Silver Jeans Co.’s team witnessed a bizarre, pinball-like game with a shipment of denim last year that took seven months to reach the U.S.
It left India and made it about halfway to China before the product was rerouted back through the Suez Canal. It was then shuttled through Europe, followed by Mexico and finally up to Seattle, about 25 minutes south of the company’s Kent, Wash. warehouse. Silver Jeans’ other distribution center is at its headquarters in Winnipeg, which services Canadian customers and is also where its parent Western Glove Works is based.
“We called it the Hotel California. You could get [product] on [a ship], but it can’t leave,” chief operating officer Mark Lamont said as he recounted the shipment’s journey.
The COO’s sense of humor is refreshing given the supply chain headaches affecting companies across industries. Silver’s had to ward off late deliveries to retailer partners, which include about 2,000 majors and specialty boutiques, and delayed direct-to-consumer shipments. The only upside is just about everyone’s dealing with the same problems, Lamont pointed out.
While logistics and supply chain circumstances have improved from the worst of the shipping issues, the lack of predictability continues to be the sticking point.
“The biggest problem for companies is, can you order? Sure, but none of that matters if you can’t predict if it takes four weeks or 12 weeks,” Lamont said.
At this point, Silver is running late on around 20 percent of its goods, with the saving grace being the company’s denim focus, with styles that have a long shelf life and the fact that most companies have learned to live with the current situation.
“It was not actually [improved] performance from the shipping lines or carriers. I think it’s more the adjustments that we’ve made to deal with the fact that we can’t rely on the actual supply. So, we’re diversified. We’re no longer set in our ways,” Lamont said of overcoming challenges.
In the past, the denim maker relied on product going through the ports of Tacoma or Vancouver. Lamont said product could now be coming from Norfolk, Savannah or just about anywhere before it is trucked to the final destination. Tacoma’s been seeing spikes due to the congestion at the ports of Los Angeles and Long Beach, so Silver has had to truck product from Canada to the U.S. in some cases.
It may cost about $1,000 a truck to get product across the country, but nothing beats the reliability of knowing something from the East Coast can make it to the other side in four to six weeks, Lamont said. That compares to about 21 days if the boat made it to Seattle. Now, Lamont pointed out, 21 days could easily stretch to 120.
Transportation costs have increased anywhere from 40 percent to 50 percent for Silver. So, a stock-keeping unit that may have cost 25 cents to ship, is now 50 cents or higher depending on the final combination of shipping.
The company had been reducing prices in the year ahead of the pandemic. The price increases, more recently, have boosted tags around 5 percent to 10 percent.
Silver Jeans is also working with more factories than it ever has: six instead of the two to three pre-pandemic. It had already been moving some of its work away from China the past few years to avoid the extra duties and currently works with factories there, along with Cambodia, Vietnam, India, Mauritius and Pakistan.
“We’ve probably had more factories in play than ever before, but some of that’s just trying to minimize the risk,” Lamont said. “It’s like a giant roulette game right now. You’re trying to cover every number, but you won’t win big.”
Other changes have also occurred internally. The team overseeing tracking and goods movement numbers around three to four. They recently promoted one employee in the planning and procurement end of the business and hired another, who started this week. The company also rejiggered some positions on the e-commerce and sales side to adopt more of a planning focus.
“People may not have set planning titles but, overall, the organization has much more focus toward planning,” the COO said.
They’re also placing orders earlier. For the best-selling 25 percent of SKUs, the team has taken up larger positions to guarantee having the stock for a set period of time.
Part of these shifts are also in response to the changing nature of the business that had been happening pre-Covid, Lamont said.
Where perhaps a decade ago Silver’s business was about 80 percent in brick-and-mortar and the rest e-commerce, the two channels are about even today. That’s why these changes internally are not just temporary bandages, but a longer-term overhaul to address the growth of e-commerce and the drop-ship model.
Ultimately, the company is driven by the fact that it must have product to sell and making the adjustments as quickly as possible to nab retail orders.
“You can’t gain back the open-to-buy period,” Lamont said, so doing as much as possible to eliminate risks via diversification and strong planning is the Silver Jeans strategy.
“The only insurance policy we have is not to have all your eggs in one basket,” he added. “You do whatever combination of running the relay [that] says you get the goods the fastest. That plan changes every week, depending on when the container’s getting there.”