemen, or agents thanks to their co-location with their Guangzhou-based vendor base This lowers their overall product costs and provides their teams with quick decision-making while providing direct and instant access to any innovation passing through their supply chain Still, there seems to be a difference in retail expenses.
A few factors have helped to offset the challenge of Shein having to charge a higher retail price due to direct shipping to customers, which is primarily done by air They include having no physical stores, paying little to no import taxes in the nations where sales are made, and sourcing directly from manufacturers Except for a few pop-up shops that appear and disappear in major cities to gain market visibility, Shein does not run any full-time stores in any country, in contrast to traditional retailers In comparison with a traditional brick-and-mortar retailer, this helps it save on store rents and other related operational costs.
Sourcing
● Polyester:Since polyester makes up the majority of SHEIN's fiber portfolio, switching to recycled polyester will have a big impact on our decarbonization effort They hope to save 3 million tonnes of CO2e over the next five years by converting at least 31% of their polyester-based products to recycled polyester by 2030 in order to reach their targets By introducing our first evoluSHEIN line and adding recycled polyester (rPET) to our fiber inventory, they are achieving this.
● Viscose: They think that synthetic cellulosic materials have enormous potential for use as a fiber of choice They signed up for CanopyStyle in 2022, and now that they've reached their 45% goal, they've promised to transfer 60% of their directly produced man-made cellulosic fibers (viscose, rayon, acetate, etc.) to suppliers who have been authorized by Canopy by the end of 2023 They also encourage the preservation of forests and expedite Next Generation fiber options Under Canopy's leadership, they are making rapid progress toward this objective.
● Cotton:To strengthen their due diligence in the cotton supply chain and find ways to boost preferred fiber procurement, SHEIN has a strong program for cotton traceability SHEIN has created a proprietary Traceability Management System that incorporates supply chain paperwork from suppliers of yarn, fabric, and completed products SHEIN also maintains stringent chain of custody documentation for company-branded items Their third-party testing supports their traceability efforts; they collaborate with Oritain, the top global provider of forensic cotton testing, to make sure their manufacturing suppliers adhere to their strict requirements, enabling compliance with relevant laws and regulations.
● Reclaimed Materials:SHEIN and Queen of Raw joined together in 2022 to start obtaining premium extra deadstock fabric from other manufacturers This is an opportunity for these excess materials, which were meant for incinerators or landfills, to be worn and used.
● Preferred Materials:SHEIN is a part of the international non-profit Textile Exchange, which creates and manages industry standards for the best materials and fibers for the fashion and textile industries As they strive to use more ethical fibers in their products, they turn to Textile Exchange for advice on how to minimize the raw material impact.
SHEIN is dedicated to utilizing more environmentally friendly packaging substitutes. With the aim of using 50% preferred materials in all of our packaging by 2030, they are decreasing the amount of single-use plastics and increasing the amount of post-consumer waste content in their product packaging For all packages going to European nations, they started using recycled polyethylene (PE) plastic express bags in August 2022 50% of the recycled PE plastic used to make these express bags comes from circular waste processes, which reduce the need for extracting raw materials and use less energy and water than using virgin materials.
In August 2022, all products under SHEIN's premium brand MOTF will also use 100% recycled PE plastic bags; this move is anticipated to save three tons of virgin plastic per month Packaging bags used by ROMWE, SHEIN, and other SHEIN brands will eventually be replaced by bags composed of materials that are sourced ethically.
In collaboration with GRS-certified suppliers, SHEIN's recycled PE plastic express bags, MOTF packaging bags, and evoluSHEIN packaging bags have earned certification to the Global Recycled Standard (GRS) This internationally recognized certification necessitates tight social and environmental compliance and supports the traceability of recycled material throughout the entire supply chain Textile Exchange is in charge of managing the GRS standard By 2025, SHEIN has also promised to stop using paper products derived from important forests.
Additionally, SHEIN has committed to utilizing more recycled materials and materials in packaging by joining the Canopy Pack4Good initiative.
- An explanation of the ingredients in Shein's textile : Shein intends to shift at least 31% of its polyester-based products to recycled materials by 2030, but for now, it only uses less than 1% of recycled polyester.
SHEIN introduced evoluSHEIN by Design, a product initiative in 2022 with the goal of expanding responsible manufacturing processes and utilizing preferred materials more quickly SHEIN is testing new, more environmentally friendly materials, technologies, and production techniques through this initiative It also serves as a springboard for scaling sustainable product innovation and educating our designers. Clothes sold under this program must be made by suppliers who have obtained high social compliance verification through independent audits, and they must contain at least 30% preferred materials.
