Sometimes you talk to people about networks in business and their eyes just glaze over. Yet right now is the very moment when both “networks” and “networking” have become truly important concepts and everyone involved in the leather chain needs to consider their implications. We talk about the leather supply chain as though it was some sort of straight line event when it so clearly is not.
No one needs leather any more
Another assumption our industry makes is that consumers need leather. Perhaps a hundred years ago, even fifty years ago, when we needed leather to go to war and before technical textiles and new plastics came on the market, we did need leather - but show me a use today where leather cannot be substituted by other materials.
Leather’s technical qualities are no longer order winners. They have no right to be an order qualifier because there are many materials that can meet the same technical specifications for every leather end use. Leather wins because consumers bond to it. They like its touch, its smell, its look. These emotional aspects are now the order winners and fundamental to leather’s prosperity.
These two facts combine to make the world a scary place for the leather industry but, at the same time, provide the basis of analysis that can help move into a profitable landscape. In any recession the structure of business changes through closures, mergers, relocation or new business methods. The network that emerges looks different. So now is the time for wide scanning, for expanding your network horizon. So if you are one of these over-burdened businessmen who looks intensely at your immediate suppliers and customers, but never looks up to see what else is happening in the broader ndustry, you are going to wake up some day and see leather replaced by textiles or synthetics that offer value for money.
What will synthetics do to your market?
If the leather industry is short of business and stuck with lots of empty capacity do we really think the same is not the same in equivalent factories in the textile and plastics sector? After all the price of oil has collapsed back just as much as the hide price has dived. Do you imagine they might not think of meandering into your immediate space and try and sell their materials as better value to your customers just at the moment when retailers are seeking cheaper prices to keep the consumer spending?
A network involves all sorts of complex interactions far beyond hide dealer to tanner, tanner to shoe maker and shoemaker to retailer. Chemical companies and machinery companies are in there and many deal with multiple parts of the channel. Many leather chemical companies know a lot more about end user industries than others in the network and many companies have complex relationships with other partners to move semi processed goods around the world. Some of the synthetic people use tanneries to dye and fatliquor their material to make it more like leather and most of the best synthetic companies already have good relationships with the major retailers, brands and even automobile companies.
Forget the Big Three think about their tanners
And this is another point if you are worried about who might be eating your lunch. Tanners in the car upholstery sector have built the most modern and most efficient tanneries in the world and quite a lot of them have these plants in multiple locations from Mexico through Europe to China. Do we really expect them to sit idle waiting to see if the Big Three US car makers survive, and if they do consumers will again purchase the same number of luxury cars with leather upholstery? Can we not imagine this group might just cast their lines into another section of the global leather network – footwear – and make some enticing offers to the big names?
The story of a business network is one of constantly weakening and strengthening relationships, along with new relationships starting while others might die off. This is always happening, so if you go to sleep for a year or two you wake up to find you are in a different place like it or not. A recession hurries these changes and catalyses new developments making the terms “networks” and “networking” important business concepts.
And a final point from the automobile and upholstery trade. If the consumer does not need to buy leather and only purchases it because they “like it” then we had better be sure we actually offer them leather, rather than plastic with a leather label. We have been saying for some time that the upholstery suppliers have been damaging the “brand leather” and those in the network who do so need to kicked to the periphery of the network as fast as possible.
