Want strong supplier relationships? You need supply chain transparency

Is your fashion brand ready to take on the world? We’ve taken a look at the latest sourcing trends in the garment industry, and considered how supply chain visibility can help retailers to manage complex supplier relationships.

Speeding up the supply chain

Garment retailers are undoubtedly under pressure to deliver new designs to consumers at a greater speed than ever before, all the while maintaining competitive sale prices. Supply chain efficiency has therefore become increasingly important in order for retailers to meet tight deadlines and control production costs.

As a result, we are seeing more and more near shoring, with Eastern European countries such as Turkey becoming popular sourcing destinations for the UK retail market. With garments produced closer to the point of sale, less time and resources are required for the shipment of orders.

Segura’s supply chain transparency solution can automatically update fashion retailers and manufacturers on the status of individual packaging orders, helping to inform the garment supply chain and determine the timescale for activities such as shipping and distribution.

Cutting down production prices

With wages rising in a number of Asian countries, especially China, it is becoming even more economically desirable to use manufacturers closer to home. In fact, a number of Asian manufacturers are setting up operations in Africa, an emerging region for garment production.

Labour in many African countries is far cheaper than in competing markets on other continents, and Nigeria has recently been touted as one of the biggest future growth areas. However, Africa does come with its problems. Political instability, the rise of rebel groups such as Boko Haram, and alarmingly high levels of corruption in Africa all represent supply chain risks and make it a less attractive sourcing location.

If these problems can be tackled effectively, then Western brands and retailers may well increase their sourcing activities across Africa in the future. However, we believe that the days of chasing cheap labour around the globe are numbered. While some brands and retailers use this approach to try and cover inefficient business practices, effective supply chain management is the ideal.

Different points of view

One big problem that stems from global sourcing is the impact of cultural differences and conflicting workplace standards on the garment supply chain. Retailers cannot rely on suppliers to share their expectations of supply chain transparency, particularly in emerging countries.

Victims of the 2013 Rana Plaza building collapse and their families have recently filed a wrongful death lawsuit in Washington D.C.’s District Court, calling for several major retailers to pay damages for their failure to address preventable supply chain risks.

Some of these retailers have previously argued that they were unaware of primary suppliers subcontracting orders to Rana Plaza. However, plaintiffs have countered that retailers should have been more diligent in regards to enforcing supply chain transparency.

“Retailer defendants in the United States knew or should have known that the Bangladesh garment industry required significant oversight to ensure safe and healthy working conditions in garment factories, including oversight in relation to structural integrity of buildings,” states the suit.

Plaintiffs also blamed the Bangladesh government for failing to perform an adequate building inspection, and ignoring reports of serious structural issues from workers and inspectors. While many Western countries have extensive health and safety regulations in place for garment factories, this isn’t the case across the world, and fashion brands can’t make any assumptions.

Segura has partnered with Asiainspection in order to make global factory auditing easy. AsiaInspection audits can be requested directly through the Segura platform, with status updates and email notifications keeping manufacturers informed at every step of the process. Inspectors can arrive on-site within 48 hours of an audit being requested online, and a detailed report is produced the same day. Packaging orders can then be placed with approved suppliers using Segura’s solution.

Benefitting from supplier choice

Garment brands and retailers could improve supply chain transparency simply by focusing their sourcing activities across a small number of suppliers. However, this could leave them at risk of being held to ransom over price, as well as suffering from potential capacity issues.

Using Segura’s supply chain software, brands or retailers can accurately monitor the performance of a diverse and resilient supplier base, rewarding those that perform and removing those that don't. As a result, greater competition in the supply chain can be achieved without greater complexity.

Originally published 15/07/2015