Modern day supply chains are extremely complex. With globally dispersed sourcing, there is now so much choice when it comes to suppliers. So how can buyers determine who best to buy from?
In an age of fast fashion and high consumer demand, it’s not surprising that price is a priority when it comes to buying. Whilst, of course, price needs to be high up on the agenda, it shouldn’t be the only factor that influences the decision, as you may find the cheapest supplier may not be the most ethical or sustainable.
The evaluation of your potential suppliers against set criteria is key to a smooth-running operation. An objective scoring system to rank existing and potential suppliers is key, but what criteria should to be considered?
Setting buying criteria
Before any criteria can be set, it is important to consider the objectives and target market for your brand, taking into account the type of garments the company produces. This is important because it will influence other criteria such as region to source and quality, as they all have strengths in different markets.
Each major manufacturing region has different skills sets suited to the type of garment and market you are aiming at. For example, a low-cost sourcing country may not have the skill standard or equipment required to make a tailored suit but has the advantage of labour being more cost effective.
One factor to consider when choosing a sourcing location, is the quality you expect from your suppliers. Poor and inconsistent quality could affect consumer confidence and brand loyalty especially if it was a luxury item. This could lead to a reduction in sales and it is very difficult to re-build reputation.
Reliability and lead time of the supplier
With fashion being much more fast paced than decades ago, it is not suitable for some brands to work with suppliers where the shipment of goods will arrive after the trend has moved on.
It is important to consider shipping times and costs involved. Should the product arrive too late you may end up having to discount it straight away when it arrives at stores and thus lose margin.
Regulatory compliance and sustainability
Consumers want to buy from retailers who source ethically; research shows that the consumer ultimately holds the brand responsible for ethical failures within their supply chain, regardless of the stage at which they occur, and brands who claim to behave responsibly but fail to do so can suffer brand damage.
With this in mind, it’s important to ensure that the brand’s appointed, audited suppliers are compliant with the Modern Slavery Act 2015 and have sustainable practices built into their processes and can evidence them.
Flexibility on demand-based order quantity
Consider if the supplier would let your orders fluctuate with the changing seasons or on buying trends, if sales drop will they let you adjust your order at short notice.
Evaluating the scores to make the right sourcing decisions
Once you have considered all of these factors you need to ‘’weigh’’ them up dependent on what you consider to be most important to your business. Scores can then be attributed to each supplier in order to rank them. One way to achieve this could be to give all of your top suppliers a number 1, secondary suppliers a 2 and those “at risk’’ due to underperformance a number 3.
Working with your suppliers is imperative. They may score low but scoring and evaluation should be an opportunity to help suppliers improve their practices rather than release them. Strategically, it is better to retain your suppliers rather than changing the mix. Using data that you have collected from real experiences allows you to engage in constructive conversations with your supplier base.
An example of sourcing criteria wheel chart. Credit: Just Style
How Segura can help
There is increasing pressure on retailers to source responsibly and buyers need to be aware of who supplies your company, right down to the extended supply chain.
Transparency is key to helping you make the best buying decisions, after all you can’t manage what you can’t measure. Segura’s platform can give you visibility of your supply chain beyond tier one, making it easier for you to manage and measure your suppliers.
Through Segura you can onboard and capture your entire supply chain and map all interactions, putting you back in control and able to manage your supplier relationships proactively.
Segura’s Order Manager module allows you to place orders for all components in one place, ensuring you know exactly who is supplying you, right down through your extended supply chain. With real time order data, you can see what stage orders are at and check that they are due to arrive on time and in full, allowing you to spot and work with suppliers who are continually underperforming.
Auditing suppliers is also made simpler with Segura Compliance Manager, as you can quickly check that audits are up to date and corrective measures are in place if required.
Original publish date: 15/01/2019