There's no playbook for navigating a pandemic – "How we act now will show the world what we stand for" - Just Style
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There’s no playbook for navigating a pandemic – “How we act now will show the world what we stand for”

By admin-demo 09 Apr 2020 (Last Updated July 21st, 2021 14:26)

While there are there are no playbooks to guide the apparel industry through the coronavirus crisis and beyond, Edwin Keh, CEO of the Hong Kong Research Institute of Textiles and Apparel (HKRITA), believes two things are clear: the entire supply chain must work as an ecosystem to survive intact, and it should use the crisis as an opportunity to reset for the future.

There’s no playbook for navigating a pandemic – “How we act now will show the world what we stand for”

While there are there are no playbooks to guide the apparel industry through the coronavirus crisis and beyond, Edwin Keh, CEO of the Hong Kong Research Institute of Textiles and Apparel (HKRITA), believes two things are clear: the entire supply chain must work as an ecosystem to survive intact, and it should use the crisis as an opportunity to reset for the future.

“This is something new; it’s not something we have encountered before, so there are no responses that we can adopt,” he explains. 

“I would caution against a knee-jerk response as it’s bigger and more complicated than anything we have seen before. The companies that have responded in a knee-jerk manner have been criticised for cancelling orders, for leaving their manufacturers high and dry, and for [their] selfish and inward-looking motivations – and that’s exactly what we should not be doing.”

Instead, the first step should be to quickly gather data to try to understand what is going on. “We must then begin to think like an ecosystem to make the tough calls as quickly as possible.”

Underlying this is ‘The Stockdale Paradox’: “We have to confront the most brutal of the facts that are before us right now, but at the same time hold on to the belief and commitment that we will get through this.”

“It is the details that we are not aware of, the vulnerabilities deep in our tier-2 and tier-3 suppliers, that will hamper our ability to fix what is going on”

Looking at the supply chain, “it will be the details that we are not aware of, the single points of failure, the vulnerabilities deep in our tier-2 and tier-3 suppliers, that will hamper our ability to fix what is going on.”

This means unknown inventories, where products are, what state they’re in (raw or greige), the zippers, buttons and threads, “and how much do we have of what.”

This is where data is key, “to map out, with as much of a degree of granularity as we can, our total supply chain so that we can understand its architecture but at the same time understand what is going on and where the moving parts are. 

“We are used to operating in a globalised environment, and that comes with complexities: every country now in the middle of a pandemic has its own restrictions about what can come in and what can go out. Those are the things that we need to learn and figure out so that we can gather information about what is going on.”

How to respond?

“The next question we should ask is how do we survive this?” says Keh, a former SVP COO of Walmart Global Procurement, and lecturer on supply chain operations at the Wharton School at the University of Pennsylvania.

“The disruption to supply was very quick and very sudden. The disruption to demand was equally quick and sudden. The recovery from all this is also going to be quick and sudden,” he said during a webinar on ‘Combating covid-19 series: managing supply chain in challenging times‘ organised by The Mills Fabrica innovation hub in Hong Kong.

“The only way we can very quickly get back into business at the end of this is for the entire supply chain to work together so that we can all survive together”

“Though there is massive disruption, all of the systems and infrastructure that we have built are intact. The only way we can very quickly get back into business at the end of this is for the entire supply chain to work together so that we can all survive together. 

“And the reason to think like this is that supply chains are complicated: they’re very difficult to build and very easy to break. That is also true of the trust and the partnership that is built up in these supply chains. 

“The companies that will be first-movers at the end of this are going to be those with the best and fastest supply chains. So just for the sake of survival, if nothing else, it is important that we make sure that all of our partners survive with us.

“The challenge is to think like an ecosystem – in an ecosystem everybody has to work together and everybody has to look out for each other. So map out what our supply chain looks like, map out the dependencies of our supply chain – and then begin to figure out how we can support each other so that all of us can get through this together.”

While data can help provide an external view of what is going on in the supply chain, it also gives an internal view about what has been going on within companies. 

“Just as the deaths that have occurred in this pandemic have happened to people who have compromised immune systems or pre-existing conditions that already weakened them, so we need to also have an honest look at the weaknesses within our organisations.

“Our response also needs to be disproportionate. The first reaction was to cancel all the orders, pull all the cash back, extend payment terms – this behaviour was self-preservation for one particular node in the supply chain. But it’s counter-productive, because if we jettison parts of our supply chain we reduce our own chances of survival. The entire supply chain has to survive, so the pain has to be shared and borne by everybody.

“Different stakeholders in our supply chain have different amounts of resources that they can fall back on – and we need to figure out how we can pool our resources and redistribute that up and down our supply chain so all of us can get through this. 

“So the multi-billion dollar companies with the million dollar CEO at the top of the supply chain need to contribute a lot more to the factory worker who’s making $300 a month. So how do we all pool our resources so that we can get through this and preserve the wellbeing of our suppliers, of those who are the most vulnerable in our supply chains?”

