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Apparel Doesn’t Have a Factory Problem, it Has a Blame Problem

The sea change in consumer behavior has necessitated a wave of modifications across the supply chain, but the industry can only transform according to the pace of change at the factory level.

That’s not to say factories carry the full responsibility for helping apparel pivot toward future-facing processes though.

In fact, manufacturing executives at Sourcing Summit: Hong Kong last week provided insight into the ways in which all partners along the value chain contribute to their progress or lack thereof. But to get to a place where everyone takes responsibility for their role in how the industry operates, the typical narrative that casts factories as the fall guys for anything that goes wrong in production has to cease, said Siddharth Sinha, CEO of Vogue International/Velocity Apparelz, a manufacturer that specializes in denim and activewear.

“The blame always comes directly back on the supplier,” he said. “Buyers are very quick to blame the supplier even though they may be responsible for having created the problem because what happens is… 90 percent of the problems in the manufacturing process actually come from the supply chain piece of it—maybe from fabric or accessories or wherever.”

And the challenging retail environment is only compounding the issue, Sinha said. “The problem has gotten a little bit worse as well. The reason for that is, as price pressures have increased, there are more and more shortcuts that happen along the supply chain, and in the end, the garment manufacturers get blamed,” he said.

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While Sinha readily admitted factories are responsible for producing quality goods, delivering on time and keeping costs in check, at the same time, he wants brands to “be responsible for their own decisions.”

For instance, if the mill they’ve selected delivers defective fabric, it can’t suddenly become the manufacturer’s problem.

“Buyers often think that partnership is a one-way street. It’s not,” he said. “We are your partners, when we talk about price. [But] when there’s a problem, it’s you. If the term [partnership] really has a meaning, I think a lot of things in this business can become much simpler.”

As a tier two player, HK Non-Woven is insulated from much of the tension, according to business director Anderson Lee. Additionally, the company attempts to foster a collaborative environment by boosting transparency.

“We don’t work with someone on a transactional basis, but we try to build that partnership onto developing something that has strong continuity, strong in value and strong uniqueness that can deliver a more diversified portfolio,” he said. “In other words, we also use that to then share certain types of measurable results where we can actually find success together.”

HK Non-Woven regularly reviews its status with clients, Lee said, giving everyone the opportunity to evaluate the company’s performance relative to specified goals. In this way, the company is able to eliminate “the blame game.”

But Lee would like to see even more collaboration in the industry. Rather than focusing on margins, he said by sharing data, more problems can be solved. Companies should be exchanging data with their partners, and thinking “of them as your decentralized network where you can enable others to build and share API.” In this way, he said, the industry can compensate for issues whether they’re in capabilities or costs.

Eddie Chan, CEO of manufacturing platform Lever Style Inc., which produces goods for companies like Everlane, said each side needs to work together to develop reasonable, obtainable goals and then leave the other to execute.

“One concept that’s really important is you can’t get everything right [whether] you’re a buyer or a supplier. We need to develop a MVP concept or minimum viable product. Don’t wait till things are totally mature to do it,” he said. “You have to trust us, we have to trust the buyer and lets be together. Then it will be a much better business equation.”

What’s incumbent on manufacturers, Chan said, is figuring out how to help with product flow. “To solve the inventory challenge [we need to look at] how we can make smaller orders, smaller MOQ, quick replenishment. At the end of the day, the most important ownership is the inventory itself,” he said.

The inventory question is even more pressing for e-commerce and direct-to-consumer brands, which represent a growing part of Lever Style’s portfolio. These businesses demand that the industry operate differently.

“The challenge coming up from the e-commerce world will affect everyone but it’s all about positioning, whether you want to put yourself in that [arena or not],” Chan said. “In the beginning, it’s challenging. You have to find a way to work it out and you have to see the vision of that customer, the way they execute and how good the partnership [can be].”

With so many new companies sprouting up, the challenge can be determining which ones to partner with, and there’s no easy way to figure that out, Chan said. Lever Style looks at the concept and the way in which the brand is attempting to connect with consumers to try to determine if there could be a future together. “There’s no crystal ball,” he said. “As a partner, you need to determine whether it is a model that’s successful.”

While working with major fiber companies like Invista and Primaloft is still a big part of HK Non-Woven’s business model, the company is also more focused on brands today. “We spend a lot more time directly with brands on creating what we call the product, the solutions and services that can engage our customer into the whole cycle of product development or commercialization cycle,” Lee said.

The company is employing a test and iterate model that allows it to bring new products to market in a targeted way that gives Lee’s team a read on how they’re performing, while limiting HK Non-Woven’s overall exposure.

“We take this type of partnership a lot more strategically, in a way, where even when there is an investment that [doesn’t] go very well, we probably have another one in the pipeline already in testing and trying out,” Lee said, adding when something clicks, there’s a model in place to scale. “We may have certain exclusivity to a few brands to launch and put that product in the market for a while, see how it goes.”