Prime Source Forum 2009 Overview: Partnerships, speed and efficiency reigns despite downturn

 

The economic downturn dominated the proceeding at the annual Prime Source Form on the global apparel industry. This new reality has obliged major players to improve supply chain management by emphasizing partnerships, speed-to-market, transparency and efficiency.   Laura Jones, executive director of the US Association of Importers of Textile and Apparel, talked of “surviving the storm” and, according to Stephen Lamar, executive VP of American Apparel & Footwear Association, those that do will be much stronger in the next decade with fewer, more reliable partnerships.   The “new reality” has led companies to consider key topics such as common standards on product safety and social compliance as well as supply chain inefficiency and over-production.   Nicolas Kwan, Asia head of research, Standard Chartered Bank Upturn in 2011 Nicholas Kwan, Asia head of research, Standard Chartered Bank, predicted an upturn in 2011 on the back of a slow recovery, based on the consolidation of US retail sales and the recovery in the housing and credit markets. Up to 200,000 US retailers could vanish in the US and 100,000 factories have closed their doors in China during 2008, reflecting the gravity of the crisis. Trustworthy partners This topic was emphasized time and again as one of the keys to survival. Janet Fox, VP, director of sourcing, JC Penney said that retailers need to make sure suppliers have a sound balance sheet, their products are design-driven and they have a multiple-country production network. In fact, all suppliers need to be vetted in terms of their production and distribution capability as well as flexibility to incorporate product changes. Suppliers should also be graded on their performance. Janet Fox, VP, Director of sourcing, JC Penney Josef-Albert Bechmann, Former president of the Confederation of the German Textile and Clothing Industry Speed over price   The latest slogan is "small and fast" according to Josef-Albert Beckmann, former president of the Confederation of the German Textile and Clothing Industry. EU businesses are turning to new suppliers from Turkey, Egypt, Eastern Europe and North Africa.   Speed to market has now become more important than price in the competitive retail market place.   Nevertheless, high inventory levels cannot be blamed solely on the fall in consumer demand. This is due to overproduction caused by inefficient supply chains.  On average, the industry is making 5.3 samples for each finished product,” said Ken Watson, managing director of Industry Forum Services.   Lack of technology also contributes to slowness in the supply chain and manufacturers need to retool, employing new technology to reduce lead times from months to around 4 weeks, Watson emphasized.   Industry standards, carbon and new markets   Lack of product safety, social compliance and common industry standard have led to inefficiency and high costs for buyers and suppliers. Thomas Nelson, managing director of VF Corporation said the leadership was required to tackle these issues and requires commitment from the whole industry.   In addition, the question of who pays for carbon emissions was covered at the Forum. Consuming countries should pick up the bill for products manufactured abroad but the industry is still some way off from trading in carbon credits, according to Jacqui Dixon, a researcher of CSR Asia. Jacqui Dixon, researcher of CSA Asia Thorsten Allenstein, general manager of Triumph India New markets to take up the fall in demand in Europe and the US could be India, China and the Middle East. These countries have large saving and have not been hit so badly by the economic crisis.   However, Thorsten Allenstein, general manager of Triumph India, maintained the retail development in these countries was too far behind to compensate for the fall-off in US demand. If you wish to contribute to the APLF News, with your experiences in the industry, your observations, or general thoughts on the direction the industry is going, we would like to hear from you. Email: aplf-news@aplf.com