Their goal with evoluSHEIN by Design is to encourage the use of sustainable materials and production techniques:
1 Instead of using virgin polyester fibers, they use recycled polyester, which has a lower carbon footprint.
2 They work in tandem with our suppliers and groups like Canopy to procure wood-derived products like viscose from vendors who do not jeopardize important old growth forests.
3 They come up with inventive uses for textile excess that other fashion brands have left over, from cutting scraps to saving fabrics that were going to be thrown in the trash or burned.
4 They package our products using materials that are more environmentally friendly, like recycled polyester.
Their operational teams and supply chain partners are motivated to decrease the environmental impact of our facilities and products by a set of targets that they have established These targets include:
1 Utilizing the evoluSHEIN initiative to source 50% of SHEIN-branded goods by 2030.
2 Obtaining packaging made entirely of paper and viscose that is forest-safe by 2025
3 Utilizing 50% preferred materials in all packaging by 2030
4 Assuming the role of industry leader in the world in rescuing excess inventory.
Social responsibility
2.4.1 Effect of Shein to environmental pollution
Instant noodle fashion is an extremely wasteful business, exacerbating the fashion industry's environmental impact Regulators and activists say instant noodle fashion is so wasteful that no one who cares about the environment can endorse it Known as a brand with a rich and diverse number of products, with 500 new designs updated every day Therefore, the final concern about Shein is the environmental impact of the fashion industry quickly depleting resources and causing viral pollution The production of polyester textiles alone introduced countless greenhouse gasses in 2015. Producing a single cotton shirt consumed water With more than 80% of products made from synthetic fabrics, Shein is certainly continuing to disrupt the supply of millions and millions of microplastics into the ocean each year.
Issue of Shein’s environmental pollution is one example of fast fashion Fast fashion creates cheap, mass-produced clothing items that are modeled after popular or high-end fashion trends This industry is extremely harmful to the environment, especially causing air and water pollutions, so fashion is seen as the second most polluting industry in the world In addition to the pollution caused by the means of production, the nature of fast fashion clothing, which is only thrown away after one season of wear, creates a lot of unnecessary waste Besides, fast fashion is also one of the causes of the greenhouse effect and has a significant impact on climate change.Finally, fast fashion also wastes water resources.
ANALYSIS OF SHEIN SUPPLY CHAIN
Environment Pollution
The fashion industry is one of the most polluting industries in the world According to a study by the University of Cambridge, the fashion industry accounts for about 8% of global greenhouse gas emissions, more than both The industry is also one of the largest water users, accounting for about 15% of global freshwater.
Environmental pollution, particularly water pollution from textile dyeing and finishing processes, can contaminate waterways, affecting aquatic ecosystems This can lead to water shortages, disrupting agricultural production and impacting local communities' livelihoods For instance, air pollution from textile factories can affect worker health, leading to respiratory problems and increased sick leave rates As a result, these things impact the availability of raw materials and transportation, resulting in production delays, shortages, and increased costs for the fashion industry.
The production of textiles, particularly synthetic fibers, is a major source of greenhouse gas emissions The manufacturers’ rapid use of virgin polyester and large consumption of oil churns out the same amount of CO2 as approximately 180 coal-fired power plants, according to Synthetics Anonymous 2.0 The company needs to pay more money to deal with a big amount of emission released in a day to avoid a reputational risk which means losing the trust from customers Otherwise, the chain may be stopped by the government when the amount of CO2 is over the acceptable level.
Shein clothing materials are also known to contain high levels of hazardous chemicals, such as lead, perfluoroalkyl (PFA), and phthalates They are hazardous to people’s health and cause severe damage when released into the environment Exposure to hazardous chemicals and pollutants in the manufacturing process can have severe consequences for workers' health and safety Textile workers are often exposed to a range of chemicals used in dyeing, finishing, and other processing stages In some circumstances, these chemicals can even be carcinogenic, leading to increasing risk of cancer Therefore, workers may suffer from serious illnesses such as cancer, respiratory problems, skin irritation, and other health issues, etc., which makes the production line be stagnant.
