The fashion industry is one of the most labor-intensive industries in the world – for example: the labor costs of clothing production make up about 60 % of total clothing production costs. Because of this, fashion companies have long since been outsourcing their production activities to countries with lower labor costs in order to achieve cost savings. As a result, today’s fashion supply chains can be described as complex and globally dispersed with often long lead times.Although the production shift to more low-cost countries has enabled fashion companies to reduce their production costs, the long lead times have brought about other problems. These problems are related to demand forecasting. Fashion industry is an industry that is characterized by constantly changing trends, erratic consumer behavior and quick loss of product value. With the development of digital media, all of this has only been accentuated. Yet with the long times, fashion companies struggle to get their forecasts right. Consequently, approximately one third of fashion companies’ products do not correspond with the demand and end up being sold with discounted prices or donated to charity. Also, it is often impossible for the fashion companies to reorder their more popular products because the delivery would take too long and because of the capital invested in the yet unsold, unpopular products.In this study, the fashion industry’s traditional production networks are looked into as well as the possibilities of shorter supply chains and a more local production approach. This study is carried out as a literature review and consists of two parts: first, of a general overview of fashion industry’s production networks and reasons behind the attractiveness of offshore production and second, of case studies of fashion companies with shorter supply chains. This study is conducted from the perspective of the more high-cost areas of the fashion industry (here: parts of EU and also, US).
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