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Fast, Cheap and Out of Control? Balancing Supply Chain Speed and Costs

Join Theory, Google, H&M, McKinsey, Foot Locker, Lafayette 148, LL Bean, the Retail Prophet and more at Sourcing Journal’s Virtual Sourcing Summit, R/Evolution: Overhauling Fashion’s Outmoded Supply Chain, Oct 14 & 15.

In today’s market, speed and cost are the two most valuable considerations for apparel businesses—but often they’re mutually exclusive.

How companies are going about solving this dilemma was the underlying question for much of the panel discussion at Alvanon’s Apparel Costing Insights in an Uncertain World workshop, which was hosted by Sourcing Journal and moderated by SJ founder and publisher, Edward Hertzman.

As it turns out, there’s no one-size-fits-all solution. Rather, each company manages the balancing act differently, leaning more toward cost cutting or rapid turnarounds, as needed.

“You have to figure out your strategy and figure out where you’ll be different,” said Ada Suneson, vice president of technical services for the dress shirt division of PVH. “If you’re just looking to model what someone else is doing, that’s not a strategic direction. You need to figure out how your strategy is going to be different and better and what’s important to you and your brand and your business.”

For instance, a lot of companies are blindly chasing the Zara model when they don’t have the same trend obsessed consumer.

Stay or go

“Our customer shops 2.5 times a year, so why do I need new inventory every week?” asks Angela Chan, senior vice president and chief sourcing officer of DXL Group, by way of illustrating the point. “We’re able to achieve 300 to 500 pieces per style and able to turn it in 30-45 days and it fits into what we want to do in our company.”

With priorities in place, the next step is to determine how to accomplish those goals—which might not mean simply chasing the lowest COGS to the farthest corners of the earth. In fact, many on the panel said much can be done without uprooting longstanding production partnerships.

“We work with some very flexible factories out of China and air [the goods] in,” Chan explained. “We achieve that cost lower than nearshoring only because of the efficiency of our factories, and it’s a special fit and handling of our product.”

The result is reliable quality. And by concentrating its business on a core group of factories in four countries, DXL Group benefits from better negotiating power as well.

The desire to get the product right is a leading reason why these brands haven’t all flooded into the Americas for production.

“I’d rather leverage our matrix overseas and possibly air [the goods] if I have to than possibly start over because our products are so complex,” said David Miller, senior vice president of owned brand operations at Hudson’s Bay Company.

On the other hand, moving some products to Mexico from Asia has allowed Lanier Apparel to expand into the made-to-measure market, which Steven DeBlasi, vice president of global sourcing at Lanier Apparel, called and untapped market. “We’re taking fabric and lining into the factory, and six days later, taking it into the U.S., one at a time,” he said. “We used to make 40,000 suits a week and now we make 2,500 but we’re shipping them a lot faster.”

Internal or external

Although much is changing around them, the panel admitted that some of their biggest challenges can be internal. If they’re not careful, it’s their own culture that can impede—or at least threaten—the innovation they seek.

“In today’s world, you have to run really fast and be really quick and light. With technology coming into play and e-commerce and Amazon eating our lunch, we have to figure out a way to do things differently,” said Chan, adding that the company her company is slowly evolving. “There’s nothing I hate more than when someone comes up to me and says, ‘This is the way we’ve always been doing it.’”

Suneson said there’s always those who will cling to the status quo so it’s about harnessing positive energy where you can find it. “If you can find the right people to drive that cultural change, those people will come along and the others will have to decide if they want to be a part of this transition or not,” she said.

For PVH, the team is currently energized about 3-D virtual technology, which Suneson said will bring about a huge transformation. “I’m telling the teams that this evolution will be like when people moved from pen and paper and watercolor designing to working in CAD software,” she said, adding it will be a challenge but the evolution is inevitable and necessary.

At HBC, the question is how to balance the company’s history, which dates back to 1670, with innovation and the changing times. “We need to be making decisions faster,” Miller admitted, listing the ways in which the retailer could streamline its process, including tweaking the culture. “We need to break behavior in our organization away from a traditional model where buyers are accustomed to seeing it, touching it, feeling it before saying, ‘Show me another one.’”

DeBlasi said his company had to overcome a lot of “old-time thinking” to successfully expand into sportswear. The shift required Lanier to partner with other factories that knew that market better. “That only happened because we had to knock down a lot of walls in the process, which is not easy to do,” he said.

Whether internal or external, the panel agreed that managing speed and cost is something that requires a holistic approach.

“It’s never one cog in the machine that will hurt you,” Miller said. “The supply chain is from start to finish.”

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