Fast fashion
Fast fashion can be defined as cheap, trendy clothing that samples ideas from the catwalk or celebrity culture and turns them into garments at breakneck speed to meet consumer demand The idea is to get the newest styles on the market as fast as possible, so shoppers can snap them up while they are still at the height of their popularity and then, sadly, discard them after a few wears It plays into the idea that outfit repeating is a fashion faux pas and that if you want to stay relevant, you have to sport the latest looks as they happen.
Cheap, trendy and speedy, it’s no wonder the fast fashion industry is booming Within the Asia Pacific region there are 43 million people working in fashion Yes, this stimulates economic growth, provides loads of jobs and valuable training for these workers However, hidden behind this is the exploitation of millions of individuals. These workers are often paid an incredibly low wage and are forced to work in unsafe conditions with poor work facilities The harsh realities go as far as child labour and slavery For these people, the poverty cycle is relentless The cruel truth encompasses not only the unfair treatment of workers but also negatively impacts our planet.
In today's fast-paced fashion industry, supply chain management plays a crucial role in meeting customer demands and delivering products in a timely manner One company that has gained attention for its agile and efficient supply chain is SHEIN With its rapid growth and global reach, Shein has demonstrated an impressive ability to navigate the complexities of the fashion supply chain.
The key factors that contribute to Shein's supply chain success and its impact on the fashion industry :
A comprehensive data analytics system drives Shein's supply chain management.Shein is able to effectively estimate demand for its products by combining customer behavior data, social media trends, and real-time industry insights This data-driven strategy helps the organization to make educated manufacturing, inventory management, and distribution decisions, resulting in optimal supply chain efficiency.
Shein has created an integrated supply chain model that includes design, manufacturing, and distribution Shein has greater control over quality, time, and cost because she owns the entire production process, from design concept to delivery This vertical integration enables faster turnaround times, shorter lead times, and greater adaptability to changing market demands.
● Agile Manufacturing and Fast Fashion
Shein's supply chain is built to accommodate the company's rapid fashion business model The brand succeeds at turning fashion trends into inexpensive and on-trend products in a timely manner Shein is able to quickly build and distribute new ideas to the market due to tight collaboration with suppliers and manufacturers Shein has a competitive advantage since it can adjust quickly to evolving trends and customer preferences.
Shein can reach consumers all over the world because to its large global network of suppliers and distribution facilities Shein lowers shipping costs and delivery times by strategically positioning its warehouses and production facilities in critical locations. Furthermore, the organization localizes its operations by adhering to local preferences and customs, ensuring a consistent consumer experience regardless of location.
Shein has made great efforts in recent years to improve its sustainability standards. The company is dedicated to ethical sourcing, the promotion of eco-friendly materials, and the enhancement of supply chain transparency Shein wants to reduce its environmental footprint and contribute to a more sustainable fashion business by employing ethical principles throughout its supply chain.
Shein has set a high standard for efficiency and adaptability in fashion by mastering supply chain management Using data-driven forecasts, vertical integration, agile manufacturing, and a worldwide network, Shein has solidified its leadership in the fast fashion market Additionally, their strong dedication to sustainability and ethical practices showcases their commitment to transforming the industry into a more responsible one.
Stability of Shein Supply Chain
Shein's supply chain has faced criticism and questions regarding its sustainability, ethical practices, and transparency While they offer a wide range of trendy products at affordable prices, concerns about their treatment of workers and the environmental impact stemming from fast fashion practices further cast doubt on the stability and sustainability of Shein's supply chain Overall, these issues have raised uncertainties about the stability and ethical reliability of Shein's supply chain operations.
Many consumers and industry experts have expressed concern over Shein's supply chain due to its lack of transparency Criticism has centered around Shein's failure to disclose details about its sourcing practices, manufacturing methods, and the working conditions within its supply network.
According to a report from Public Eye in 2021, workers endured 11-12 hour shifts, one day off monthly, and minimal pay, which violates the labor laws Shein's business model prioritizes controlling the chain value while avoiding responsibility Channel 4 investigations exposed appalling conditions in certain factories: workers, paid a mere $556 monthly, working up to 18 hours daily, facing penalties for errors and receiving minimal pay per clothing item These conditions violated China's labor laws, highlighting the exploitation endured by these workers.
The lack of transparency and reports of labor law violations can lead to reputational damage, eroding consumer trust and loyalty This negative perception could deter customers from supporting the brand, impacting sales and overall business stability.
