IT systems can reduce costs for US apparel sector
Rather than putting up with ever increasing production and logistics costs, apparel producers may opt for introduction of IT systems, which can help in continuous optimization of supply chain by developing direct links between brands and suppliers.
This was suggested by Jeff Streader, Operating Partner at California-based Marlin Equity, a California-based investment firm specializing in the retail and apparel sector, while speaking at the sourcing seminar, “Visibility Sourcing and Margins” held at Fashion Institute of Design and Merchandising (FIDM) in Los Angeles.
Streader noted that in recent times there has been a considerable rise in time and cost pressures. These are forcing the firms to launch fully synchronized collections in retail in historically shorter periods. Also, if some collection pieces go missing or are delayed in transit, it directly impacts sales, reducing it to almost half.
As process expedition and cost cutting remained hot topics at the seminar that discussed several issues confronting the apparel industry, Walter Wilhelm, Founder and President of Walter Wilhelm Associates, the shoe and apparel industry business consultancy, said speed and promptness are imperative for success.
Discussing the pros and cons of sourcing markets with regional diversities, and comparing the Central America Free Trade Agreement (CAFTA) region with China, he said that though Chinese producers work with fully integrated production systems, CAFTA region producers possess great expertise and also have the advantage of geographical proximity with North America.
Chinese apparel and footwear units have the advantage of raw material, button and zipper manufacturing units clustered in proximity. However, similar advantage is now being offered by some of the countries in the Central American region.
Wilhelm noted that while proximity is a big factor in time and cost cutting, latest techniques support constant optimization and acceleration of supply process, thus enabling a speedy and efficient supply chain.
Kathy Fang, Founder and President of Shanghai-based Lamode Textile, said rising labour and raw material costs are pushing production costs upwards. Moreover, the apparel industry is competing with other industries like electronics and automobiles, which are luring workers, particularly young workers.
In order to cut costs, several apparel firms are shifting their base from China's big cities to smaller towns, but these small cities often lack the requisite garment know-how.
A centralised IT collaborative system can prove to be of great help for suppliers in the sourcing sector, allowing them to get in direct touch with the customers and timely completion of several important tasks, Fang said.
The seminar, organized as part of the worldwide Roadshow jointly staged by New York based Setlog Corp. and Salt Lake City based Walter Wilhelm Associates, had over 30 brand representatives and retailers as participants alongside industry experts.
Fibre2fashion News Desk - India