Apparel, footwear cos lag in commodity-related savings

14 Apr '16

4 min read

Beyond the specific opportunities related to a better understanding of commodity price effects, a procurement approach built on a deeper understanding of the whole value chain has the potential to offer more than just quick wins. It can also help the industry meet some of its most enduring challenges. For a decade or more, apparel companies have been fighting rising costs, driven by increasing labor, raw material and energy prices, as well as compliance costs in Asia. Their main weapon in this war against inflation has been to move production to lower cost countries and regions.

But this strategy has many drawbacks: Supply chains must be reconfigured, and companies need to expend time and effort ensuring new suppliers meet the required standards of quality and environmental and social responsibility. Worse, by focusing so much on where their products are manufactured, these companies may not be paying enough attention to how they are made—and to the opportunities to reduce costs, manage risk and improve efficiency in their existing value chains.

There is also a significant opportunity for the apparel sector to make use of procurement best practices from other sectors. For example, the automotive and electronics industries for years have used advanced sourcing approaches such as Design to Value (DTV) teardowns, cleansheet “should cost” modeling and supplier collaboration. (SH)

Fibre2Fashion News Desk – India

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