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Why Supplier-Buyer Partnerships Must Be Win-Win

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Fashion is at a crossroads: continue with cutting-edge strategies developed to persevere during Covid or slide back into familiar (yet unprofitable) habits? Get the experts' perspective at our in-person Sourcing Summit, Oct. 19 at New York’s Cipriani 42nd Street.

As the apparel industry emerges from the pandemic, one lesson from the past year should be the need for enhanced collaboration up and down the supply chain. However, while some companies recognize the need for change, others are reverting to old habits.

At the height of the pandemic, when store closures and dwindling consumer demand stalled fashion retail, brands cancelled fabric orders and suppliers stored these materials for them. Now, 12 months later, some of the same brands are less sympathetic when suppliers face disruptions that are out of their control.

Despite rising vaccination rates and reopenings, parts of the global supply chain are still reeling from Covid-19 complications. For instance, surges of coronavirus cases in places like Taiwan have put the apparel business on alert, while freight remains costly due to demand that exceeds supply. Additionally, at the factory level, it took time for yarn producers to ramp back up to full capacity as orders picked up.

In a recent conversation with Sourcing Journal founder and president Edward Hertzman, Chris Parkes, managing partner at textile sourcing firm Concept III, explained that some of his customers “get it” and work with his team to develop solutions, while others are less understanding and are stuck in a 2019 mindset. When notified of a slightly delayed delivery date, those in the latter group might cancel a purchase order or request prohibitively expensive expedited shipping.

“Some are just going to go back to the old model, where it’s ‘Just get me as much stuff as you can,’” Parkes said.

Part of the old model is routinely negotiating down fabric prices per yard. Parkes sees these attempts to trim just a few cents off cost as antithetical to a true partnership. Instead of nickel and diming suppliers, he said, there are more cooperative things that companies can do to improve pricing.

For one, brands could develop merchandise specifically for direct-to-consumer channels, which would improve their margins by cutting out the middleman. Another strategy is giving mills more business and spreading out manufacturing for signature styles throughout the year. This helps the factory maintain more consistent and efficient workflows, and it can in turn pass savings on to retailers. Outdoor apparel has typically been a weather-dependent category, but with consumers spending additional time outside throughout the pandemic, this year-round production strategy also fits the new retail patterns.

As part of the holistic view on pricing, brands should also work to reduce markdowns by aligning goods to a more see-now, buy-now schedule and taking a conservative inventory approach. And getting sizing and fit right—particularly in the e-commerce space—can reduce the financial impact of returns.

“You need to focus on the fabrics, meaning if you’ve got 100 percent polyester, it’s going to shrink differently than a 50/50 cotton-polyester blend,” Parkes said. “But that fit has got to be as similar as possible so that consumer keeps coming and buying from the brand.”

Over the years, mills in Asia have catered to American and European outdoor buyers’ sustainability demands by adopting the ever-growing spate of certifications. According to Parkes, brands need to realize that they are invested and that they have in some cases spent decades grooming factories to meet their needs.

Partners can’t just turn their backs on each other when things get rough. “The partnership aspect needs to be more important,” Parkes said. “It has to be a win-win for both the brand/retailer, as well as the factory.”

Click the image above to watch the video to learn about the creative solutions that can boost both factories’ and brands’ bottom lines and to hear best practices for building collaborative supplier-buyer partnerships.

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