Figure 3.4: The treatment of workers 3.3.2 Environmental destruction
The swift turnover of fashionable attire generates extensive production, resulting in heightened waste accumulation and a pronounced ecological footprint Furthermore, there are apprehensions regarding Shein's procurement methods, potentially entailing the use of unsustainable resources and manufacturing processes detrimental to the environment.
According to the report by Greenpeace Germany, laboratory tests conducted on 47 items purchased from SHEIN revealed the presence of prohibited hazardous chemicals like phthalates, exceeding the EU Regulatory Limits.
Although Shein is supposed to be an unsustainable supply chain with the above factors, its organization has managed to improve its chain.
In order to make their supply chain be more sustainable, Shein outlines a plan to make the supply chain more eco-friendly Goals include reducing greenhouse gas emissions by 25% by 2030, achieving carbon neutrality in scope 2 emissions, using environmentally responsible materials like forest-safe viscose and paper-based packaging, and ensuring that packaging contains at least 50% preferred materials by 2030 Additionally, they aim to source half of their branded products through a program promoting responsible materials and manufacturing methods by 2030.
According to the Shein sustainability and social impact report in 2021, in the near future, there are plans to team up with various partners to enhance their environmental impact The focus will be on creating circular economy programs that redirect waste from landfills when products reach the end of their life cycle Long-term goals involve partnering with designers to advocate for sustainable fibers, assessing operations to minimize emissions and waste, and addressing workplace safety and labor issues throughout the supply chain by identifying and rectifying non-compliances.
Synchronization of Shein Supply Chain
“Supply chain synchronization is the strategic work conducted to bridge the gap between supply chain operations, multi-functional business processes, and people systems.”
- ‘the 3 Ps’ in the authors’ summary in theSupply Chain Management Review2.
Examples of synchronization in action are:
- A clothing retailer uses demand forecasting to predict which styles and sizes will be popular, and then orders inventory accordingly.
- A manufacturer uses a just-in-time (JIT) production system to receive raw materials only when needed, reducing inventory holding costs.
The intricate interplay of physical resources and operations plays a critical role in Shein's success Their ability to source materials, produce garments quickly, manage inventory efficiently, and deliver products rapidly has enabled them to become a dominant force in the fast fashion industry Shein's fast supplier network, streamlined production, and data-driven logistics fuel their rapid trend catching and budget-friendly fashion, but sustainability and ethical practices remain critical challenges.
In order to reduce cost and allow rapid production cycles and quicker response to trends, Shein concentrates their suppliers in low cost regions from China down to Southeast Asia, particularly Vietnam, Cambodia, and Bangladesh These countries offer lower labor costs and production expenses compared to Western nations.
Clustering suppliers in established garment production centers like the Pearl River Delta in China allows Shein to leverage existing infrastructure, skilled labor, and efficient logistics networks This proximity facilitates rapid production cycles and quicker response to trends.
China: Roughly 70% of Shein's suppliers are located in China, primarily in the Pearl River Delta region This region houses a vast network of textile mills, garment factories, and finishing facilities, offering Shein a one-stop shop for production.
Southeast Asia: Vietnam, Cambodia, and Bangladesh are increasingly important sourcing destinations for Shein, particularly for labor-intensive garment production. These countries offer lower labor costs than China and are geographically close to major shipping ports.
Other regions: Shein also sources materials and garments from other countries like Turkey, India, and Brazil This diversification allows them to access specific materials or production expertise not readily available in their primary regions Shein's presence in Turkey provides access to high-quality fabrics and trims for more premium garments Shein is exploring production in countries like Mexico and India to expand its reach and potentially tap into lower costs.
Shein relies on contract manufacturing, this allows them to:
+ Scale production up or down quickly by adding or removing suppliers as needed, minimizing inventory risk.
+ Reduce capital expenditure: Avoiding ownership of factories frees up capital for other areas like marketing and technology.
+ Access diverse expertise: Contract manufacturers bring specialized knowledge and skills to the table, allowing Shein to produce a wide variety of garments.
To maintain speed and efficiency, Shein emphasizes modular production, automation and standardized quality control.
Shein keeps extremely low inventory levels, sometimes just a few days' worth This minimizes storage costs and reduces the risk of unsold items The company also implements Just-in-Time (JIT) Production so the suppliers only produce garments on recurrent demands, responding to real-time sales data and eliminating overproduction and waste
Data-Driven Forecasting: Shein uses sophisticated algorithms to predict trends and customer preferences with remarkable accuracy, guiding production decisions.
