Blog: Leonie BarrieWising up to supply chain changes

Leonie Barrie | 18 June 2017

The old guard of the United States apparel and footwear industries better wise up to changes occurring all along the supply chain if they want to see their companies survive, industry executives have been told.

This top-down state of affairs has been unsettled both by new technologies and new business models and trade relationships, with apparel and footwear having lagged behind other consumer sectors in a significant way.

Indeed, the number of "distressed retailers" in the US – those whose troubled finances mean they are in danger of filing for bankruptcy – is set to keep growing over the next 12 to 18 months, according to a new report.

Nike is responding to softening North America sales and a challenging climate for retailers and brands by axing around 1,400 jobs or2% of its global workforce as part of a restructuring that will see the US sportswear giant move closer to the consumer.

Also among the changes are a 25% reduction in its number of styles as Nike looks to deliver new product faster than ever by cutting production creation cycle times in half and streamlining its organisation.

Moves by both Nike and Adidas to turbocharge their footwear supply chains through robotics and automated factories have also been identified by analysts as key to shaking up the athletic wear market and positioning the companies for more full-price selling and reduced input costs.

Another potential catalyst for change is the Regional Comprehensive Economic Partnership (RCEP), which could be one of the most significant mega free trade agreements in the world – with enormous implications for the textile and apparel trade. Here we take a closer look.

Two pieces of pending legislation in Cambodia that relate to the minimum wage and arbitration of worker-employer disputes are also causing concern for US apparel and footwear buyers.

And the International Labour Organization is urging the Bangladesh Government to bring the country's Labour Act into line with ILO's conventions.

India, however, has just ratified the ILO’s conventions on child labour in a move described as "historic".

Apparel brands and retailers are also being urged to address informality, work to end violence, and join global efforts to recognise childcare needs in order to support women garment workers.

And the Australian Government is holding an inquiry later this week to look at whether the country should adopt national legislation to combat modern slavery in global supply chains.

A number of fashion giants, including Sweden's H&M and Inditex's Zara, are said to be buying viscose from highly polluting factories that are contributing irreparable damage to environmental and human health.

Meanwhile in other news, J Crew has set out the terms of its debt restructuring; Canada’s Apparel Textile Sourcing show is returning for a second event in August; SoftWear Automation has secured $4.5m to speed the development of robotic worklines for apparel production; and employers at two garment factories in Bangladesh have filed criminal charges against 61 workers trying to form a union.

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