I’m just back from a whirlwind trip to visit suppliers and subscribers in Vietnam and Hong Kong.
It was fantastic to be back in face-to-face contact with those doing the hard work of managing supply chains and manufacturing our clothes. But what I heard resulted in a harsh reminder that the apparel industry and how it operates is really messed up!
Of course, I’m talking about the purchasing practices of brands and retailers.
In a conference setting I heard one brand share with suppliers, “if we don’t give you forecasts, you should use your own experience and develop forecasts for what we need. And feel free to ask us questions.” I think the speaker meant to encourage open dialogue from the supplier to the buyer, which is good. But for buyers to expect suppliers to do their forecasting for them is to admit to failing at something that should be a buyer’s core competency.
Furthermore, this failure is coupled with two other unfair practices on the part of big brands and retailers:
- Requiring suppliers to finance their business for months on end, and
- Meddling in costing and dictating the allowable costs of production – when costing is a core competency of suppliers.
In other words, brands and retailers are trying to do the supplier’s job of determining how much it costs to produce a product that conforms to all the buyer’s requirements. And suppliers are being required by their buyers to both understand end market demand and to take on risks in order to finance the buyer’s business.
In this scenario, exactly what value is the buyer bringing to the table?
Sure, an established brand name might bring in more business than a supplier could achieve when initially taking a direct-to-consumer business approach. But many legacy brands are struggling, and the huge success of Shein, for example, provides an attractive alternative to suppliers who are tired of both doing the buyer’s job for them and of the buyer trying to do their job for them!
At least some suppliers have given up on the big legacy brands that they used to all think they wanted to work with, and many predict that these brands are destined to fail because of their inefficient, complicated, and costly operations. One observed that SME brands are his company’s preferred customers because they work more collaboratively and as true partners.
When will this craziness stop?
Better BuyingTM subscribers are trying to improve their purchasing practices by gathering feedback from suppliers that identifies what the problem areas are and how to fix them. Many are continuously improving in important areas that impact their suppliers’ businesses and achievement of social and environmental sustainability goals.
The big brands and retailers that survive will be the ones who are changing the way they work with suppliers, and building the resilient supply chains that survival depends on by improving their purchasing practices. If you’re not one of those, watch out!
And, lastly, a note to investors. If you are not yet demanding data from brands and retailers that demonstrates that they are divesting of the inefficient and costly practices, which we know impede financial success and stifle sustainability efforts throughout the supply chain, then good luck! You are taking unnecessary risks that will eventually catch up to you too!