Prime Source Forum 2012: Quote/Unquote - day 1
By Leonie Barrie | 29 March 2012
The first day of this year's Prime Source Forum in Hong Kong threw up the usual mix of ideas and insight. Rising costs, finding capable capacity, new sourcing locations such as Myanmar, collaboration across the supply chain - and of course China's role in all of this - were all up for discussion. Here are some of the most quotable highlights from the first day.
"As you continue to move up in price points and fashion, the ability to find capable capacity is an ever-increasing challenge. Some of the fastest growing segments of the footwear business are also the most difficult to supply" - Ronald Fromm, chairman and CEO, Brown Shoe Co Inc.
"The normal has always been the migration of footwear from west to east, and I think it's going to continue. In addition to the $2bn we spend on auditing and the $2bn on customs, we [as an industry] are spending billions of dollars on inventory that is always in the wrong place at the wrong time and always being marked down. Despite supply chain enhancements, it is still tremendously wasteful. If you change the way information flows around the supply chain, I suspect you would have inherent capacity in the system that was devoted to shoes that were going to sell rather than shoes that were just marked down" - Ronald Fromm, chairman and CEO, Brown Shoe Co Inc.
"For the next three years the three most important countries for sourcing footwear for The Jones Group are one, China, two, China and three, China. There's no need to go elsewhere. China still produces 84% of the world's footwear by volume and 75% by value. But China's footwear industry now has opportunities to improve productivity and profitability, and it must realise that" - David Hampson, country manager, The Jones Group, Nine West Footwear.
"Labour prices in footwear account for just 20% [of the total] - but we seem to have lost sight of the remaining 80%. We don't seem to see the bigger picture" - David Hampson, country manager, The Jones Group, Nine West Footwear.
"The travelling circus that has crossed the globe looking for lower prices stops with China because of the volume and maturity of the industry, and because there is no next China. We need to make paradigm shifts to improve service levels. We have to figure out how to work smart" - Edwin Keh, lecturer, The Wharton Business School, University of Pennsylvania.
"Moving garment and footwear manufacturing for tariff and duty is a reality, the mathematics are there are there and policy driven. Moving it for geographic location, to respond to the markets faster, that makes sense too. Packing up and moving it to Myanmar because today it's $1 but tomorrow will be $10, doesn't seem to make sense" - Stephen Forte, managing director of global sales, Coats.
"Instead of searching for the next China, the important thing is collaboration. If there was better collaboration between ourselves and our customers, it may be easier to reduce the initial markup than trying to look for the last penny or the lowest wage country. Our price has now dropped to a level where it cannot go down any more" - Henry Tan, CEO and president of Luen Thai Holdings Ltd.
"Think about the growth opportunity and the growth challenges associated with the emerging markets, and the lack of opportunity and the cost pressures associated with the markets that have gone through pretty difficult and challenging economic times, like the US and Europe. When you're competing on a global scale you have to constantly make sure your teams are focused on where the greatest opportunities are" - Ronald Fromm, chairman and CEO, Brown Shoe Co Inc.
"The China market is maturing. If you're a western retailer and you're not in China today, the window is closing. The competition in China is increasingly more difficult; certainly there will continue to be opportunities in the luxury segment, but at the mid-market level it will continue to be difficult" - Ed Gribbin, president, Alvanon Inc.
"90% of all standards that we have out there in the factories that people work towards are the same, especially when it comes to health and safety we have a lot of overlaps and very few disputes. The biggest problem lies in the remaining 10% - which is the piece that includes remuneration, working hours, living wage discussions" - Veit Geise, VP of Asia Sourcing at VF Asia Ltd.
"There are zero competitive advantages for being involved in sustainability - there are only disadvantages from not being involved" - Kevin Myette, director of product and supply chain sustainability, Recreational Equipment Inc.
"It is truly more important how your do business than how much business you do" - Ronald Fromm, chairman and CEO, Brown Shoe Co Inc.
View next/previous articles
30 Mar 2012 -
Currently reading -
Prime Source Forum 2012: Quote/Unquote - day 1