Risk Management: Rethinking Fashion Supply Chain Management for Multinational Corporations in Light of the COVID-19 Outbreak

Abstract

Through an international business risk management lens, the widespread and catalytic implications of the 2020 COVID-19 pandemic on the supply chains (SCs) of fashion multinational corporations (MNC) are analyzed to contribute to existing research on supply chain management (SCM). While a movement towards agile, networked supply chain models had been in consideration for many firms prior to the outbreak, the pandemic highlights issues inherent in supply chains that employ concentrated production. We examined the current state of fashion supply chains, risks that have arisen historically and recently, and existing risk mitigation methods. We found that while lean supply chain management is primarily favored for its cost and waste reduction advantages, the structure is limited by the lack of supply chain transparency that results as well as the increasing demand volatility observed even before the COVID-19 outbreak. Although this problem might exist in the agile supply chain, agile supply chains combat this by focusing on enhancing communication and buyer-supplier relationships to improve information exchange. However, this structure also entails an associated increase in inventory and inventory costs. The COVID-19 pandemic has caused supply and demand disruptions which have resonating effects on supply chain activities and management, indicating a need to build flexibility to mitigate epidemic and demand risks. To address this, several strategies that firms can adopt to control for such risks are outlined and key areas for further research are identified which consider parties both upstream and downstream of the fashion supply chain.