Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user

How a Demand-Based Sourcing Strategy Can Reduce Inventory Risk

Sponsored Content

Rivet's 2020 Denim Circularity report takes a deep dive into how the global denim industry is plotting its circular future amidst a worldwide pandemic.

Globalization may not be dead yet, but it’s losing blood fast. For too long now, the apparel industry has talked about the need for faster supply chains, how guesswork projections lead to extreme excess or severe lack of inventory, and the gradual erosion of profit margins. Unfortunately, little has been done about it.

The U.S. trade war with China and the outbreak of Covid-19 are dealing a double-fisted blow to any brand clinging to the antiquated notion that chasing the next cheap labor market is the answer. We all know the apparel industry needs a fundamental shift away from this way of thinking, but are we finally ready to take action? We better be. It’s time to rip off the Band-Aid, let globalization die, and go through the necessary transformation that the industry has been talking about for years.

“Today’s brands, especially direct-to-consumer brands, need to completely revamp their manufacturing strategies,” said Brian Sather, CEO of global sourcing and manufacturing company Blacksmith International. “The only intelligent way forward is to embrace a demand-based production model that leverages not only a large factory network, but a process that allows for products to be made at the lowest cost per sale rather than the lowest initial cost per item. Often, that means making the product locally at a premium and only utilizing high-volume overseas manufacturing when the time is right. The value Blacksmith International delivers for clients today by understanding how to implement these strategies effectively is lightyears beyond the value we delivered only four or five years ago.”

So, let’s talk about demand-based apparel manufacturing. “Demand-based” is not the same thing as “on-demand” manufacturing. First of all, the concept of on-demand has been around for decades and has been widely touted by brands like Ralph Lauren and tech companies like Amazon as the solution to piles of unsold inventory in warehouses. However, on-demand apparel manufacturing has largely focused on customization and finding a way to produce a single customized unit tailored to each unique customer. While on-demand customization eliminates the need to hold inventory, it’s expensive and is not a realistic solution for the vast majority of today’s direct-to-consumer brands.

What brands actually need is the ability to test new styles without significant inventory risk and the associated discounting of unsold items. They also need to be able to restock popular styles in days rather than months, instead of leaving essential revenue on the table when their most popular merchandise is sold out.

Blacksmith International is developing a supply chain solution that will unlock these abilities for apparel brands. The solution is a combination of technology and process that enables brands to effectively utilize a network of global suppliers. Product is produced where and when it makes sense to produce it. Factories can be located close to markets, resources, or expertise. Supply decisions are made purely based on finding the best outcome for the brand.

Perhaps the most striking difference between the approach taken by Blacksmith International as opposed to others, is a tacit acknowledgement that technology alone will not solve the problem. While technology, such as 3D design and development, is core to the solution, even more important is manufacturing process expertise. Helping brands to reengineer processes that touch everything from sales and marketing to production and delivery in order to accommodate a demand-based model is key to what Blacksmith does. The more willing a brand is to embrace new concepts, the quicker they see the benefits—increasing revenue, growing margins, reducing waste, improving customer loyalty, and most importantly, a solid trajectory for future growth.

Blacksmith International’s demand-based network model provides a more comprehensive solution to guesswork inventory and non-responsive supply chains. Instead of talking about it incessantly, Blacksmith is developing it right now. Read more about how one apparel brand recently used this network of U.S. and overseas factories to test new styles, reduce inventory risk, and restock core styles at record speed.

Brian Sather, CEO of Blacksmith International, is passionate about reforming the inefficient, costly, and environmentally damaging way apparel and other soft goods are manufactured. Sather invites any brands and companies interested in a demand-based manufacturing solution to continue the conversation with him on LinkedIn.

If your brand needs a more flexible supply chain strategy, then contact Blacksmith International today.

Related Articles

More from our brands

Access exclusive content Become a Member Today!