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| Apparel Sourcing Rapidly Changing in Post-Crisis World |
The way clothing is being sourced by EU and US buyers is rapidly changing in a post-quota and post-crisis world, according to a just released study by the World Bank. Apparel producers will have to swiftly offer a large number of services or to accept depending on increasingly growing intermediaries in the global supply chain. How clothing suppliers in low-cost countries can adapt to the change in buyers' demand in a post-crisis and post-quota world?
A just published study from the World Bank offers a comprehensive description of the global rules in the apparel chain with a specific focus on Bangladesh, Cambodia and Southern Africa.
New Sourcing Requirements
The most interesting part of the 200-page study lies with the new requirement by global clothing buyers in the United States and the European Union.
After interviewing a series of buyers and compiling related literature, World Bank's Cornelia Staritz gives a detailed picture of the new trends in the way apparel are now being sourced and how suppliers in low-cost countries have a chance to fill the new requirements.
The most important trend consists in the supply chain consolidation.Being no more forced by the now expired quota system to source from a large number of countries; western buyers have drastically reduced the number of their suppliers.
Long Term Relationship
Obsessed with the need to simplify the whole process, largest buyers also tend to develop more direct relations with producers, although still relying on intermediaries for a large part of their orders.
Long-term relationship with a small number of core suppliers is being privileged by buyers. In addition to the traditional low production costs, US and EU buyers are increasingly looking for lower lead times and production flexibility. A wider array of services is also expected from the same suppliers, including textile sourcing, design and product development, inventory management and stock holding, logistics and financing, communication and merchandising.
They are also more insisting on labor and environment compliance.
This trend in sourcing requirements actually favors largest intermediaries which were developed in the last decade. These former producers in China, Hong Kong or Taiwan shifted to trading and coordination of apparel sourcing in different countries, playing an increasing role in the market.
From CMT to OEM and ODM
Global trading house Li & Fung obviously offers the best example for this new type of participants. The new trends in the global apparel supply chain are also forcing apparel producers in more rapidly shifting from cut-and-trim (CMT) model where inputs are supplied by the buyer or the trading house, to original equipment manufacturers (OEM), themselves sourcing textile materials and even to the full-package model or ODM (original design manufacturer).
All low-cost countries are however not equals in front of these new challenges. Reducing lead times for instance requires developing a domestic textile industry.
A Need for Government Textile Policies
This was partly done in Bangladesh where spinning capacities were largely expanded in the past years by contrast with a lack of textile inputs in Cambodia and Southern Africa.
Suppliers trying to upgrade will need the support of strong government policies, says World Bank's study, for financing textile buying, developing infrastructure or reducing red tape. Comprehensive policies in low-cost countries could therefore be a key to further development to higher-paid products and services, in order to finally exit the textile business and shift to other stages of economic development.
Source: www.emergingtextiles.com
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