Global sourcing is facing tough times to say the least, as is retail, and with threats like the Border Adjustment Tax looming, there’s a lot to consider in navigating this new, complex landscape.
Paula Zusi, global operations advisor for retail supply chain with private equity firm Advent International, officially takes over duties as chairman of the American Apparel and Footwear Association (AAFA) this month, and there’s no small set of tasks to tackle ahead of her. For one, AAFA has been working hard in the fight against a Border Adjustment Tax because its implications could prove detrimental to the apparel and footwear sectors.
Zusi has served on AAFA’s board of directors since 2012 and she served as vice chairman during 2016 before transitioning to chairman. Her background in supply chain, having served as EVP and chief supply chain officer for Ann Inc. and corporate VP at Liz Claiborne prior to joining Advent and AAFA, is expected to serve her well.
Sourcing Journal caught up with Zusi to find out her thoughts on navigating these complex times and what we can expect to see from AAFA in the year ahead.
SJ: How should apparel and footwear brands be handling today’s volatile political and economic environment?
PZ: The apparel and footwear industry is certainly at a pivotal point in its history, and the situation is even more challenging with uncertainty surrounding trade and tax policy in Washington. I’ve been spending more time in Washington and speaking with our members about key issues and concerns; fighting the proposed Border Adjustment Tax (BAT) has risen to the top of the agenda given its potentially devastating impact on our industry. Brands and their supporting supply chains need to become fast, nimble and flexible to deal with the current environment—including economic volatility, shifting trade policies, increased sustainability expectations and speed to market.
SJ: What do you think it’s going to take to start getting retail out of its rut?
PZ: The retail industry is navigating a profound transformation, which includes broad-based changes in consumer spending habits and preferences, fueled by the significant impact of technology advances and social media. The younger tech-savvy generation chooses to place a higher value on experiences, and I believe the retailers who fully embrace these changes—and work hard to create a unique and compelling guest experience (regardless of how and where the consumer chooses to engage)—will continue to succeed. Also, with mobile use on the rise, companies must prioritize their digital investments to create a compelling mobile experience.
SJ: When it comes to supply chain improvements, what should retailers be putting in place to accommodate this new, quick-turn retail environment?
PZ: Speed and flexibility will be critical to succeed in this fast-changing environment, particularly as it relates to managing inventory and having the right product available. Speed is really based on quick decision making, the ability to plan in advance while executing in season. In addition, having pre-positioned raw materials, factory capacity secured and a quick and efficient logistics network is key. Many brands and retailers are working to balance their Asia supply base with Western Hemisphere sourcing, with many Asian suppliers investing in factories outside of the Asia Pacific region in support of reduced lead times. There will be even more demands on supply chains in the future, as increasing amounts of data need to be harnessed and integrated into supply chains, to better serve customers.
SJ: Where do you see the industry going in the next year? In the next five years?
PZ: Given the immediate uncertainty with geopolitical events, the short-term focus is on how things shake out with the new administration’s trade agenda. Over the longer term, I see even more rapid change on the horizon as we see advances in Blockchain technology (significantly impacting supply chain traceability), Artificial Intelligence, machine learning and robotics. We will also see Amazon as a continued disruptor, forcing companies to rethink how they service their customers and manage their supply chains. Lastly, while store closures and consolidation will accelerate, we will also see some fascinating new startups with interesting concepts targeting the next generation of consumers.
SJ: What do you hope to accomplish with AAFA in the coming year?
PZ: I’m passionate about advocating for free and fair trade for our industry, protecting U.S. intellectual property and making sure we provide the right resources to advance sustainable and socially responsible supply chains. When it comes to trade, lawmakers in Washington are walking a very fine line between trade and tax policy right now. I’m working closely with AAFA members as we strive to educate lawmakers and inform the general public about the negative impact that the Border Adjustment Tax (BAT) would have on the apparel and footwear industry. BAT would result in unsustainable prices and job losses that we can’t afford as an industry or, frankly, as a nation. We have been hard at work in Washington, and need the support of our industry leaders to contact their Members of Congress for support. This is a very urgent issue.
Collaboration is also a top priority for AAFA’s members. We’re focused on bringing the industry together around the issues of brand protection, trade and supply chain management and we’re always crafting unique opportunities for our members. We’re thrilled to launch our first-ever Supply Chain Week in New York this June.