Sourcing is hard. It’s a profession. Apparel sourcing execs log more miles a year than executives in most industries. So, why are there still problems?
Yogi Berra once said, “Baseball is 90 percent mental, the other half is physical.” In sourcing, we might say 90 percent of the problems are from not talking to your supply chain, the other half are bad accounting. Why?
In the old days, brands owned their own factories. VF still does. Most do not. Few start their careers in factories. As a result, the loss of hands-on operations talent up and down the chain has been staggering. This has caused a shift of power to the factory as the supply chain’s problem solver.
At Sourcing Journal’s Summit in New York in September, we saw a room full of world class sourcing execs. Just a dozen years ago, we had an event in Central America where even though we had a room full of world class suppliers, we did not have a world class supply chain in the room.
But we do now. Example: A buyer walks into a factory and sees yoga pants…asks if they make them…orders 40,000 pair on the spot…gets them in 45 days…sells them all like it was Black Friday…and the subject of cost never came up.
The industry saw a future where all the factory would get was a “sketch and a check.” In the above example, there was no sketch, just a check. The factory was the problem solver – designer, product developer, fabric printer, lean producer, ship direct-to-store. Was this an apparel factory or an innovation company?
Let’s turn this around. A buyer comes back to a factory and says you have to lower your costs 10 percent. The factory responds saying, “I know my costs, it’s my job to know my costs. Tell me how you’re going to increase your sales because THAT is the core problem here.”
Why is sales forecasting getting harder? The reason is that the pace of change is accelerating. One brand executive told me, “For the last 100 years, this year’s sales were based on last year’s. This model does not work anymore. We wait for what the brand’s want…but they don’t know.”
That’s where the supply chain comes in – fiber, yarn, fabric, finishing, zippers, thread, elastic, labels, fasteners, embellishment, logistics, technology, and much more. Remember this – the supply chain knows who is making what for whom, and their capacity to make it.
Is production coming back? Ask the thread guys. Who makes world class underwear? Ask the elastic guys. Where is there a great pants factory? Ask the zipper guys. How can I differentiate my garment? Ask the label/embellishment guys. The supply chain knows.
Americas Apparel Producers’ Network (AAPN) has been filling rooms with every link in the chain “from the dirt to the shirt” for decades. What do you get when you do that? Disruption. Anxiety. Truth. TRUST. Until you earn trust, you’ll never get speed. These meetings build relationships, and do so without an agenda!
When the topics are current issues, it’s almost impossible to have an agenda in advance. At our 2012 meeting, for example, someone said, “production is coming back.” Really? Was it? If so, why? In fact, if so, then what are the differences between Asia and the Americas? What is the score? (This discussion was NOT on the agenda).
To find out, a veteran sourcing executive created a 31 question survey. Major topics were: knowledge of the U.S. market, verticality, cost, speed, ease, product development, sustainability and risk. He asked his peers to give a score of 1 to 5 to Asia, then 1 to 5 to the Americas and explain why. He got a 100 percent response. The score? 3.1 for the Americas, 3.5 for Asia.
The supply chain ate this up. Now, what about the claim of “bad accounting?” Barbara Zeins of Gerson & Gerson published 9 Big FAT Garment Lies, none of which are true and all of which are fatal. They are:
-Vendors are substitutable
-There is no cost in setting up a new vendor
-Costs are linear, increasing in direct proportion to quantity produced
-Last years performance is a good prediction of next year’s
-People are a variable cost — in downturns, lay them off
-Customization is always expensive
-All costs are either fixed or variable
-As long as you are competitively priced you will survive
-The only way to lower product costs is cheaper labor or materials
Brands may not be opening factories, but factories are opening brands. Factories know operations. Factories know costs, and speed, and supply chain, and the market. They are not just making what they know how to make. They’re making what they know will sell.
That brings in another Americas strength – they’re ahead of the rest of the world in social responsibility, and can prove it. So what? Well, better benefits mean lower turnover, lower training costs, higher attendance, higher skills, faster turns and exceptional flexibility.
Look, there’s only one story in the industry. We know what it is. It starts with a designer and ends with a consumer. Everything in between is operations. Either you know operations or you don’t.
The gloves are off. It’s business as unusual. We’re living in the first truly global era in human history with new business models, new thinking, new power. It’s hard to keep up with the details but we know this – the bigger the picture you get, the smaller the problems you have.
If the big picture is the consumer is changing, then the way we manufacture and SOURCE has to change. What are we doing about this? We’ve invited TED speaker Seth Godin to be our keynote at our annual meeting May 3-5. Why? Change.
In his book, “Survival Is Not Enough,” he writes, “Most of us view change as a threat, and survival as the goal. Change is not a threat, it’s an opportunity. Survival is not the goal, transformative success is. … Rather than thinking of work as a series of stable times interrupted by moments of change, companies must now recognize work as constant change, with only occasional moments of stability.”
There’s a 13th Century saying, “Good judgment comes from experience and experience comes from bad judgment.” You’re young. You’re new. You’re in a silo. How’s that working for your career? What is your license to exercise bad judgment and learn from it?
Sourcing is hard. It’s a profession. We’re your network that works. Every link in the chain is in it. It’s here for those who don’t know operations, and are afraid to ask for help “inside.” Whether you jump, trip or get pushed, everyone needs a net (-work of suppliers) to catch them.
Again, to quote Godin, “In the old days, companies were in charge. Good managers managed change. They controlled how and when a company would respond to the outside world. Those days are over. You can’t manage change. Change manages you.”
Coach Bill Parcells preached, “Blame Nobody, Expect Nothing, Do Something” We are. It’s a great time to be in sourcing!
Mike Todaro is the Managing Director of the Americas Apparel Producers’ Network. Since 1981, it has been “a chain of suppliers and suppliers of change.” Based in Atlanta, AAPN has nearly 200 member organizations of over 600 individuals worldwide.