IAF Convention 2012: Where next for sourcing?
The likelihood of a resurgence in near-sourcing is "certainly possible" as the apparel industry starts to think more holistically about its supply chain, delegates at this year's IAF World Apparel Convention were told today (26 September).
"We're seeing that near-sourcing has a lot of attractions," says Bob McKee, fashion industry strategy director at business management software supplier Infor.
"Is the manufacturing of textiles and apparel going to return to the US? Probably not in a large way. But will it return to the Americas? Certainly.
"Today, an hour of sewing labour in Haiti costs less than an hour of sewing labour in China. So certainly we'll see more near-sourcing."
While McKee thinks it unlikely there will be a resurgence in homeland production, Kurt Cavano, founder, chairman and chief strategy officer at supply chain trade platform provider TradeCard points to the commercial drivers behind such a move.
"The reason you would go to [ Central America or the US] is because you want to get closer to where you're selling those goods, be able to do more rapid replenishment and have closer demand and supply.
"The other driver that people don't think about is oil prices and, as they continue to go up, sourcing nearer so you don't have as much transportation is going to play into it a lot. As you look at a garment, where are the real costs?"
Of course some firms will continue to chase the low cost needle to try to cut the cost of goods.
For these companies, Bangladesh is losing its sheen following a succession of labour strikes, while Vietnam and Cambodia are "not really large enough" to be able to offer a long-term viable alternative.
"If we're looking for an alternative to China, the only area where we have a sufficient amount of space, the transition from an agricultural economy to an industrial economy, as was done in China, the large potential workforce that's under-employed at the moment - the only place on the planet on this time is central Africa," McKee says.
"I think that at some point in the future, whether its ten, 15 or 20 years from now, we'll be heavily invested in Africa as a primary source of manufacturing textiles and apparel.
"But I think we have to watch some lead indicators. If you take a look at the only capital-intensive part of the apparel industry it's textiles - and if you see where textiles is starting to position itself logistically, you'll see where we are going to end up in the next 20-30 years."
McKee also makes the point that: "As we as an industry continue to move forward, we need to be looking at better and smarter ways to replenish the source of demand, which is the consumer.
"We've talked about time to market, and I think we need to look at time to consumer, and really recognise that the consumer's driving this bus. And that goes to things like more frequent replenishment, smaller batch sizes, and flexible value chain where organisations work together."
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