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Deckers Aims to Source 35% of Products In Vietnam Within Five Years

In running a diverse portfolio of brands including Ugg, Teva, Sanuk, Hoka One One and Koolaburra, Deckers Brands needed to build a coherent strategy of how to evolve into a digital operation before the COVID-19 crisis forced everyone in that direction. As part of the strategy, the footwear company is in the midst of moving its sourcing and manufacturing processes out of China into markets including Vietnam, Cambodia and the Philippines.

Deckers only has an estimated “4 or 5 percent” of production left in China as it gradually migrates its product development capabilities outside of the manufacturing powerhouse. But as Noel Rix, vice president of global footwear and apparel product development at Deckers Brands, noted in a session at the FDRA Global Shoe Sourcing Series, the company doesn’t want to put “95 percent of our eggs in one basket” like it used to in China.

The company established a goal to have 30 percent to 35 percent of sourcing in Vietnam, but Rix asserts he wants to diversify sourcing across numerous countries in Southeast Asia in the next three to five years, as well as Central America and perhaps eventually even Africa. Rix didn’t entirely rule out U.S. manufacturing either, but admitted that is not likely to happen unless technology makes labor and transportation costs palatable.

When seeking out factories, Rix and the Deckers team study population size, culture, working conditions and other nuances including the human-rights element and general labor practices.

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“Let’s take Cambodia, for example,” Rix said. “You go to Cambodia and you see there’s factories there and then on the surface everything looks good. Then when you dig a little deeper you realize that you’re not going to be able to build a big mega factory like you have in other countries like China and Vietnam. In Cambodia, workers go home every night and you’re not going to bus them in 50 miles from someplace, so you have to build a factory that is scaled to the population that will support it.”

Rix said Decker maintains a great relationship with its factories, and keeps a quarterly performance scorecard to measure the corporate social responsibility (CSR) and overall waste each location creates.

“We measure their delivery, their development turn times, the waste at the factory, how they dispose of that waste to make sure that it’s done by legally,” Rix said. “We look at their hours, and we actually measure the time that they leave their home to the time that they get to the factory. Anything that happens there, we measure that against any downtime for injuries. If they get hurt on a scooter going to work, that gets measured in the downtime.”

Rix said Deckers gives the factories the time to understand what the company is all about to learn how it can improve relative to the competition.

As Deckers adapts to modern shopping habits, it also looks at new technologies across the supply chain. Rix used the Teva brand as an example of how 3D design and development technologies have made life easier for the teams, especially as more employees were forced to work from home.

“All of their recent designs have been put on the shoe last, then drawn on the last, then transmitted to the factories with all the components and broken down by a subset of files,” Rix said. “And what that’s done, it’s not perfect, but it leaves less interpretation for the factory design centers and development centers. Even though they may have to make an adjustment for material allowances for overlaps. The basic pattern is there, and it takes much less time and fewer iterations to get a sample back in the way you want it.”

The company can scan the 3D model in the time that the shoe sample comes off the conveyor belt in the development center and send the rendering over to the design so they can they iterate and modify the sample. This ultimately reduces the company’s carbon footprint, particularly in mitigating the number of samples required in the development and sales processes.

In his time at Timberland, Rix said designers had to manually draw shadows onto the models and use Photoshop to get the right lighting, whereas now the teams can instead leverage 3D platforms to automatically add shadowing and scan materials in their library.

The partner factories have a major hand in improving the manufacturing experience as well, according to Rix.

“They’re bringing new technologies like injection molding machines or screen-printing capabilities,” Rix said. “These are new types of ways to reduce the magnitude of the size of a location and shrink it down so you can get the same amount of product with less effort met.”