How Vendor Selection Shifts in a Post-Pandemic Future
And How Technology Supports What’s Next
The apparel and soft goods sourcing and manufacturing landscape has changed significantly since the pandemic’s onset. Companies face different supply chain constraints, costs and challenges than they did this time two years ago. Yet amid all the changes, retail’s evergreen goals remain constant: Right product, right place, right time, right price.
New strategies are needed to meet the same core business priorities and key performance indicators (KPI):
- Social responsibility/sustainability
“It is not as much looking at new KPIs as just a new look at the same KPIs,” said leather jacket and motorcycle apparel manufacturer Jason Schott, COO, Schott NYC, in Sourcing Journal’s 2021 Visibility Report, “The Need for Supply Chain Visibility Has Never Been More Crucial.” Costs and lead times are more impactful today vs. pre-pandemic because the supply chain “is in such a state of flux,” he said.
Here is a look at how three industry dynamics are affecting a vital supply chain priority: vendor selection.
Looking to 2022, businesses want to make sure all their eggs aren’t in one manufacturing basket. They are building new supplier relationships in multiple regions, including nearshore production closer to consumer markets. Such diversification is essential to both:
- Counter supply chain disruptions and uncertainties
- Meet intensified requirements for speedy delivery from connected consumers and eCommerce channels
Blacksmith International, which provides global product development, sourcing and manufacturing services, cited diversification as one of the top three lessons learned from 2021, along with shipping delays and supply chain visibility.
Kontoor Brands, a global lifestyle apparel company, told Sourcing Journal that having a footprint in both hemispheres is “a distinct competitive advantage in scale and speed.” Likewise, Marcus Chung, vice president of manufacturing and supply chain, ThirdLove, said the lingerie business has diversified sourcing into Vietnam, Mexico, Nicaragua and the United States. “Having that diverse country-of-origin base in place has helped us to be able to manage these shocks a little bit better,” he said. “It’s not to say that it’s perfect and that we’re not being impacted by capacity and delivery challenges, but at least we have options.” Both Kontoor and ThirdLove were featured in Sourcing Journal’s report, “Fashion in Focus 2021: Investing in a Future Forged by Adversity.”
This report highlighted the results of a Sourcing Journal and AlixPartners survey. Respondents said the top three strategies they were considering to “future proof” their supply chains were:
- Diversifying production partners
- Focusing on fewer, more strategic production partners
- Increased partnership and collaboration with suppliers
Technology’s supporting roles:
- Shop floor control (SFC): Supply base diversification means identifying reliable new vendors. When factory partners have strong plant floor digitalization, brands and retailers can be more confident their new suppliers have an accurate view of available capacity. SFC technology helps suppliers provide timely work-in-process (WIP) and delivery information.
- Product Lifecycle Management (PLM): PLM accelerates the vendor onboarding process, offering tools for vetting and comparing prospective vendors. PLM also automates and standardizes request-for-proposal (RFP) processes. These capabilities reduce the need to sift through emails and spreadsheets for price quotes and other data to vet suppliers.
#2 Supply Chain Mapping
While eyeing the geographic map, sourcing and C-suite executives also are focused on another type of map—one that shows clear line of sight to upstream suppliers beyond their Tier 1 vendors. Many companies are confident in their primary supplier relationships, but they often do not have visibility deeper into the supply chain. Gartner and other consulting firms refer to “mapping the supply chain” as important to ensure:
- Resiliency and reliability
- Better control of raw materials
- On-schedule production
- Corporate social responsibility (CSR) and sustainability
Leading global denim material manufacturer Isko has established an Environmental Product Declarations (EPD) system to “measure the environmental impacts of one square meter of fabric throughout its life, from growing the raw material to delivery to the garment manufacturer,” said the Sourcing Journal Visibility Report. Isko encourages its customers, which include major fashion brands, to request EPD Life Cycle Assessments from all of their suppliers, the report said. This is one way to improve upstream supply chain visibility and accountability.
Also in the report, a manager with OVS, the vertically integrated Italian fashion retailer, called for brands and retailers to move away from a “buying” approach and be more concerned with manufacturing. Likewise, Nudie Jeans’ sustainability manager Sandya Lang said apparel brands should have intimate knowledge and understanding of their supply chains. “It might be easier for some brands to claim it is too complex or too difficult, so they’ll not need to take any responsibility for what they might find in their supply chains,” she said. “If you are aware of all the production steps for all your products, it becomes difficult to ignore that all those people need to make a living, and it will be highly questionable to have a too-low selling price.”
Technology’s supporting roles:
- PLM: This technology enables workflow management farther upstream than many brands and retailers might control today. This includes raw materials development and management. Also, factory scorecards can be digitally attached to sample approvals and other vendor communications.
- Integrated PLM and ERP: With highly integrated technology, such as BlueCherry® Enterprise Software, data is exchanged seamlessly between enterprise resourcing planning (ERP) and PLM. Companies get greater visibility to production costs and can build detailed and accurate bills of materials (BOM).
- SFC: When prospective factory partners use SFC, their customers get clear visibility to capacity, WIP, and incentive payroll practices. Real-time data and detailed reports from production management technology like BlueCherry Shop Floor Control provide greater assurance that production is proceeding according to plans, at compliant factories, not unknown subcontractors.
As they diversify and map their supply chains, businesses also are seeking tighter, closer partnerships with suppliers. To avoid shortages, delays, and compliance challenges, they want more supply chain control.
Integration supports remote monitoring of supply chains when in-person audits and visits are not possible. With closer vendor relationships, brands and retailers are better able to:
- Lock in reliable supply
- Build trust with trading partners
- Respond with more agility to market trends.
In the Sourcing Journal and AlixPartners survey, respondents were asked what pandemic strategies they expect to persist.
- 57 percent said it would continue to be difficult to visit factories, prompting more remote collaboration
- 61 percent expect to do more virtual design and development
- 45 percent will continue looking for supplier-certified quality assurance (QA)/quality control (QC) programs
- 37 percent will work with third-party QA/QC service providers
“To gain more visibility, supply chains must become more digital. Digitally functioning, automated supply chains have the power to integrate IT, operations, and data to improve performance,” Blacksmith International said in its blog post, “Planning Your Supply Chain for 2022: Lessons Learned from 2021.”
Blacksmith cited the Reuters and Blue Yonder 2021 State of Supply Chain Execution Report. That report found that 63 percent of manufacturers believe end-to-end visibility is the single greatest ROI of all their execution strategies.
In its “Investing in a Future Forged by Adversity” report, Sourcing Journal found that 67 percent of participants in its research study “prioritized platforms that offer a single source of the truth.”
Karen Smith, executive vice president, global supply chain, Kontoor Brands, said the company is “transforming to a synchronized, data-driven global supply chain that can identify and quickly respond to customer and consumer demand and optimize our inventory.” A new ERP platform and enhanced data analytics are helping Kontoor improve speed and agility, she said.
Technology’s supporting roles:
- SFC: Whether a factory is wholly owned, a joint venture or an independent contractor, SFC integration opens a window into a supplier’s operations for clearer visibility than is possible without it.
- PLM: With solutions like BlueCherry Next™ PLM, trading partners can collaborate remotely and share a single version of the truth. They also can integrate upstream suppliers such as fiber and fabric producers into their PLM platforms for greater transparency into and control of their raw material supply chain.
- Integrated PLM and ERP: When these solutions are on a shared platform, they support more robust two-way sharing of information about plans, demand, designs, raw materials, and production.
If you are like many of your peers, supply chain diversification, mapping and integration are top goals heading into 2022. For a fresh take on achieving these priorities and more, download the Visibility Report.