First step – the fact finding mission in Your house
1. Analyse the situation: how much are you buying? How many producers are supplying You? Whats their average annual order volume with You? How many different fabrics are You using? Think! How important could your business be for Your suppliers?
2. Whats the issue? Your margin is not sufficient? Your jeans have fitting issues? Sales are not sufficient?
3. Can Your issues be solved with Your supply- partners? Or do You have to find new supply partners? Are You producing in countries, who can offer what You need?
Second step – the fact finding mission abroad
With the exception of those producers (I did not say supply partners) who don’t make You happy with their products, You have to visit now Your future supply partners. Ask all of them the same questions: what are the other customers, what is their capacity, visit their production, check compliance and their code of conduct, water treatment, check their certificates, look at shrinkage- and as well at shading- tests, what will happen, when there is fire? Is the factory safe? Where do the workers eat? Are there restrooms for male and female workers? … treat all of them the same. Be respectful and don’t promise anything which You can’t keep. Very important – is the communication easy?
Third step – rating of your new (or old) supply partners
A very important part for all decisions regarding your supply- partners is the rating of your existing or potential suppliers
Important informations for us have been
grade of verticality (spinning – weaving – garment production – laundry)
capacity of the supplier
our share of his capacity (how important are our orders)
ability to produce smaller volumes
his other clients (from your continent?)
his suppliers
communication skills
r&d ?
creativity
compliance
past experiences (for existing suppliers)
strenght – weakness – options – threats (SWOT analysis)
% of sales at regular price
% of sales at reduced price
aso…..
Most important are always communication skills – if you and your supplier don’t understand each other, Your business will be difficult.
Please understand: our orders have been 30K+ per item and the annual volume was superior to 12 Mio jeans. This made all discussions relatively easy and we had to select suppliers which have been able to produce these volumes easily. But there are as well „normal“ retailers or brands who order smaller volumes.
General characteristics: the more vertical – the more big players will be working with this supplier. That means this supplier will be better informed, will run his own R&D department, there will be permanent production of well selling fabrics. In a completely vertical setup it will be easy to discuss prices. But: more vertical means as well that the supplier will need bigger order volumes.
Vertical setups can be huge or tiny this is the most interesting type of supplier which can match to every type of retailer or brand. The big ones will have their own fabric sourcing, a R&D dept. and most possibly there will be big players with their customers. You might get similar advantages like with a completely vertical setup but don’t forget the fabric supplier must earn money too, which is not the case in a completely vertical setup. If your orders are small, try to find a small vertical supplier. With a small one, you risk, that the guys in the laundry don’t really understand european or american needs, that they don’t understand the differences between our markets, that they use chemicals which soon will be prohibited to use … all this might happen, but must not be necessarily the case. Be careful with owners who are just talking too loud, guys who know everything – just remember: „… when you talk, you can’t listen – if you listen, you might understand.“ With a smaller setup you have as well the chance to get very good ambitious collaborators who will do everything for you and your orders. It will be a question of understanding. If the potential supplier is open to learn and you respect, that you have to learn as well – there will be a healthy basis for your future. Simple garment producers ? … try to avoid if possible. There will be discussions in case of problems. Who was responsible for what? Did the mill create the issue or the laundry? Who tested what? How? ….
Big setups don’t work with agents, buying houses, vendors – they don’t need this kind of service. Thats why buying houses, agents asa are working in general with factories (with or without laundry) who don’t have a R&D dept. and who are not traveling.
If you need to – or can – give just smaller orders, you need to compromise. There are all around the world smaller setups who do a very professional job. Talk to people who know the country, who know some factories, talk to colleagues, … to be informed is the best vault you can get.
Now you have to decide. What will be the best solution for you and for the company who is paying your salary?
fourth step – who will be your supply partners?
Risk sharing
There are tectonic plates at a subduction zone under Bangladesh which have been building up strain for over 400 years. Assuming the movement has been steady over the last 400 years, enough strain should have built up for the zone to jump 5.5m all at once. No one knows exactly when something will happen but Dhaka might be devasted. Bangladesh is for the european community the biggest supplier of jeans. In the case of a catastrophe like this earthquake there will be as well a serious issue regarding apparel in european and american stores.
We know that terror can’t be avoided. People have been killed all over the world even in countries, where jeans are produced. Terror is influencing everything – even production and shipment of our garments.
In 2016 some guys tried a coup in Turkey. The laws have changed and the relationship between Turkey and the EU changed.
There are influences in each country (or in each area) where we produce which are risky for the production. They are even different in different cities. Merchandise which is produced in Dhaka (BD) or Lahore (PK) must be transported to Karachi or Chittagong for the shipment.
Every year there will be Ramadan and there will be Chinese New Year both are influencing the production in some countries.
But there are as well positive changes. New streets are built, new factories are set up … changes make our business less boring.
To avoid issues regarding your production you should share the risk – probably you concentrate on two or three areas (or countries) and you source or produce for all genders in all areas (if possible).
Set up shares for the countries where you buy and leave some volume for countries where you want to do a test.