By Jill Mazur, September 8, 2016
How many of you have a sourcing strategy? How many of you have taken a long, hard look at your suppliers, your vendors, your manufacturers and asked yourself these questions: “What will my supply chain look like in a year?” “Can I expect to get the same margins I’m getting now with the same sourcing strategy?” “How can I improve my delivery times and keep my costs low?” “How do I mitigate my risks?” More questions spring to mind, but you get the idea.
Pick up any newspaper and take a good look at the business and news sections. Politics are shifting, currencies are fluctuating and even shipping companies are filing for bankruptcy. An article in the Wall Street Journal titled “U. S. Retailers Turning Their Gaze Beyond China” sums up what many other articles are saying: with rising labor costs in China, and with Chinese factory workers striking for higher wages, the days of inexpensive, quality products from China may be coming to an end. If all of your products are coming from one region, or one country, you need to start looking for other options.
Just like you review your retirement investments, every year you need to think about your current supply chain. What works one year may not provide the best results the next year. Make a habit to review your vendors, suppliers, factories and agents every fall. Are they delivering what you need, when you need it, at the price you expect? Think about where you’re getting most of your goods. Is it all from one country? Is it from one or two vendors at most? Would your business survive if those vendors increased their prices by thirty percent, or even twenty percent? What happens if a disaster, natural or un-natural, hits in the region where you manufacture. Can your company survive if your factory can’t deliver? For very small companies, you may not have many options, but you still need to figure out what options you do have and make a solid sourcing strategy.
Larger companies can afford to build factories and infrastructure in new cities and countries. As they develop new resources, they create new possibilities for smaller companies to advance their own sourcing opportunities. Depending upon the type of skills and machinery you need for your products, you may be able to capitalize on these new resources.
Don’t be afraid to sample materials from new suppliers. Don’t be fearful to do a test run of products with a new factory. You may find the same quality or better from vendors and factories in new countries. As an example, a number of my footwear clients have been re-evaluating their manufacturing strategies and moving many of their product lines to Mexico. If the quality and overall costs are comparable, it might make sense to take advantage of NAFTA regulations, no duty on goods imported to the US and a significantly shorter transit time. You won’t know until you make the decision to test the waters.
So what are these manufacturers and retailers planning for their sourcing strategies? Well, finding other, more affordable labor markets is key. India, Cambodia, Vietnam and other Asian sources for one thing. Africa is starting to develop a talented labor pool as well. There is always Mexico, the Caribbean and Central America. And, hey…what about the U. S.? Keep a close eye on resources like The Sourcing Journal at sourcingjournalonline.com for the latest news and information on what’s happening in the global supply chain.
When was the last time you went to a materials or sourcing trade show? Are you just sitting back, waiting for your existing vendors to bring you new materials, or are you actually out looking for new suppliers, new fabrics, synthetics, leathers and more? Have you invested the time to visit the locations where your products are made? Have you looked for other factories with similar capabilities and capacities? How about talking to your own staff or colleagues at other companies to see who they’ve used in the past and what recommendations they can make to you. Concerned with needing to purchase or produce in small quantities? There are suppliers and factories who specialize in supporting smaller customers. Do the research; create new opportunities for your products and supply chain.
Just like fashion, the world of sourcing is constantly changing and evolving. Everyone is trying to play the same game. Get the best quality goods for the lowest prices with the fastest turn times. Being a leader in the fashion industry means finding those trends and responding quickly. The same goes for your sourcing strategy. Fast response and pro-active management of your supply chain is the key to your future.
Jill Mazur is a Fashion Business, Inc. and independent business consultant to the apparel and footwear industries, based in Los Angeles, California.