79% expect costs as major supply chain disruption in 2026: QIMA data

Nearly four in five sourcing businesses expect costs to remain their biggest supply chain headache this year, according to data from quality control firm QIMA. The company's quarterly barometer found that 79% of respondents identified costs for materials, labour and shipping as the top supply chain challenge in 2026, underscoring how inflation and trade tensions continue to squeeze fashion supply chains despite years of adjustment.

What is driving cost concerns in fashion supply chains?

The persistent focus on costs reflects multiple pressures across the fashion supply chain. Raw material prices have remained volatile amid ongoing geopolitical uncertainties, whilst labour costs in key manufacturing hubs continue to rise as economies develop and wage expectations increase. Shipping costs, though lower than pandemic peaks, remain elevated compared to pre-2020 levels and subject to sudden spikes from port congestion, canal disruptions or carrier capacity adjustments.

These cost pressures come as fashion businesses face margin compression from multiple directions. Consumers remain price-sensitive following years of inflation, limiting brands' ability to pass through higher input costs. Meanwhile, retailers face rising operational costs including energy, rent and technology investments, leaving less room to absorb supplier price increases.

How are fashion brands responding to cost pressures?

Fashion brands are deploying several strategies to manage cost volatility whilst maintaining supply chain reliability. Supplier diversification has become standard practice, with brands spreading orders across multiple countries and factories to reduce dependence on any single source and create competitive tension on pricing. This approach also provides flexibility to shift production towards lower-cost regions as relative economics change.

Longer-term supplier relationships and contracts represent another key tactic. Rather than constantly shopping for the lowest price on each order, brands are negotiating multi-season agreements that provide volume certainty to suppliers in exchange for more stable pricing. This approach helps both parties plan more effectively and can reduce the transaction costs of constant re-negotiation.

Brands are also investing in better demand forecasting and inventory management to reduce waste and emergency orders. More accurate predictions of what customers will buy means fewer markdowns on unsold stock and less need for expensive air freight to rush in best-sellers. Some retailers are experimenting with smaller initial buys followed by rapid replenishment of proven styles, trading slightly higher per-unit costs for dramatically lower clearance losses.

Which sourcing regions offer the best value in 2026?

The calculus of sourcing location has become increasingly complex as brands weigh not just labour costs but total landed costs including shipping, duties and risk factors. Traditional low-cost manufacturing centres in Asia continue to serve high-volume basic production, but their advantage has narrowed as wages rise and brands factor in longer lead times and higher inventory carrying costs.

Nearshoring to regions closer to end markets has gained traction for certain product categories. For European brands, Turkey, Morocco and Eastern Europe offer faster turnaround times that can offset somewhat higher labour costs through reduced inventory risk and shipping expenses. American retailers have similarly increased production in Mexico, Central America and the Caribbean to serve the US market more responsively.

However, sourcing decisions extend beyond pure cost calculations. Capability matters enormously, with certain regions offering specialised skills in particular product types or techniques that justify premium pricing. Compliance and quality consistency also factor heavily, as the costs of defective goods, failed audits or reputational damage can far exceed any initial procurement savings.

What role does technology play in managing supply chain costs?

Digital tools have become essential for brands seeking to control supply chain costs through better visibility and decision-making. Cloud-based platforms now allow procurement teams to compare quotes from multiple suppliers in real time, track order progress, and identify cost variances before they become problems. This transparency helps brands negotiate more effectively and catch billing errors or specification changes that add unexpected costs.

Data analytics enable more sophisticated cost modelling that accounts for the total cost of ownership rather than just the purchase price. Brands can now quantify the financial impact of lead time, minimum order quantities, payment terms and quality rejection rates to make more informed sourcing decisions. Predictive analytics also help anticipate cost increases based on commodity prices, currency movements and capacity constraints.

Artificial intelligence applications in demand forecasting and assortment planning help reduce one of fashion's biggest cost drains: unsold inventory. More accurate predictions mean brands can order closer to actual demand, reducing both the carrying costs of excess stock and the margin loss from clearance sales. Some brands report forecast accuracy improvements of 10 to 20 percentage points from AI-enhanced planning systems.

How can fashion businesses balance cost control with sustainability?

The tension between cost management and sustainability commitments represents one of fashion's most difficult challenges in 2026. More sustainable materials, cleaner production processes and fair labour practices generally cost more than conventional alternatives, at least in the short term. Brands must decide how much cost premium they can bear or pass through to customers who may say they value sustainability but often choose cheaper options at checkout.

Some companies are finding ways to align sustainability with cost reduction. Efficient use of materials reduces both waste and raw material costs. Energy efficiency investments lower carbon emissions whilst cutting utility bills. Better quality standards mean fewer defects and returns, reducing both environmental impact and financial loss. Water recycling systems in textile mills pay for themselves through reduced water purchase and effluent treatment costs.

Circular business models also offer potential cost benefits alongside environmental advantages. Resale and rental programmes generate additional revenue from existing inventory. Take-back schemes provide cheaper feedstock for recycled materials than virgin inputs. However, these models require upfront investment in new capabilities and infrastructure, making them more accessible to larger brands with capital to deploy.

What should fashion executives prioritise in 2026?

Given the persistence of cost pressures highlighted in QIMA's findings, fashion executives should focus on several priorities. First, invest in supply chain visibility tools that provide real-time data on costs, capacity and risks across the supplier network. Decisions made with accurate, current information consistently outperform those based on stale data or assumptions.

Second, build deeper relationships with strategic suppliers rather than treating all production partners as interchangeable commodities. Suppliers who understand your business and trust they will receive consistent volume are more likely to offer competitive pricing, prioritise your orders during capacity crunches and collaborate on cost-saving innovations.

Third, focus relentlessly on demand accuracy. The most expensive costs in fashion supply chains are often self-inflicted through poor forecasting: markdowns on unwanted goods, expedited freight for late additions, and lost sales from stockouts. Even modest improvements in predicting what customers will actually buy deliver significant financial benefits.

• Review total landed costs including duties, shipping and inventory carrying costs, not just FOB prices
• Develop scenario plans for potential disruptions including trade policy changes and logistics bottlenecks
• Negotiate longer-term agreements with key suppliers to secure more stable pricing
• Invest in digital tools that provide real-time supply chain visibility and cost tracking
• Balance cost reduction with quality, compliance and sustainability requirements