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What the Middleman Really Means to Apparel Sourcing Today

For a while, as companies looked to skip the middleman in favor of greater speed to market and closer access to the consumer, “agent” became a four-letter word.

Now, though newfangled companies are still going straight to the consumer, agents are reclaiming their space in the sector by offering more—or less—depending on what the customer wants.

“I think it really depends on the customer, what they expect from an agent,” Guido Schlossman, president and CEO of Synergies Worldwide said during a panel at the Sourcing Journal Summit in Hong Kong this month. “We have a lot of new emerging e-commerce retailers that are less involved in sourcing and product and they need a full-service provider and a sourcing solutions provider who starts from design and product development up to quality inspection.”

Recognizing that the new crop of apparel players range from influencers launching a line of dresses to traditional players catering to the global mass market, Li & Fung—itself a traditional player in the space with 112 years under its belt—has taken to being more flexible about its supply chain offerings.

“Over the decades that I’ve been doing this…it’s been a bit of a pendulum swinging back and forth with respect to buying offices versus using an agent, and our experience is it’s a combination” said Robert Sinclair, president of supply chain solutions at Li & Fung. “We have customers that have their own buying office who have chosen to move from a fixed cost model to a variable cost model and engage an organization like Li & Fung.”

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Regardless of the varying demands, Sinclair acknowledged that the portfolio of services an agent provides has had to change, and with that has come a shift in the whole concept of sourcing.

“We don’t have a one-size fits all way of working with customers. We’re diversifying our portfolio of services to be more forward thinking,” Sinclair said. “The emphasis that we now have with our customers, the engagement that we now have with our customers is really about bringing solutions to them as opposed to just sourcing alternatives and sourcing options.”

And it isn’t that Li & Fung doesn’t provide sourcing options, but that’s just a component of the more holistic approach to addressing pinpointed supply chain challenges, Sinclair explained.

With supply chain challenges as abundant as they’ve been—with transparency, Trump and traceability among the pressing concerns—sourcing companies have had to balance that unfavorable trifecta and boost their customers’ bottom lines.

“We are entering the era where the middleman is questioned and the demands for quality and sustainability are actually increasing, but this is not something new and this is not the key challenge we are facing,” Schlossman said. “The question is more how we can, in a deflationary environment, manage our cost and still generate a margin and still offer low prices. And I think there are a lot of ways to do it.”

The not-so-secret sauce, according to Schlossman, comes down, quite simply, to how companies structure their organizations, how they skill and re-skill their people and the processes they apply to work smarter to deliver on customers’ demands. It also comes down to the back-up plans they build out to guard brands and retailers against the unpredictable wrath of a president that’s promised to bring parity to global trade deficits by all means necessary.

Trump and his actions on trade have certainly posed concerns for Synergies as tariff threats between the U.S. and China may still be waiting in the wings, but the key has been positioning itself to adjust accordingly.

“We’re operating 16 offices in 12 countries and that provides the flexibility to react and even to anticipate political uncertainties,” Schlossman said. “We are also cross costing for our customers. So we are coming up with a plan B in case something would happen to China.”

Offering the manufacturer’s perspective, Raymond Tan, CEO of leading Hong Kong-based consumer goods supply chain group Luen Thai Holdings, said his company has been doing the same.

“We provide more than two sourcing locations for [our customers] as a backup,” Tan said, adding, “On the other hand, we internally also have to ask ourselves where’s the bulk of the confusion and what’s the model to develop in each country.”

The idea, he continued, is to think of the globalized and disparate apparel industry as just one place.

“I told my management team, just think of the world as one world. So, you only have one country of origin and you only have one country of destination and you are able to imagine it being one and be as flexible as you can to deal with this future,” Tan said. “I don’t see the world being Asia, Africa, Europe or America. The consumer of the future will think, ‘I’m going to buy this,’ and India can ship directly to that consumer…so where’s the boundary? There is no boundary, so are we there for this future or not?”