Nearly 160 sourcing executives took part in Apparel Magazine's 6th Annual Sourcing Summit at MAGIC, held as an official event of Sourcing at MAGIC this past August in Las Vegas, where thousands came to visit more than 1,100 resources from 43 countries and a special focus was put on sourcing opportunities in the Western Hemisphere as well as the ASEAN region. (See related story.)
Apparel's Sourcing Summit consisted of an executive analysis of its sixth Annual Excellence in Sourcing survey and report, presented by Andrew Billings, manager with Kurt Salmon, as well as a panel discussion addressing "New Innovations in Sourcing," moderated by Tony Ward, partner, Kurt Salmon. Panelists included Vivek Bhargava, vice president, operations, Charming Shoppes Inc.; Tom Langdon, vice president, sourcing and purchasing, Encompass Group LLC; Scott Oldham, senior account director, strategic fashion accounts, Lectra; and Charles Sheppard, vice president, global sourcing and distribution, Superior Uniform Group. Giving closing remarks was Steve Burns, vice president/general manager, Americas, Avery Dennison/Retail Branding and Information Solutions. (Download "Looking for Cost Savings In All the Right Places" here.)
The event was sponsored by Title Sponsor, Lectra, and Gold Sponsors, Avery Dennison/Retail Branding and Information Solutions, ecVision and Jesta I.S.
Following are some of the panel highlights.
On current challenges and lessons learned:
Langdon: "Vendor reliability can be a tough problem. We have had to scramble sometimes to find an alternate vendor. It's important to keep close tabs on our vendor base, to include understanding their financial position and/or to have back up. Also, understand that low cost does not always translate into the best product."
Bhargava: "You must have continuity of supply. Historically we approached vendors according to our separate brands, but over the past year we have approached sourcing more corporately. … We have cut our vendor base in half and we are more important to fewer people. In April we had our first sit-down with our top five vendors in Asia [to discuss our corporate needs] and were thrilled with the results."
Oldham: "We get lots of calls for help from our customers; people saying they are concerned they are getting ripped off [in their sourcing efforts]. My role is to provide tools to give visibility, so the brand or retailer has the right information at the right time."
Sheppard: "Supplier viability is the big issue. Do you really have an idea of their financial backing? A lot of good companies are gone. We have always dealt with few vendors and we don't chase the pennies; we have a lot of 10-year relationships. The other challenge is the uniform business is so price-driven. We challenge ourselves to ask, ‘Are we buying our product as good as we can?' and ‘What can we do to improve that relationship that will eventually field a lower price?'"
On vendor portfolio management:
Sheppard: "At Superior, we are actually looking for additional vendors. As we continue to grow we are at the point where we need to diversify our risk. We will continue to keep our group of vendors going, and growing with them, but we need more. About 25 percent
of business could be driven into new vendors. We can provide continuity to vendors because seasons aren't an issue."
Bhargava: "About a year and a half ago we began rationalizing our vendor base. We used to buy a lot of finished goods and we made a strategic decision to be more vertical. We went through a big exercise asking, ‘Where are we?' and ‘Where do want to be?' We realized we could get better leverage by grouping our brands in terms of buying, even though we had some big runs and some small runs. We created a vendor playbook for these top vendors. And because we were providing transparency they were very open."
On materials management:
Langdon: "We are doing some dollar cost averaging. And as we go deeper with core vendors we are even helping them procure yarn.
Oldham: "I am seeing an outcropping of consortiums where there are groups of companies joining together through agents to leverage costs of textiles."
Sheppard: "On textiles we are working with a few key mills and getting them into new products. We can let them get involved in that planning side and it gives us both time to react as plans change. We try to find more stock fabrics as well."
On the sourcing/PLM connection, challenges and benefits:
Oldham: "I have been involved in some 50 PLM implementations. It takes approximately 18 months for a decent ROI after about two months from implementation. PLM helps tie together the supply chain. It's about getting better and faster and creating real-time communication with your vendor base. It's about your vendor base being able to get revised information directly from you. It's all a matter of having the right tools that your supply chain can use at the same time. The challenge can be getting different technologies to communicate. Sometimes the tools don't allow this."
Bhargava: "It takes about a year to get your rhythm with PLM. Include your overseas offices in the early phases. Once you've got the entire organization on the same platform a lot of emails and spreadsheets go away. Also recognize that you need support at the top."
On key sourcing functions most in need of supporting technology:
Bhargava: "Tools on the market today aren't mature enough to support materials management. I know folks are working on it, but it's just not there yet. We need a more holistic view."
Oldham: "Being able to do better scorecarding and vendor-based management would allow the use of that information to better leverage prices."
Langdon: "There's interest in greening the supply chain, but when we show customers products and then the prices they groan. I'm not sure we're there yet with consumers."
Sheppard: "I don't see anything changing with consumers in the next five years. If there is a payback in lowering your carbon footprint you're going to do it. If it doesn't make sense business-wise, we won't. For example, we got a seven-month payback for changing out the lights in our DC. We look at waste every day. And we have key committees dedicated to making sure we drive out every bit of waste."
Oldham: "Testing is becoming available to determine the greenest of products and we are building that into tools, including vendor scorecarding."
On risk and balanced sourcing:
Langdon: "We did a risk assessment several years ago. We divided our sourcing teams into different regions and challenged them to look at all of the products for their region, which in turn created some friendly competition. We do have some dual sourcing strategies with key products."
Sheppard: "We have always believed in having multiple factories around a product; you cannot be limited to one product in one country. With the Haiti earthquake, for example, we did have a back-up to rely on. We look at this quarterly at a very high level and annually we do a very serious look at it. We also challenge our team internally to look at the region they are responsible for and think about products we are doing in other regions: ‘Can you bring that other product into another region?'"
Susan Nichols is publisher of Apparel. She can be reached at firstname.lastname@example.org.
Editor's Note: A date for the 7th Annual Apparel Sourcing Summit at MAGIC will be announced in conjunction with Sourcing at MAGIC. Watch for details.