The coronavirus pandemic has taught us new ways of doing business by either discarding or modifying the earlier ones, writes Adi Kapadia
Many organisations in the textiles and apparel supply chain have faced disruption—either through business closure, drastic fall in retail sales, or inventories piling up across members in the supply chain.
• Recent forecasts suggest: trade volumes decreasing between 13 per cent and 32 per cent in 2020 (WTO, 2020);
• Clothing and garment sales in the United States (US) fell more than 70 per cent in Q1 2020, from Q1 2019;
• In the United Kingdom (UK) and elsewhere in Europe, clothing sales sank by 50 per cent during Q1;
• Asian manufacturers have exports falling by 50 per cent, businesses impacted and job losses in millions.
Let us look at learnings from this crisis with an eight-point reckoner for the covid-struck industry.
Global supply chains need to be transparent
It is necessary—as we move out of pandemic-related shutdowns and disruptions—that each player in the global supply chain takes a deep dive for transparency throughout the chain. It is not enough for the enterprise global sourcing professional to have visibility in their immediate level of supply, but gain visibility into the complete chain, beyond tier-1 suppliers. In the case of apparel manufacturing especially the value chain is extensive and starts from fibre and yarn to fabric and textiles and finally apparel and fashion. So, supply chains extend to multiple tiers, and enterprises must know who these suppliers are, where they are located, where they source from, their risk exposure, and so on.
For example , the US can reduce the trade over-dependence on a single Asian country, by sourcing within or by near shoring, but if suppliers are going to depend for raw material and intermediaries in the same cluster or country, there would be chances of disruptions repeating once again.
Enterprise supply chain risk assessment
It is necessary for sustainability in business that they affirm the supply chain risks and evolve a management plan towards minimising or mitigation of such risks. The old supplier-buyer relationships that worked in last decade or so will have to be assessed in the current global environment for geo-political stability and with a midterm cost benefit analysis, as in the past the primary criterion for supplier selection used to be costs.
Grow operations sustainability
It is a no-brainer that organisations that are more aligned with a sustainable future will attract more investors from global communities. In the case of the fabrics and apparel industry we have read about the damage already caused to businesses, retailers, discount stores and manufacturing setups across South Asian countries. Global supply chains were based on “best cost country” production and meeting demand globally. The outsourcing criteria helped many companies benchmark in terms of manufacturing input costs. However, today we are seeing wages rise in China and Chinese plants are moving to produce higher-value goods, while India, Bangladesh and Sri Lanka with lower wages have started attracting white-labeling brands and outsourcers to relocate their production from China.
The global market share is still very tilted in favour of China (40 per cent share), but China along with Japan has also become an important consumer of this industry. Consequently, the Asian country most affected by the disease outbreak could be Bangladesh where 85 per cent of its exports include fashion goods. The change brought about by this pandemic must mean moving more business online, necessitating a global digital transformation of small and medium businesses. This also calls for a shift to B2B ecommerce platforms and more efficient logistics.
Sales as sole focus does not work
Too many people are in unusual work environments and simply are not as receptive to the hard sales pitch as they were before. The best approach now is to shift into a helpful and/or educational role. “How do you solve the pain points of the next touchpoint in your supply chain, makes a critical difference and can lead to quick restart your business.” In these times, it means working with new search habits, new performance benchmarks, and in some cases new budget restrictions.
Audiences for business proposition
Audience building can still be a great strategy even during these strange times, but know there will be some challenges to overcome here as well.
• First, with many people now working from home, there are potentially many more (or at least different) devices in their workday.
• This change in behaviour will not last forever, but it’s also not going to go away overnight. Think about how you are leveraging audiences and adjust as needed.
• Move to capture audiences where you can, and leverage your touchpoints on all channels.
Leverage digital
Create a multichannel digital strategy across platforms and actively re-target to best of abilities across all channels. Look at a vertical focused approach, which is brought about by new age B2B relationships using innovative marketing and intuitive software platforms solving the key problem of excess inventory in the supply chain and find an effective way to improve working capital.
Continue full-funnel marketing
In times like these, it is easy to assume that all B2B buying functions are stopped, but that’s not always the case. Some companies are seeing businesses go through the buying stage more quickly than usual. Target “categories of immediate need” to the international buyer community. Win confidence with focus on international quality certified products and sellers. Companies are still willing to buy during COVID-19, but it just might look a little different than usual. Continue having sales teams follow up and utilise re-targeting campaigns to impact their buying decisions.
Communicate with customers
No matter what, throughout each stage of the buyer funnel, make sure you are communicating proper expectations to your customers. Be thorough, in what can they expect from you in terms of follow up.
This article was first published in the October 2020 edition of the print magazine.
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