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Navigating Choppy Seas is Supply Chain’s New Reality

With the latest round of tariffs tabled, it’s time to return back to normal—our new normal, of course.

As most apparel and textile manufacturers have come to accept, simply picking up and exiting China is easier said than done. Many companies have developed decades-long relationships with their partners and now have supply chains deeply entrenched in the region.

But, as most also recognize, exploring supply chain diversification is crucial, if for no other reason than to be prepared should an exit be forced upon them.

“It’s not as quick as just saying, ‘Let’s move somewhere without a tariff,’” said Gary Barraco, product marketing and business development director of Amber Road, a provider of global trade-management software. Companies must take into consideration such things as social compliance when researching new areas.

“We have to realize we’ve been doing business in China for years. They’re a well-oiled machine. You can’t just jump out of there.”

Being mindful of quality and speed to market when sourcing raw materials in new countries is also important, said Ann Diamante, chief product officer of retail tech company Bamboo Rose. “Retailers must assess if the pain that diversification introduces is less than the additional cost and risk that tariffs introduce.”

While most of the companies Sourcing Journal spoke with said they haven’t received increased business attributable to trade turbulence, they were unanimous in their sentiment that awareness has been raised about the importance of having a diversified supply chain and the complexity involved with achieving one.

“The supply chain has evolved significantly over the past three to five years, so we’ve already seen many companies make moves to improve processes that increase speed, reduce cost and drive new sources of revenue through innovation,” said Peter Warner, senior manager of consultancy firm Kalypso. “The recent trade uncertainty hasn’t changed the core needs of retailers—it’s only applied more urgency to look for holistic and efficient approaches to leverage a larger supply chain landscape.

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“The most important thing is that companies look at their data and make an informed decision driven by strategic planning,” Warner added.

What follows is a selection of services that continuously gather, update and analyze relevant information to help apparel and textile companies manage these new and uncertain times.

Amber Road—duty management solutions

Amber Road’s country profiles and data solutions pull in layers of data to inform its customers what a duty or tax will be on a specific harmonized schedule (HS) code at the present moment, taking into account such crucial information as the country of origin, restricted party lists and labor costs.

The company also has a global team of around 100 people who can provide information on the nuances of trading within a specific country, providing insight and context when targeting advantageous sourcing locations. As manufacturers weigh the costs and benefits of shifting operations, they need to incorporate such concerns as brand risk, a country’s sustainability advancements, transportation costs and the level of disruption a move would inflict upon their supply chain, noted Daniel Smith, Amber Road product marketing specialist.

Texbase—raw material database

Texbase’s cloud services provides apparel and textile manufacturers with a deep level of information behind the raw materials they’re sourcing. Texbase has the ability to get as granular as whether a specific button or zipper a manufacturer sources in China is available in another location, or they can inform about the shrinkage properties, durability and color fastness of the yarn a company currently uses to see if a similar fiber is offered elsewhere.

Manufacturers equipped with this level of information can then discern how difficult it would be to replicate their supply chain elsewhere.

Beyond trade uncertainties, having such transparency lets companies operate much more independently and efficiently than those without this information, said Joe Walkuski, Texbase CEO.

“It’s having the data and information you need to maintain quality and compliance no matter where you sourcing from,” he added. “If you have that level of detail and understanding within your existing [supply chain], it’s No. 1 going to strengthen it and make that as effective as can be. And, No. 2, it puts you in a position to change your sourcing strategy when forces dictate it.”

Bamboo Rose—tariff calculator

Part of the company’s Multi-Enterprise Platform cloud service, the Tariff Impact Analysis Tool estimates the bearing a tariff will have on the landed cost of a customer’s goods in real time.  Data is incorporated from product development, sourcing, manufacturing and supply chain stakeholders, including such details as negotiated freight rates, agent fees, bank fees, brokerage fees, negotiated volume discounts, bill of materials and product attributes.

According to Diamante, the system automatically incorporates new tariff rates as soon as they’re tweeted and updates when an official announcement is made by a government. This early visibility enables companies still in the product-design stages to limit added import costs and speed-to-market delays.

Logility—disruption forecasting

While companies once upon a time painstakingly created spreadsheets to forecast the needs of their supply chains, today’s computing power has thankfully made those days as much of a relic as manual recordkeeping. Logility’s supply chain management platform employs artificial intelligence and machine learning to create detailed “what if” scenarios to measure the disruptive effects of anything from tariff tweets to hurricanes.

Used by manufacturers and brands from concept through customer delivery, the cloud platform pulls in a company’s internal data and layers it with data from third parties—including Twitter—so customers can locate those “golden nuggets of information” they need to make business decisions and quickly execute them.

NGC Software—quality control monitoring

NGC has integrated several tools within its cloud-based management platform that are designed to optimize supply chains by evaluating and managing vendor onboarding and management details. The Andromeda Vendor Compliance and Quality Control tools incorporate data from product and material creation, factory capabilities and capacity, material positioning, quality control, and finished goods distribution. Users can also send RFQs to multiple vendors and monitor quality control during the production process.

“Regardless of an impending trade war, the future supply chain ecosystem is going to move a lot faster in order to quickly react to consumer demand,” said Mark Burstein, president of NGC. (Both NGC and Logility are owned by American Software, although they operate independently.)

“Manual systems [like spreadsheets and email] and siloed data will not work in the new model. The industry’s leading brands and retailers are moving towards a common supply chain platform that will eventually utilize artificial intelligence to analyze Big Data and autonomously make decisions and initiate transactions faster than any amount of human beings can possibly achieve,” he added.

Kalypso—strategic consulting

The firm consults on all aspects of product development and production for apparel and textile retailers and manufacturers, helping companies navigate the strategic aspects of the supply chain to weather and thrive within uncertain environments. While trade ambiguity is certainly top of mind, it’s only amplified and heightened the ongoing issues in the supply chain as brands and retailers adapt to speed-to-market and channel disruptions, said Warner.

“Companies that will continue to lead the way in the face of uncertainty are those that focus on bringing innovative, differentiated products to market that a consumer wants to buy,” he noted. “This is increasingly difficult due to many factors, including more empowered consumers, new digitally enabled competitors and the recent supply chain uncertainties.”