As brands and retailers set higher production standards and create ever more complex supply chains, they need to consider all the risks when switching suppliers.

Shifting sourcing is becoming increasingly complex for apparel firms as they set higher production standards and create ever more complex supply chains.

To switch suppliers efficiently and ensure that they can meet these requirements, companies must be informed of the political and cultural issues in the supplier's region, and clearly communicate their goals to a new manufacturer.

Emma Wilson, director of UK-based Smartway Consulting, adds companies might shift sourcing to another country if it specialises in particular product categories; for instance, she notes some suppliers in the former Soviet Union focus on making quality, technical products, such as sportswear.

Likewise, Munir Mashooqullah, founder and president of US-based Synergies Worldwide, notes there may be a product shift in a country and points to Vietnam as an example. "Instead of making just basic stuff, they started developing expertise in making nice outerwear, nice performance wear."

Of course, searching for lower cost suppliers is a key reason a company might look at shifting sourcing, says Mashooqullah. In addition to shifting labour and material costs, for instance, trade agreements can make outsourcing countries more attractive in terms of cost - for example, companies are now looking more to Pakistan because of its GSP+ and other trade agreements with the European Union (EU), he adds.

And of course, when switching to a new supplier, companies risk production problems and delays - without a track record, they do not know if the supplier will deliver quality merchandise on time, she says.

"Make everything as absolutely clear as you possibly can, and go over details to the finest point that you might think is wasting your time, but you can be surprised when things come up that you've assumed is common practice, such as fabric performance levels," Wilson adds.

Clear communication
Clear communication between companies and suppliers is crucial to an effective supply chain. "It may seem very straightforward and obvious, but it is one of the biggest challenges," Wilson believes.

She notes language barriers, particularly with suppliers who speak poor English (the predominant language of business globally), being the key challenge - although this is improving as international trade and business increase. "Sometimes, casualness of communication can make us misunderstand; if we use colloquial language, which doesn't translate well."

Wilson advises companies, if possible, to initially prepare trial orders for new suppliers rather than assigning them an entire season's line. But this needs to be balanced with the supplier's needs so that companies are presenting enough business to attract the supplier.

Regulatory and cultural landscape
Ultimately, companies need to learn and understand the regulatory and cultural landscape of their outsourcing countries to help find suppliers best suiting their needs.

Willy Kruh, global chair of consumer markets at accounting firm KPMG, tells just-style differences exist within countries as well. "Some look at certain countries as homogenous, which is a mistake as there can be significant differences from a cultural, regulatory and political perspective between provinces in countries like India, and China, for example."

And of course, a key risk is "the new supplier's compliance with social and environmental sustainability standards. Companies need to ensure that the new supplier's policies and practices are compliant with local regulations and the policies and practices of the company," says Kruh.

But as companies' policies and requirements become more complex, they will find it increasingly challenging to ensure suppliers meet their standards, according to Mike Flanagan, CEO of UK-based Clothesource.

"Buyers' requirements have tended to grow over the last two or three years in all kinds of new ways," he notes, including increased environmental and social standards.

The bigger picture
He adds companies' supply chains will probably become increasingly complex too: "In the next five years, the number of individual products a buyer has to be responsible for is going to keep on growing." And in addition to greater consumer scrutiny of companies' supply chains, "all that's going to get tougher and tougher to manage."

He stresses that companies need clear goals linked to their standards and must re-evaluate assumptions they make. For instance, he notes, companies often make plans assuming their supply regions and countries will remain politically stable.

"We've taken political stability in manufacturing countries for granted during the years everyone's been moving to China because, whatever else China's got going on from price and's got spectacular political stability," he adds.

Even when a supplier is performing well, brands should remember the bigger picture. "It really is quite important to remember that they are not in control of the world around them, and therefore you have no alternative but to have in your spectrum...serious alternatives wherever possible."

Flanagan advises companies to stay informed about world events as well as about the apparel and textile industry to plan for possible changes.

Kruh advises firms to "do your research" when switching suppliers. "Whether it's by engaging with a firm like KPMG to assist in the transition process; speaking to other, similar organisations who have already made the switch; or mapping out the key questions and answers to better understand motives versus risks - it's always a good idea to make sure you've done the proper background prior to making such a big move."

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