IT Collaboration Reduces Costs and Accelerates the Supply Chain

FIDM 'Roadshow' Review

April 24, 2012

Apparel Magazine
Process acceleration and cost reduction in the apparel industry were center stage at the sourcing seminar, “Visibility Sourcing and Margins,” part of the worldwide Roadshow jointly presented by Setlog Corp., New York and Walter Wilhelm Associates, Salt Lake City. More than 30 representatives from brands and retailers attended the event held at Fashion Institute of Design and Merchandising (FIDM) in Los Angeles on Feb. 9, 2012. Attendees and invited experts discussed the challenges facing the apparel industry. Jeff Streader, operating partner at Marlin Equity, a California-based investment company specializing in the retail and apparel sector, emphasized that time and cost pressures have risen dramatically. To satisfy customer requirements, brands are forced to bring fully coordinated collections to the retail market in ever shorter intervals. If some pieces are missing or arrive too late, sales are only half as successful as they could have been and the inventory remains on the shelf. Streader suggests that instead of accepting ever higher process and logistics costs, companies should adopt IT systems that continuously optimize the supply chain through direct networking between brands and their suppliers. An integrated event management should include all critical deadlines. Streader is convinced that this makes constant, rapid response possible. In Streader’s opinion, reliable partners operating with total transparency is the decisive factor for success. “In order to keep complex IT infrastructure as small as possible, more and more companies insist that SCM-providers offer their system for Cloud Computing,” Streader says. Walter Wilhelm, founder and president of the shoe and apparel industry business consultancy Walter Wilhelm Associates, is adamant that speed and punctuality are important keys to success. In outlining the pros and cons of regionally diverse sourcing markets, and comparing the CAFTA region with China, Wilhelm notes that although Chinese suppliers specialize in fully integrated production systems, the CAFTA region offers superior geographical proximity to North America in addition to excellent know-how. China is well known for clustering of materials, buttons and zippers close to factories that manufacture apparel and footwear but this capability is now available in some regions in Central America as well. While proximity offers a huge edge in time and cost savings, Wilhelm adds that modern software is truly the critical enabler in allowing supply processes to be continuously optimized and accelerated to achieve a quick and efficient supply chain. The challenges faced by suppliers based in China were outlined by Kathy Fang, founder and president of Lamode Textile in Shanghai, which, together with 40 Chinese factories, produces apparel valued at $50 million for the European market. Currently, one of the primary problems is the increased expenses associated with the rising cost of labor and raw materials. Furthermore, the apparel sector is faced with increasing competition for labor from the automotive and electronics industries, which are increasingly popular especially among young people seeking employment. In order to reduce costs, increasing numbers of apparel factories are locating outside China’s large metropolises, but in these smaller cities garment know-how is often lacking. There, as in other regions of China, the success of these enterprises will depend on the availability of good worker training, acceptable social conditions, and the ability of retailers and producers to form trusting, long-term partnerships — all of which must of course be capped off by a clear view of the supply chain. Says Fang, “A collaborative system with a central platform is extremely helpful as a support for suppliers in the sourcing sector. This makes it possible to cooperate with the customer in order to reach the many necessary milestones on a timely basis.” Participants at the event agreed that the clock can never be turned back. Competitive pressures will continue to increase while the cost of energy, raw materials and labor will continue to rise. Yet, these higher prices cannot merely be passed on to the consumer, and consequently, cost pressures also will snowball. Savings must come through the lowering of process costs, and this is achievable only through the support of an intelligent software solution.