As brands are deciding on sourcing destinations, many factors beyond cost are coming into consideration today. Geographic diversification and workforce diversity are both shaping sourcing teams’ strategies, respectively fulfilling the demand for disruption preparedness and reflecting companies’ values.
A panel during PI Apparel Supply Chain Forum 2022, moderated by Caroline de Baere, founder of footwear development expert Laforma Inc. and Bendy Shoes, discussed the underlying causes of supply chain map changes.
In the discussion, Yelena Mogelefsky, vice president of production and sourcing at Komar Brands, said that FOB cost “might not be the end all, be all when deciding where I place products.” Among the factors being weighed is the cost of logistics, including container prices. One of Komar’s strategies has been to cluster orders at factories so it can fill containers for maximum value.
Komar is also looking at nearshoring. “All of a sudden, nearshoring and finding factories closer to home have a whole new meaning. Can I afford to pay a little bit more but ship quicker? And sometimes that answer is yes,” Mogelefsky said.
To guard against issues, Gap limits the percentage of production allocated to any particular region or nation. “Everything we do in supply chain is to mitigate risk and to get our best possible combination with the lowest possible risk,” said Alex Thomas, vice president global quality at Gap.
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A supplier portfolio also must cover a range of capabilities. Mogelefsky suggested that companies should look at what products they are producing and see whether they have multiple locations that can manufacture the same goods. This not only provides a backup for disruptions but also allows for tactical decision-making. For instance, Komar can optimize where it is sourcing to use the origin and destination ports that will provide the speediest delivery.
“In recessionary periods especially, how fast you get product could be just as important as how much that product cost,” Mogelefsky said. “In a time when stores don’t want to buy as much, if you can be the person that fulfills back orders, if you can get goods in faster, I think that you have the upper hand.”
Further on capabilities, Mogelefsky advised companies to ask their suppliers for “newness,” leveraging the work that many vendors’ R&D teams are already doing. Komar seeks out innovation as it is deciding whether to bring new suppliers on board.
Inclusivity culture
Brands and manufacturers can also be a force for inclusivity and diversity. For instance, after deciding it wanted to make a difference in Sri Lanka, Komar chose to build a facility there. Because Komar owns this development center, it has the ability to diversify the workforce.
In a similar diversity and inclusion push, Gap’s P.A.C.E. program supports career development for women at its partner factories.
Both Komar and Gap investigate whether potential supplier partners align with their corporate values through audits and discussions with the workers and management.
“We have as many factories as we deactivate or we reject as we onboard,” Thomas said. He added that its multi-day audits can reveal a value misalignment or fail to show a “culture of wanting to improve.”
“We are always looking for improvement,” Mogelefsky said. “And to me, that’s what’s key about onboarding a new factory. As long as they show improvement and a way to get closer to our values or to our values, we’re going to engage with them.”