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Risky Business: Supply Chains Need to Innovate

A strong global supply chain is a crucial component for any apparel brand that wants to compete for consumers’ dollars in the fast-changing world of on-trend fashion. But with such ever-present external threats as currency fluctuations and oil prices, bolstering that network is easier said than done.

Which is why David Bowen, U.S. country manager at Xchanging, was surprised to learn that just 77 percent of businesses see risky supply chains as a challenge. “I think that number is pretty low. Everyone out there should be a bit more concerned,” he said. “We’re living in an amazingly technical time. Things are changing year to year. If your head isn’t on a swivel and you don’t think there’s some kind of risk somewhere in your supply chain, you’re setting yourself up for trouble.”

Xchanging surveyed 830 senior procurement professionals across the U.S., the U.K. and mainland Europe between January and March for its 2015 Global Procurement Study and found that a whopping 23 percent aren’t worried about supply chain risk, which Bowen defined as “an unsustainable or less than optimally diverse supply chain, one in which you have too many eggs in too few baskets.”

Elsewhere, 58 percent cite currency volatility as a threat, while 26 percent see falling oil prices as an issue, both of which Bowen called “regular bellwethers for supply chain organizations across every industry.”

An emerging topic, meanwhile, was the eurozone, specifically Greece’s debt crisis. “Any time that a governing body is forced to underwrite another governing body of any type it reflects not necessarily on the specific nation itself; it’s more of a matter of whether there is an ample amount of economic activity to sustain a recovery,” Bowen explained. “In addition, if you have suppliers in Greece—and many different industry verticals would have plenty of supply coming from the Greek nation—I think you’ve got to be concerned. Not only because of civic unrest but also because those suppliers’ access to financial institution such as Greek banks or credit itself may impact manufacturing or production and delay shipments.”

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The study also found that more than a third of procurement professionals don’t feel challenged by a lack of supplier innovation. Again, Bowen disagreed. “They need to continuously evaluate their supply chain, which goes far beyond negotiating new pricing or product,” he stressed. “First and foremost it’s procurement’s obligation to continue to drive and encourage its supply base to work towards innovation. It’s got to be part of the ethos of every successful supply chain organization to be constantly asking what can you do for us and how can we help you to innovate?”