Speed and agility are also going to be absolutely critical. 

“I suspect that from here on out there will be some significant lifestyle changes for many of us: when we leave for work we’ll take our keys, we’ll put on our shoes…and then we’ll put on our face mask”

“The faster we act, the less it’s going to cost, and the more options we have. And it’s not only speed in acting and reacting but also speed and agility in our own thought process. Every day we are learning more about this pandemic. All of this new information should make us change our behaviour and make us change our decisions. As we learn new things we should very quickly incorporate this into everything that we do.”

Unprecedented opportunities

Crucially, Keh also believes the pandemic is an unprecedented opportunity “to not only deal with some of the issues we have in our supply chains – but it’s also an opportunity to rethink how we create value, to think about the marketplace changes that will take place as we come out of this, the opportunity to get into new types of businesses, offer new types of services and make new types of products.”

Current examples are personal protective equipment (PPE) such as face masks and surgical gowns. 

“The need will probably not go away, so is this a business opportunity for us to think about? I suspect that from here on out there will be some significant lifestyle changes for many of us: when we leave for work we’ll take our keys, we’ll put on our shoes…and then we’ll put on our face mask.”

Other changes are likely to mean consumers will be more conscientious about health and wellbeing in the future.

“They will want to be protected, they want to feel safe and comfortable, and they will want what they use and what they wear to inform them, protect them, and be a barrier to what harms them. Features they will be looking for will skew towards fabrics and garments with functional characteristics: self-cleaning, self-sterilising, anti-microbial, anti-viral. 

“We will move away from aesthetic/visual concerns to more functional concerns – and there are lots of opportunities for us to figure out how we can incorporate all this into our new products.”

E-commerce is also likely to play a much bigger role in how consumers buy things. “How do we do last mile fulfilment? What does our logistics supply chain look like as a result of this shift in business?”

“If nothing else, this pandemic accelerated a lot of the trends that were already going on in our supply chains, so will certainly accelerate the move out of China”

It’s also an opportunity to think about new innovations. Dyson, for example, has pivoted very quickly from vacuum cleaners to ventilators. “Are there things like that that we can do, that strengthen our value system and what our brand stands for, and improve the economy and society that consumers live in?”

Reshaping supply chains

The immediate challenge for supply chains is that “everybody has the wrong stuff, the wrong raw material…the summer material, the back-to-school material, whereas the likely scenario is that they need fall and winter products.”

Options are to “creatively repurpose all the raw materials that we have so that they are more appropriate for fall/winter. Another approach is to stockpile those for 2021. Recognise that we have to write off a season or two; there is no way to claw back the lost time and the lost sales.”

Looking to the longer term, however, there are opportunities to rethink supply chains altogether.

“If nothing else, this pandemic accelerated a lot of the trends that were already going on in our supply chains, so will certainly accelerate the move out of China.” Not just the “cosmetic” shift of sewing operations to countries like Vietnam, but the complete end-to-end supply of materials, buttons and zippers as well.

Onshoring and nearshoring are considerations, too, potentially offering a shorter, faster, more visible and more manageable route to market. “Globalised supply chains are difficult and complicated: very few companies do it well, and very few companies do it smoothly at scale.” 

Keh also wonders if there are other considerations that should shape sourcing in the future. “Safety, robustness, the certainty we will get our goods on time, the speed we can go from concept to store – these will all be different as we emerge from this.

“We should be thinking about building factories that China doesn’t want. It’s not a matter of upping sticks in one country and putting the same into another country. We have a great opportunity to think about Industry 4.0 types of solutions. Are there highly automated solutions or new technologies or on-demand manufacturing solutions that we can incorporate? Are there predictive solutions that can reduce our inventory risk? 

“The tendency is to close the doors, turn off the lights and turn a blind eye to what’s happening. And I’m really cautioning companies not to do that”

“Here is an opportunity to take care of some legacy challenges that we have and start with a clean sheet of paper and to say ‘what makes sense?’ And how does this improve, not only our sourcing capability but the other things that we care about: sustainability, working conditions, being more socially responsible.”

Do the right thing

Keh is also very clear in his belief that actions taken now are going to be remembered long after the pandemic has passed.

“The tendency is to close the doors, turn off the lights and turn a blind eye to what’s happening. And I’m really cautioning companies not to do that, because those actions will be remembered much longer and they will cost a lot more than the little bit that we save by cancelling an order here or a programme there. 

“This crisis reveals our character, it demonstrates those core principles we say we believe in. People are not going to be looking at what we say, but what we do. You don’t want to come out of this with the reputation that you are not a trustworthy partner, as that will become a competitive disadvantage to you going forward.

“So don’t be remembered for cancelling orders or putting factories out of business or abandoning sustainability or abandoning social responsibility. Be remembered as companies and supply chains that did the right thing and acted with courage and conviction and demonstrated our beliefs and our values by our action in this critical time.”