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Op-Ed: Complying with Ethical Sourcing to Satisfy Consumer Demand

By Bob McKee, Fashion Industry Strategy Director

Executives who run ever-changing business models in the fashion/apparel/sewn goods industries share a similar set of core challenges. As consumers demand fast factory-direct options, our industry is transitioning from latitudinal cross-ocean supply chains to longitudinal north/south ones. It was this shift in sourcing that led to the creation of the Americas Apparel Producers’ Network (AAPN) Asia/Americas Report Card. While it was first used to score the differences between the two regions across 31 questions, it quickly became an important tool in making supply chain relationships more successful.

All companies compete as supply chains

Whether or not you’re aware, your company competes as a supply chain and it does so in an age that increasingly demands transparency. Nowadays, you are often one tweet away from disaster — and not just as a company, but as a supply chain as well. It takes the failure of only one supplier in the chain to make the entire process come under attack.

This is where the AAPN can help the fashion industry in the Americas. Infor has worked within this network of organizations since 2005, meeting as a complete end-to-end supply chain to better understand the current issues, discuss alternative actions and find solutions that work. One of these solutions is the Report Card, which has been successful across the AAPN membership. Since its introduction, the Report Card has evolved into a comprehensive tool that organizations can use to more adequately comprehend the elements of this industry, ask the questions needed to cover the spectrum of possibilities and give individual organizations within a supply chain a score which they can work on to improve.

Have you ever been to an actual supply chain meeting? If it truly spans the chain, it is an uncomfortable meeting — disruptive and unusual. Why? Because each major link in the chain lives in its own world, with its own language, lobbies, associations, events, tradeshows, journals, schools and market leaders — all of whom are accustomed to meeting among themselves. But when you bring them all together, you get several things: the truth from sources you would not expect, trust with executives you would otherwise never meet, and tangible rewards from just “showing up” — with others just as committed to the industry as whole as you are to your individual “industry.”

The differences between sourcing in Asia vs. the Americas

In the apparel industry, the world is divided into two parts: China and not-China. The majority of the retailers and brands in the U.S. source from Asia. To them, “The Land of Not-China” is divided into three parts: Southeast Asia, South Asia and the Americas. Many retailers have not utilized suppliers in the Americas for a long time and consequently have perceptions that are no longer real.

The East and the West are different from one another. In the West, the view of safety, security, stability, sustainability and social responsibility is progressive. It is a movement and it means something. In the East, in general, they choose to, in the words of one retail executive, “fight, avoid, hide and ignore whenever possible.”

How do we close the East/West gap?

  1. Knowledge – The East/West gap is closing. As China becomes more difficult for retailers to source from, the West is improving and beginning to follow in the East’s footsteps with a willingness to listen to what brands are asking for, as well as anticipate their needs. In activewear, the West has even developed a world-class synthetics supply chain city in El Salvador.
  2. Speed – Once goods go into production, the West is as fast as or faster than Asia. Western transit times are faster due not just to the proximity of U.S. markets, but to a mature logistics model and an established set of processes.
  3. Cost – Cost and reliability of power are a big problem in the East, while electricity is extremely competitive in the West, specifically in the U.S. When one practices full costing — where sell-through is included and speed is given a value — in a growing number of market niches, the West is growing as a North/South chain-driven source of flexibility that is able to quickly respond to consumer demand.
  4. Ease – The Western Hemisphere’s flexibility means smaller lot sizes and an ability to make exceptions. The supply chains are in the same basic time zones, have the same basic business education, speak roughly the same American language and have survived wave after wave of negative trade legislation in a globalized world.
  5. Development – The West is taking advantage of its better understanding of the American body/fit. Some factories not only develop the garment, but design the prints, use high-speed sublimation technology to print and cut them, use Lean manufacturing to produce them and use quick shipment to get them to the store. The cycle between design and the consumer in the West is shrinking every month.
  6. Sustainability Sourcing tells us that the speed in sewing lines is equivalent. The West is leveraging its leadership in ethics, sustainability and speed in production and transit to deliver safe goods. There is a direct link between the social programs that lower turnover and absenteeism, and “the need for speed” empowering the West as a source of high-margin, strong-selling apparel.
  7. Risk In the East, brands struggle with more compliance issues, more unethical behavior, more pollution, more labor issues and many more public protests and work stoppages, especially in those Asian countries rebelling against China-owned factories. The entire Western Hemisphere is, as one brand put it, easier, faster, safer and better than the East.

Many retailers are getting in over their heads, and need to better understand sourcing and production, as well as how other regions operate in order to be more efficient and increase their profitability.

 

BobMcKee

Bob McKee has more than 40 years of experience working in and with apparel, footwear, home textiles and fashion accessories companies. He has hands-on experience sourcing apparel products around the globe and was one of the first U.S. apparel executives to start sourcing in China in the early ’80s. His knowledge and skills span retail, sourcing, manufacturing, and product development within the fashion industry.

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