Fashion and apparel companies spend their time trawling the world to find the best value and most reliable sources for both raw materials and finished goods. And with the lifting of World Trade Organisation quotas on textiles and clothing, their nets are likely to be fuller than ever as more manufacturers gain access to western markets.
These newly open markets are forcing a shift in sourcing patterns with more focus on countries such as China and India - already the worlds biggest apparel exporters - and Vietnam, which recently announced much increased garment and textile exports.
The result of increased global sourcing is longer and more complex supply chains that will have difficulty responding quickly to changes in consumer demand, or reacting to industrial, economic and political events. Many supply chains are already so lengthy that they have very little visibility and lack the necessary communication between trading partners.
Supply chains are also under strain as retailers and distributors postpone the placement of orders until closer to the time they are needed. Manufacturers are faced with increased pressure to improve lead times, offer faster replenishment and develop the agility to respond rapidly to changes in requirements.
Many companies have become adept at fire fighting, but this merely adds to their problems, rather than solving them. Some companies are resorting to desperate measures in a bid to meet demand. There have been reports of importers who are purchasing fabric speculatively and of companies manufacturing products before they receive orders.
Global sourcing could potentially become even more complex after 2005, because the need to increase capacity through new producer nations will be essential to meet increased demand from emerging markets.
A recent report from www.just-style.com - Apparel sourcing in the 21st century, the ten lessons so far - notes that over-capacity is a myth, and that overall demand is likely to rise substantially thanks to growth in middle income countries, such as India and China.
Unless every part of the supply chain is fully involved and has total visibility of what is actually going on at any one time, it becomes increasingly difficult, if not impossible, for manufacturers to keep up with and respond to a changing market environment.
The fundamental issues are a disconnection between information systems, lack of flexibility and an inability to energise suppliers because of a lack of timely information. No one has a clear, real time view of inventory and the status of work in process. And it leads to a build up of hidden costs. Its hardly surprising the supply chain cant react quickly, or in unison.
So, can the industry rise to the challenge, integrate its supply chains and improve its commercial outlook? There is compelling evidence that some of the more innovative companies are successfully using collaborative technology that enables them to adopt demand-led business models with a pull-based approach to planning.
The future holds tremendous opportunities for the industry. But if the industry is to meet forecast demand profitably and efficiently, it needs to be more holistic in its outlook and embrace collaborative information technology with a greater degree of enthusiasm than it has thus far demonstrated.
The globalisation of the fashion supply chain and the complexity of its logistics have greatly increased the risk of errors in planning with consequent repercussions, both operationally and financially. Companies need to start using planning tools at all stages of the planning process.
Some participants such as Vandevelde, H&M, Zara and Mango are building fast moving and responsive supply chains. While traditional retailers and manufacturers lag behind, they can catch up if they embrace the technology to adapt their supply chains so that material flow is synchronised through the whole length of the supply chain.
Companies need to start by uniting internally with a collaborative enterprise system. This becomes the transactional backbone for the whole company and enables everyone to work with the same information.
Supply chain planning systems enable a company to model the complete supply chain, including all aspects of supply, production and distribution. The models can then be used to optimise the supply chain and propose the most profitable sourcing plan to meet anticipated demand.
Direct integration between demand planning and supply chain planning systems enables manufacturers and distributors to run almost instant what if scenarios across the whole supply chain network. Integrated systems create clear visibility of a companys ability to meet demand under a range of market, supply and cost conditions, irrespective of whether it is a commodity or high fashion organisation.
Systems for operational planning can significantly reduce the amount of fire fighting by synchronising all orders in the supply chain from raw materials supply, through production and distribution to customer orders.
These systems can identify areas where shortages or constraints could result in delayed orders. And because planners are working on an exception basis, they can proactively adjust the plan and significantly improve delivery performance.
In an environment where time is so critical, collaborative technology reduces the psychological geography between manufacturers, suppliers, subcontractors and retailers. Collaboration eliminates barriers and changes relationships, which leads to less fire fighting and more forward thinking.
Collaborative technology creates a new dynamic in which individuals start to become more creative. And it fosters an environment that is centered less on the resolution of issues and more on creative planning and new ideas.
From an operational perspective, collaborative technology gives manufacturers the ability to plug new sourcing partners into the supply chain by opening up clear channels of communications, and getting everyone working with the same standard processes.
Collaboration enables the whole supply chain to adopt a demand-led approach focused solely on the consumer, which benefits everyone retailer, manufacturer, supplier and subcontractor.
Global sourcing has become an art form. Achieving that delicate balance between labour costs, lead times, quality, and suppliers can mean the difference between maintaining margins and happy customers, or spiraling inventory costs and swingeing penalties for late deliveries.
Vicky Hyde is the Global Director of the Fashion Industry centre at Intentia Ltd and is primarily responsible for business all facets of the fashion industry divisions marketing, business process and product management. Intentia reportedly is the only global enterprise solutions provider 100% dedicated to bringing software applications and consulting services to companies whose core processes involve manufacturing, distribution and maintenancethe make, move and maintain market.