Agile Sourcing in a Fast-Changing Trade Environment

3/12/2013
To thrive in today's world, fashion companies must keep a sharp eye on rapidly changing trade policies. As Thomas Travis, managing partner at Sandler, Travis & Rosenberg, urged fashion executives at the 2012 WWD Global Sourcing Forum, "Companies should focus on turning trade policy to specific advantage. You can be an adventurer, you can be proactive or you can stand by – as long as you monitor these trade developments, because they matter. They distinguish who wins and who loses."1

One of the most prominent trade policy initiatives in the news these days is the 11-nation Trans-Pacific Partnership (TPP) free trade agreement that is currently being negotiated. Among other things, the TPP will provide a major catalyst for shifting more apparel sourcing from China to other lower-wage countries, particularly Vietnam. The historic trade pact between the U.S. and Myanmar will also change the sourcing landscape; with labor rates that are substantially lower than China's, Myanmar is poised to become a hot destination for apparel manufacturing.

Dozens of international trade agreements are currently under consideration by Congress and at the state level, covering free trade, child labor and human trafficking and slavery in the supply chain, among other issues. Given the constantly changing landscape of international trade, companies must pay close attention to the impact of trade legislation on the supply chain. Leading companies will have nimble supply chains and will be able to take advantage of the shifts in sourcing, while the laggards will not.

Supply chain systems aid sourcing agility
To win, companies must have flexibility and nimbleness in their supply chains — which means that winning companies will have the right management systems in place. These platforms give them the flexibility to quickly change their sourcing mix — from one region to another, from one country to another, from one vendor/factory to another — in order to take advantage of all the trade policy changes.

To do this, companies must have one system to report across the entire global supplier base — and to gain the sourcing flexibility that is required, PLM systems must extend into the supply chain by combining traditional PLM with Supply Chain Management (SCM) and sourcing capabilities. Only by extending traditional PLM into the supply chain can companies gain the agility they need and take advantage of trade developments. As an Apparel/Gartner study noted, these synchronized PLM and sourcing systems are "at the heart of a company's ability to achieve greater supply chain agility."2

Systems that combine PLM with SCM and sourcing — which NGC refers to as Extended PLM — can enhance supply chain responsiveness in a number of ways. The following characteristics are especially important in enabling more agile sourcing:

Supply chain visibility. Extended PLM systems share production and logistics information among all members of the extended global supply chain — including retailers, vendors, manufacturers, suppliers, contractors, agents and other stakeholders. As a result, these systems can provide real-time visibility that dramatically improves supply chain execution.

Improved supply chain collaboration. Instead of relying on emails, faxes and other inefficient methods of communications, these combined PLM-SCM systems can provide a single platform that centralizes communications and reporting across the entire supply chain. Workflow calendars, exceptions dashboards and collaboration tools ensure accountability and responsiveness throughout the supply chain, enabling retailers and brands to understand the real-time status of all products at all times and ultimately improve on-time delivery and compress production cycle time.

Vendor compliance and factory safety. In the aftermath of the tragic Tazreen factory fire in Bangladesh, worker safety has emerged as a top supply chain issue, so companies must also consider factory safety as they evaluate their sourcing mix. Supply chain systems are invaluable here as well, by providing instant access to vendor profiles, with critical information such as vendor profiles that include each supplier's current compliance audits, quality and performance history, and factory safety records. Systems can even proactively notify retailers, brands and factories of upcoming audit and re-certification dates and assign a corrective action plan if factories don't pass the audit.

Armed with improved supply chain visibility, greater collaboration and insights into vendor compliance, companies can put themselves in position to take advantage of the constantly shifting trade landscape — and PLM/supply chain systems can help give them the agility they need.

Mark Burstein is president of sales, marketing and R&D for NGC, a provider of software solutions for the apparel industry.

1 "Focusing on Trade Policy," WWD, Oct. 9, 2012
2 "Forging PLM's Next Frontier – the Sourcing Connection," Apparel Magazine, Dec. 2010

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