Shein has a rapid product turnover system where it releases thousands of new styles weekly, ensuring fresh options and keeping customers engaged Slow sellers get discounted or disappear quickly, freeing up space for new trends.
Shein has an agile and data-driven approach to their product development and sourcing, opting for quick trend forecasting; rapid prototyping of sample garments within a day or two; working closely with a vast network of suppliers, leveraging their expertise and existing fabric stocks to create new styles at breakneck speed; small batch production, allowing Shein to test market response and adjust designs before committing to large-scale manufacturing; data-driven decisions in accordance with sales data and customer feedback.
To maintain speed and efficiency, Shein emphasizes modular production, automation and standardized quality control (e.g., in cutting, sewing, finishing), other than physical resources like humans Shein has strict quality control protocols in place to ensure product consistency across different suppliers.
Shein utilizes air freight for time-sensitive shipments This ensures faster arrival, often within days or even hours, making it the most expensive option but with limited capacity, so Shein might prioritize certain routes or countries depending on demand.Sea freight is the most economical option for bulk shipments and is used for slower delivery options This allows Shein to keep their prices competitive for customers willing to wait a bit longer It is also susceptible to the risk of port congestion and delays, impacting delivery timelines.
Shein partners with major logistics companies and operates local fulfillment centers in various countries This allows them to offer faster and more efficient delivery within specific regions Local fulfillment centers can help reduce delivery costs for customers in nearby regions by minimizing transportation distances.
Faster Last-mile Delivery: Local fulfillment centers enable faster last-mile delivery within the same region or country.
Real-time Cost: Shein's website displays shipping costs in real-time based on the chosen delivery method, destination, and order size.
Customers can choose from various shipping options, balancing speed and cost according to their needs and preferences Shein provides tracking information for most orders, allowing customers to monitor their package's progress.
Shein utilizes advanced analytics and algorithms to predict future demand for specific styles and sizes based on historical data, social media trends, and competitor analysis. This highly accurate forecasting enables Shein to optimize production schedules, avoid overstocking, and minimize markdowns.
Shein relies on a vast network of contract manufacturers, allowing them to adjust production capacity quickly based on demand forecasts Minimal inventory levels are maintained to reduce storage costs and ensure fast turnaround times Just-in-time (JIT) production practices ensure materials and components arrive just when needed, minimizing waste and lag time.
ADVANTAGES
In a nutshell, Shein benefits greatly from influencer marketing, search engine optimization, good value/price offers and ease of returns to capture the hearts and minds of young fashion shoppers.
However, at the center of Shein’s success is its ability to improve upon a “cookie cutter” supply chain and customize it to offer: wide choice, better value, lower prices and speed in translating trends to products , all the while carrying minimal inventory.
Shein has built and leveraged its supply chain and moved it from a supportive function to a core driver and enabler of their business model This they then applied to an industry – fashion—that disproportionately values supply chain speed and supply chain enabled innovation to achieve this unmatched success Here are a few ways that Shein leveraged its supply chain differently than other fashion companies and turned it into a strategic advantage.
- Strategically located vendors :Shein strategically located itself from Nanjing near Shanghai where it started, to Guangdong in South China in the heart of garment manufacturing district in the Pearl River Delta which has about 25,000 apparel enterprises The Pearl River Delta, despite being a small region, accounts for roughly 40% of all Chinese exports Furthermore, it is located next to best-in-class shipping ports of Yantian and Hong Kong and the airports of Hong Kong and Guangzhou As a result, it takes Shein days, and in some cases just hours, to get the goods from vendors into its distribution facility and then pack and ship directly to its global customers.
- Vendor enabled product development :Shein empowers its vendors to curate, develop and present product collections with minimal direction from the company Now take a co-located apparel ecosystem of 28,000 companies that can produce a wide range of products and empower them and what you get is an incomparable offer of choice to customers of Shein.
- Rapid order fulfillment and service:Shein has invested heavily in distribution infrastructure to process and ship packages from Guangzhou to customers around the world It has also been able to leverage its scale along with other direct-to-customer shipping companies in Guangzhou and China to lower costs and increase speed to customers.
