The world gets smaller every day—and global brands and retailers absolutely must innovate to stay in the game. This was the key takeaway from SOURCING at MAGIC, which took place in Las Vegas from February 16-19. The twice-annual show, one of the largest events showcasing the entire supply chain from fabrics to finished garments, featured not only miles of show floors across the Las Vegas Strip, but also several seminars providing tips for brands and retailers to do better business.
Bharat Khandelwal, a partner at Boston Consulting Group (BCG) spoke during a seminar titled, “Apparel at a Crossroads: The End of Low-Cost-Country Sourcing.” While brands have often chased low-cost production around the world, this practice is going out of fashion because the risks are too great—and often, there are other ways to save more money while producing a quality, responsible product.
Khandelwal offered that companies such keep three ideas in mind when developing sourcing plans: innovation, collaboration, and proliferation. He encouraged brands to think about new ideas—new ways to reduce labor time and hands require and consequently cost through new sewing techniques, for example, or reducing your portfolio complexity through fabric consolidation. He also said brands should be deliberate in establishing their supply chains based on segment, such as sourcing closer to the market for high-fashion items that you want to move quickly, while sourcing your standard, predictable items that you sell season after season in areas that can be shipped by sea or air freight without the time crunch. The Sourcing Journal covered Khandelwal’s presentation in detail.
Speaking of sourcing closer to home, another seminar focused on Made in the USA, which has become a brand itself. But Mathew Burnett, CEO of Maker’s Row, a one-stop shop for U.S. suppliers, said Made in the USA can make economic sense, especially in an era when product cost is no longer the only factor to consider. He argued that the closer production is to consumption, the more likely the goods will be produced with the consumer’s labor and environmental standards in mind, and similar to what Khandelwal discussed, offered ideas for how to reduce labor costs when sourcing in the United States through product engineering.
Of course, as you’re thinking about establishing a deliberate supply chain, it’s important to take another look at duty-free options. USFIA President Julia K. Hughes moderated a session titled “Shifting Trade Winds: Duty-Free Options.” She began by discussing the trade trends—and the many reasons why many companies don’t use Free Trade Agreements (FTAs) and trade preference programs (download presentation). However, there is one duty-free program that was celebrated at MAGIC—the Egypt QIZ, which is much simpler to use than many other agreements and also contributes to world peace by encouraging Egypt and Israel to work together. Gail Strickler, Assistant U.S. Trade Representative for Textiles (download presentation) and representatives from the Egypt and Israel textile and apparel industries (download presentation) talked about why global brands and retailers should consider this agreement.
In the meantime, as companies continue to innovate, USFIA continues to advocate for more flexible rules to allow global brands and retailers to source and do business more efficiently. During SOURCING at MAGIC, USFIA Chair Maureen Gray, Vice President of International Trade for Ralph Lauren Corporation, took Josh Teitelbaum, Deputy Assistant Secretary for Textiles, Consumer Goods, & Materials at the Department of Commerce, on a tour of the show floor to explain how global brands are doing business today. Looking at Ralph Lauren Corporation’s new children’s wear booth, we provided a first-hand look at the complexity of today’s global supply chains—and the need for more flexible rules.