Where does the current climate leave sourcing?
With thousands of factories already closed in China alone, the global recession is taking its toll on apparel and footwear supply chains. A panel discussion at The Prime Source Forum in Hong Kong last week discussed how sourcing has now entered a transitional period. Joe Ayling reports from the event.
Retailers and fashion brands at Prime Source Forum last week pondered whether the disruption of sourcing paths represents more of a 'surge' or a 'shift' in operations.
Unprecedented economic events demand tighter inventories and reduced orders, while the emergence of the 'BRIC' economies (Brazil, Russia, India and China), together with social compliance and sustainability, means the apparel supply chain is undertaking some much-needed evolutionary changes.
Indeed, Industry Forum Consultants and Services' MD Ken Watson says the old model of multiple sourcing is fraught with inefficiencies anyway.
"It's moved not from a surge or a shift, but to a stampede," he says. "Our traditional model is very inefficient, and the market we're in at the moment is a bit like driving a Formula One racing car into the fog - kind of dangerous.
"We are now going into a market where nobody knows what's going to happen, but we have to forecast what we're doing. In an uncertain market we have to be more flexible and responsive.
"It's about having a different supply chain that is responsive, and one which can deliver within the season.
"It's not a question of taking a lead time down to six months, or six months down to six weeks, it's consistently delivering something within four weeks and being able to react within the season."
Guess spreads its bets
Fashion brand Guess retails its goods globally, and so localises its supply to neighbouring regions rather than betting on one particular country across the board.
The company, which now has around 1,100 stores globally, has supply and design centres in Florence, LA and Hong Kong to serve is European, US and Asian markets respectively.
"Shift versus surge? Neither," says Jeff Streader, SVP, global sourcing for Guess. "It's maintain, if you believe in your sourcing strategy."
Guess is, however, pruning its vendor base, which is mainly spread between China, India, Mexico and Turkey.
Streader says: "We're still in the process of consolidating our vendor base and there's three principles behind that.
"Number one is partnership, and we continue to combine with our important knit, sweater, denim and woven partners to share with them what exactly our requirments are.
"Number two is joint product development - even though we have 300 [employees] in design in Los Angeles we still want feedback from the industry - with textile mills, trim suppliers, direct suppliers and agents.
"The last piece, and most important, is about transparency. We want to know who your suppliers are, who do you buy fabric from, how sustainable is their business, are you profitable with Guess - we want you to be profitable with Guess, and with no surprises and no secrets."
Survival of the trustworthy
While the global economic downturn has resulted in reduced orders forcing factory closures, other manufacturers have failed to meet other challenges, such as social compliance.
Walter Archie, VP, global sourcing for US sportswear retailer Dick's Sporting Goods, says that although manufacturing prices were lower in years gone by, the corresponding late deliveries, lacking technology and problems meeting CSR meant many fell by the wayside.
He says: "It's not a surge its just a shift away from those who couldn't make compliance. Planet low-cost is not the answer anymore."
Dick's sends a 15-page evaluation form to its suppliers about business practices and finances before going to the next step - sending CSR personel to evaluate factories.
"A true partner understands what we need from the business and will work with us to deliver price, quality and ship on time. I expect my partners to manage their own quality standards and to deliver on time and deliver the product we ordered," Archie says.
"That's one of the criteria for doing business with us. If you don't do that then you're not a business partner of ours.
"Certification means that you and I have signed an agreement saying that we trust you and you trust us, we're going to allow you to run your business and we're going to run our business.
"Dick's Sporting Goods is looking for people who can drive out inefficiencies, help us drive out our inefficiencies and become streamlined."
Better and fewer partnerships
Indeed, the theme of partnerships ran though the entire Prime Source Forum 2009, and Thomas Ruthekolck, MD, Corporate Service Group, argues that a strong relationship between buyer and supplier is the driving force for survival.
He says: "Imagine the situation where two joggers are in the middle of a forest and they turn the corner of the path to see a grizzly bear. One the joggers kneels down and ties his laces and the other jogger says 'what are you doing, that won't help you.' He replies: 'If I'm faster than you then it's enough.'
"Whatever the situation we are in, competition will be the driving force. In the past it was sufficient to be well on your way with a certain pace - loose laces or bare foot was fine - but this doesn't fit anymore and the question is what can we do."
"There is still room for improvement and these times are the times to change the rules," he adds.
By Joe Ayling, news editor.
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