- Solving for the cost differential:Unlike traditional retailers, Shein does not operate any full time stores in any country except for a few pop ups that come and go in major cities for market visibility This helps it save on store rents and other associated operational costs compared to a traditional brick and mortar retailer Being co-located with their vendor base in Guangzhou, Shein has been able to work directly with the manufacturers without the need for any agent,traders or middlemen This reduces their overall product costs and offers direct and immediate access to any innovation coming through their supply chain with fast decision making from its teams.
DISADVANTAGES
● Quality Issues: The apparent inconsistent nature of SHEIN's products is one of the main points of criticism Customers might receive products that are different from their online representations, and some items might be of lower quality.
● Problems with Sizing: A few clients have expressed difficulties with precise sizing SHEIN items' sizing might not always match conventional sizing charts, making it challenging to get the perfect fit.
● Concerns about the environment and ethics: Fast fashion is generally linked to unethical and environmental problems, such as labor disputes, excessive waste, and unsustainable production methods SHEIN has come under fire for these problems.
● Extended Delivery Times: Shipping durations may vary significantly based on the destination, particularly when items are being dispatched globally. Customers who want faster delivery may find this to be a disadvantage.
● Challenges with the Return Process: Some customers have complained about lengthy processing timeSome customers have complained about lengthy processing times and trouble getting refunds during the return processs and trouble getting refunds during the return process.
● Lack of Transparency: Concerns have been raised about SHEIN's lack of transparency with regard to its manufacturing and supply chain procedures. Consumers might be unsure of how their purchases will affect the environment and ethics.
● Use of dangerous substances: Fast fashion has negative effects that extend beyond the air and ocean pollution caused by the discarding of used fabrics. These textiles are manufactured using dangerous chemicals that have a substantial negative impact on human health and the environment.
Because synthetic materials are inexpensive and versatile, fast fashion frequently uses materials like polyester and nylon However, hazardous substances like formaldehyde, phthalates, and nonylphenol ethoxylates (NPEs) are extensively used in the manufacturing of these textiles.
According to a CBC investigation, Shein and other well-known fast fashion companies have been selling harmful chemicals to the general public under the guise of apparel and accessories.
● Ethical concerns: In an effort to satisfy consumer demand and boost their profit margins, fast fashion brands attempt to reduce production costs Their clothes are frequently purchased from factories in developing nations, where laborers frequently receive meager pay Child labor, forced labor, and hazardous working conditions are just a few of the labor abuses in the fast fashion industry that have been widely reported.
The prevalence of low wages, which fail to give workers a living wage and keep them stuck in a cycle of dependency and poverty, is one of the most concerning issues. Many of these laborers put in long hours of hard work in dangerous environments with little thought for their own safety or well-being Furthermore, developing nations are not the only ones seeing this trend Investigators in the US discovered that the hourly wage for garment workers can be as low as $1.58.
Not to be confused with the "help me" notes that workers in their manufacturing factories are said to have left on the labels of their clothing Since then, Shein has referred to these notes as "confusion," but she has not addressed the accusations that they mistreat their employees.
A recent report released in November 2021 revealed startling details about the work culture in Shein's Chinese factories It is discovered that employees put in 75 hours a week, work three shifts a day, and frequently take just one day off per month—clearly in violation of the local labor code China's local labor laws stipulate that an employee may only work eight hours a day, or forty hours a week Because they are paid on an item basis, employees are incentivized to work long hours Approximately 14% of the violations found in their supply chain have to do with working hours, and 28% have to do with inadequate fire and emergency preparedness These findings contribute to concerns regarding the unfavorable working environment.
● Worker health and safety, living wages, and other labor rights are not guaranteed by any of the supply chains used by Shein.
● There is no proof that its supply chain guarantees the payment of a livable wage.
● It doesn't use a lot of green materials.
● There is no proof that it has made any significant efforts to lessen or get rid of dangerous chemicals.
● There is no proof that it has any policies in place to lessen the effects of microplastics.
RECOMMENDATION
In the Shein market, it is overwhelming over rivals in the same industry However, shein still has some shortcomings that need to be improved We have some advice for businesses:
● Dealing more deeply and strongly with employee working hours and salaries, ensuring fairness and transparency for workers .
● Moving towards environmentally friendly production materials such as organic materials, etc.
● Improving product quality to extend the product's life cycle longer (which will reduce the large amount of waste released into the environment every year).
● Strictly manage the quality of finished products from supplier partners.
● Increasingly perfecting the stages from raw products to products delivered to customers to become a business with sustainable development.
With the measures to overcome, we believe that shein will grow and receive more attention from customers.
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