Many of the world's major businesses, corporations and government institutions use the same cloud-based technology to fulfil their daily operations.
On Friday 19 July the downside of being reliant on just a single system sent shockwaves throughout the world as banks, airports, retailers and doctor surgeries were all forced to shut down due to a major Microsoft technology outage.
What was the global Microsoft cyber outage?
According to media reports, a "faulty software update" by cybersecurity firm CrowdStrike, which is used by Microsoft, caused the global IT malfunction.
A cybersecurity expert told CNN the global cyber outage could be the "largest IT outage in history," highlighting its widespread impact across industries.
On 19 July, George Kurtz, CEO and founder of CrowdStrike, clarified on the social media platform X (formerly Twitter) that the incident was not a "security incident or cyberattack" but was due to a "Falcon content update for Windows hosts."
Following the incident, CrowdStrike released an article detailing the impact and the remediation measures being undertaken.
Impact of global IT outage on apparel retail
Like many industries, the apparel sector relies heavily on technology to keep its end to end supply chain in operation.
From inventory tracking and logistics coordination to supplier integration, design, production, sales, marketing, data analytics, and retail, technology is integral to every part of the apparel value chain.
The immediate impact of Microsoft's global outage was evident at point-of-sale systems, which disrupted sales and smooth in-store transactions for global retailers.
CEO of QR Code Generator Marc Porcar highlighted: “The recent Microsoft IT outage serves as a clear indication of the risks associated with relying heavily on digital technology."
However, a representative from the US' National Retail Federation told Just Style it only heard back from one retailer who reported experiencing the most impact between 6:30pm and 11pm on Friday, and its operations are now mostly running as usual.
GlobalData's retail analyst Neil Saunders told Just Style the extent of the impact for the apparel industry depended on how long systems were offline and how quickly businesses could recover.
He explained: "In terms of supply chains, we know that functions like processing of containers and trailers have been impacted at some ports and that air transport is disrupted. This will mean there is a backlog of stock that needs to be cleared through the system, and that some apparel deliveries may reach retailers late.
Fortunately, he added: "Apparel products are not perishable so the impact will be less severe than it is for sectors like foodstuffs."
Impact of global IT outage on apparel supply chain
Several UK ports reported disruption to their "landside operations" on Friday. Supply chain publication The Loadstar shared a customer advisory from a UK freight forwarder the Woodland Group that several ports were affected and operations at Felixstowe were halted because the Destin8 system, crucial for cargo movement, was down.
Meanwhile supply chain data firm Xeneta has warned the disruption and delays to air cargo services could take days or even weeks to get back to normal.
Xeneta chief airfreight officer Niall van de Wouw explained: “Air supply chains are highly complex, so a global disruption of this scale could have a severe impact. Planes and cargo are not where they are supposed to be and it will take days or even weeks to fully resolve.”
Xeneta noted that its latest data indicates air cargo supply chains were already under pressure prior to the IT failure.
Van de Wouw said: “Shippers already had concerns about air freight capacity due to huge increases in demand in 2024, driven largely by the extraordinary growth in e-commerce goods being exported from China to Europe and the US.
“Available capacity in the market is already limited so airlines are going to struggle to move cargo tomorrow that should have been moved today.
“These incidents can take three times as long to resolve as the length of time they last, but that is very much dependent on the scale of the IT failure and the market conditions at the time it occurs.”
Van de Wouw sees it is another reminder of the vulnerability of the world’s supply chains.
He said: “We have seen in 2024 how vulnerable our global maritime supply chains are following the disruption caused by conflict in the Red Sea.
“Now we see vulnerabilities exposed in our air supply chains due to IT failure. We benefit greatly from technology and have grown dependent on it – but there is a price to pay when things go wrong.”
How can the apparel sector boost its resilience to technology failures in future?
Saunders agreed noting the world is so reliant on technology that it is very difficult to completely mitigate the impact of a worldwide outage. However, he would advise companies to have backup systems and to build in some slack within their supply chain schedules.
He also argued that having alternative manual systems could help but points out none of these suggestions completely offset the wider issues.
Porcar added that apart from current issues like disruptions in operations and a surge in interest towards rival companies, there could be lasting effects on customer connections and business strategies within the tech sector.
He explained: "It's crucial for both Microsoft and its competitors to tread carefully in order to tackle these challenges and make the most of new possibilities.”
On a wider level the incident serves as a warning for all actors within the apparel supply chain and retail sector that they should assess the risks of relying on one single IT system if something similar were to happen again in future.
