Successful Supplier Relationships Think Beyond Price-Per-Unit
Amid today's perfect storm of fluctuating consumer demand, cost inflation, labor shortages, supply chain disruptions and delays, consumer goods brands and retailers must find new ways to meet burgeoning consumer expectations for value, quality and delivery. Winners in this challenging environment are rethinking traditional strategies and making bold moves to position themselves for whatever comes next.
Rebuilding Strained Supplier Relationships
It's clear that the challenges of the past few years have been tough on buyer-vendor relations. One of the pandemic's worst economic impacts was the "Great Cancellation", the 2020 flood of order and payment delays and cancellations. As a result, many businesses struggled to stay afloat, and supplier relationships hit a low point.
For most brands, the key to mitigating their most significant risks is forging stronger, more strategic supplier relationships.
The new CGS Whitepaper, "How to Build Better Supplier Relationships While Boosting Efficiency", details four ways today's most successful companies are shoring up their supply chains by:
- Rebuilding partner trust
- Rethinking and responding to challenges
- Addressing collective business requirements
- Embracing digital transformation of all operations
One of the most important lessons learned, then, is the urgent need to change traditional buyer-seller dynamics for the better. To succeed, both parties must take a fresh look at the needs of their partners. The free Whitepaper reveals a set of updated business requirements for each.
Changing Buyer-Seller Needs
Today's brands and retailers need suppliers who produce:
- Efficiently with minimal waste, rework, and delays
- Responsibly and ethically in compliance with ESG standards
- Economically to meet target price points and profit margins
- On schedule to meet critical delivery and selling windows
In turn, suppliers need buyers who:
- Honor commitments and pay on time
- Pay a competitive price that supports quality and ESG priorities
- Think beyond 'price-per-unit'
- Recognize the complexities of manufacturing
These points make it clear that achieving significant improvements requires us to rethink some of the industry's oldest and most entrenched sourcing strategies. So much so that even the most margin-conscious businesses are putting the traditional cost-per-unit priority on more level footing with factors like manufacturing reliability, flexibility, speed and ESG goals.
Consumer goods companies are also investing heavily in technology to gain real-time visibility across the entire demand and supply chains. Early warning systems and alerts to potential disruptions and delays now have fresh significance for trading partners. Shop Floor Control technology, once solely focused on collecting and reporting production activities for use on the factory floor, is now front and center for buyers' sourcing and supply chain management teams. It enables offsite managers and executives to track production milestones, KPIs, quality, delays, ESG compliance and other supply chain activities.
The newly advanced CGS BlueCherry Shop Floor Control solution provides this transparency along with the advanced analytics and detailed dashboarding that remote managers and executives need today. It enables them to see status and get answers immediately instead of waiting for return phone calls, emails and texts. This newfound visibility empowers all teams with the opportunity to head off, pivot, address problems and make better-informed course corrections on the fly.
Nearshoring Success Story
To provide firsthand insight into recent changes in supplier relationships and transparency, the CGS Whitepaper includes a Case Study of How Nicaraguan manufacturer Confexsa is successfully nearshoring apparel production by meeting the needs of U.S.-based uniform brands, retailers and distributors.
In operation for 18 years, Confexsa provides flexible full-package and cut-make-trim (CMT) production services for customers like Carhartt, Boot Barn, Ariat, Unifirst and other major brands. It is planning to build a second factory and expand its 1600-employee workforce by 50%.
Confexsa President Roberto Bequillard sees strong interest in Central American sourcing as U.S. retailers, brands and manufacturers seek flexibility, speed and peace of mind from producing close to home. In a recent interview, Bequillard explained, "The pandemic and geopolitical issues have triggered a mindset shift among buyers, who are putting greater focus on total costs, risks and profits vs. the least expensive 'first price' (price-per-unit)."
"Instead of wanting millions of one style, buyers now want multitudes of small lots of assorted styles. There is heightened wariness about carrying too much of the wrong product, and sourcing smaller order runs closer to the market reduces this risk. The market has changed, and manufacturing must adapt to that change and become a lot more flexible."
In addition to flexibility, "Strong ESG practices have become a core requirement for customers and prospects. Having significant programs for social responsibility is the minimum common denominator to do business," he continued. "And, of course, you have to produce high-quality garments. There's no compromise. "You have to check all the boxes."
"Customers also want to partner with manufacturers that are achieving productivity improvements of their own accord to help offset rising costs due to inflation," continued Bequillard. Confexsa is taking proactive measures to eliminate waste, inefficiencies and downtime in its processes. The manufacturer has implemented CGS BlueCherry Shop Floor Control at nearly half of its workstations, with a full factory rollout in progress. SFC enables Confexsa to:
- Track production in real-time
- Prevent bottlenecks
- Promptly address off-standard time
- Measure operator and line productivity
"We're already obtaining productivity increases in excess of 10% and expect that these efficiency gains will continue to climb", added Bequillard. "SFC has been a really good solution, and I would recommend it to anybody that doesn't have this technology."
Thanks to its flexibility, value-added services and proactive investment in capacity and technology, Confexsa is well-positioned to continue its growth.
To learn more about how consumer goods supply chains are winning in today's challenging environment, download the free "How to Build Better Supplier Relationships While Boosting Efficiency" whitepaper.
For more information about newly advanced SFC technology, visit the SFC webpage.