In sports, the saying is “You can’t teach speed.” But in global sourcing, “speed to market” can be learned and realized with the right sourcing strategy.
The need for faster cycle times and quick turn production capabilities has increased in recent years as consumer purchasing habits have evolved with the desire for immediacy and as e-commerce brands and strategies have become more important and promising options for at-once fulfillment.
Sourcing closer to market has in many cases become the answer and the reason for heightened interest in Western Hemisphere production, particularly the U.S., Central America, Mexico and the Caribbean.
“When I think about speed to market and this Hemisphere, I think about two things–there is speed to market that’s about replenishment…and there’s also speed to market that’s about fashion,” said Tony Anzovino, vice president of production for Haggar speaking at a seminar on “Sourcing from the Americas” at Sourcing at Magic in Las Vegas.
The value of U.S. apparel imports from the Western Hemisphere were basically flat for the year to date through June at $6.69 billion, and the volume of goods coming in fell 2.8% to 2.14 billion square meter equivalents (SMEs). The value of overall apparel shipments to the U.S. declined 1.9% for the period to $37.25 billion, with volume increasing 1.7% to 12.8 SMEs.
Anzovino, who is also vice president of the Americas Apparel Producers Network, said many people know about the Western Hemisphere’s proximity advantages, but don’t always realize that it also has a “world-class supply chain.”
He said companies shouldn’t just try to take products and switch production from Asia to the Western Hemisphere, they should become knowledgeable about what products are best suited to be made in the region, such as high-quality knitwear and denim.
[Read more on Central America’s proximity advantage: Central America Looks to Surpass Asia for Affordable Quick Response]
Ed Gribbin, president of Alvanon, said a big part of the consultancy work Alvanon does with clients is about speed to market. Noting that many of the companies they work with are planning 16 to 18 months ahead of time, with Spring 2019 being the next season they’re strategizing.
“The product development cycle is broken,” Gribbin said. “It’s one of the reasons you’re seeing so many retailers going bankrupt today and so many malls with vacancies and so many department stores struggling today. They can’t operate on a cycle that’s going to predict what you’re going to buy 18 months from now.”
Citing Zara’s model of constant replenishment, a fast-paced style cycle that includes quick decision making and localized production yielding flexibility in shipping methods, Gribbin said, “Not everyone wants to be Zara. They skip a lot of steps, it’s not the best quality, but American retail needs to transform itself if it’s going to be competitive. It’s about time from design to the consumers’ backs. That has to be reduced. Decisions have to be made much more quickly.”
Steve Hawkins, senior vice president for American textile and apparel at Grupo Karim’s, said manufacturing companies like his are always under a lot of stress because of the competitive environment, and the need to satisfy the brands that choose to work with them.
“Part of that and I think part of the huge advantage we have in this region is the proximity to the U.S. market,” Hawkins said. “We have seen turn times go from 90 days on spot orders to 36 days from Honduras to California.”
Mike Todaro, managing director of the AAPN, who moderated the panel, said, “Because of the investments that factories have made in innovation and technology, they can make it very quickly. What they’re missing from the brands and retailers is that split-second decision that allows them to jump into production and deliver.”
Hawkins said the quicker turn time includes approval of production on the front end to eight days transit on water and land.
Grupo Karim’s, headquartered in San Pedro Sula, Honduras, can ship goods by boat from Honduras to Port Everglades, Florida, to which Hawkins said, “They can’t do that from Spain or China, so that proximity advantage is huge. It even offers the fact that we need to be more specialized. I think we’ll see a transition to factories that specialize in certain things.”
“That obviously puts a lot of pressure on the factories because no longer can we plan six months out,” Hawkins said. “So, it takes a lot of collaboration from the brands and from the retailers to partner to achieve the turn time reductions.”
For example, giving the factory the go ahead to take a stock position on yarn–Grupo Karim’s specializes in premium knits–takes three weeks out of the turn time.
“Retailers and brands are learning that time is money and if they can afford to pay a little more and in the end not have as much markdown, they come out in a better situation than if they had gone to Asia and taken the traditional 120 days in the production cycle,” Hawkins added.