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Brand and Retail Participation in Manufacturing Innovation

By CGS, Inc.

Over the years, you have undoubtedly heard the stories chronicling large retailers’ decisions to invest in their manufacturing supply chains. Perhaps the most familiar are Walmart's historic commitments to buy products that support American jobs. Sam Walton launched the "Bring it Home to the USA" initiative in 1985, with the world's largest retailer making additional pledges to purchase hundreds of billions of dollars of products made, grown or assembled in America ever since. Among the several categories prioritized in these programs are textile products.

Most recently, controversial Singapore-based fashion retailer Shein announced plans to invest $70 million in its Supplier Community Empowerment Programs and nearly $150 million in local production in Brazil in the coming years to establish a network with thousands of textile manufacturers in that country.

While one can debate the motivation behind these and other investments, an undeniable driver for increased supply chain spending and collaboration by top-tier retailers is being driven by a fundamental shift in how today's fashion and sewn products retailers, brands and producers are rethinking the strategic importance and value of post-pandemic supply chain partnerships.

The new realities around buyer-seller relationships were explored in a recent "Seats at the Table – Brand and Retail Participation in Manufacturing Innovation" symposium at the Texprocess Americas event in Atlanta. Panelists in the session included industry veterans Brett Mathes, Carhartt Director of Supply Chain Services and Paul Magel, CGS President of Application Solutions and Technology Outsourcing. Jennifer Guarino, ISAIC (Industrial Sewing and Innovation Center) President and CEO, served as moderator.

While commitments like the ones above clearly dominate headlines, few of today's mainstream supply chain commitments approach their size and scope, and many are not, in fact, direct financial investments. All session panelists agreed that the need is for much more than retailer co-investments; it's primarily about the importance of collaboration.

Mathes said, "Everybody is concerned about putting money out somewhere, but investment doesn't necessarily have to be about dollars. It can be about investments of time and resources. At Carhartt, we have invested our people's time and efforts, allowing our resources to be used by others to push forward initiatives. Collaboration is more essential than in the past. Collaboration can help drive business value and bring more value to the consumer, which benefits us all."

Magel concurred, "Collaboration can mean many different things to many people and take on many different forms. Ten years ago, collaboration was defined as sending faxes and talking on the phone. The difference is that today, it's a basic building block for the future – it's essential to survival in this industry. This reality was accelerated during the pandemic when some goods went undelivered and unpaid for, severely strained supply chain relationships. Moving forward, the industry must take much more of a shared risk and reward type of collaboration."

The panelists identified one of the biggest challenges to improving supply chain partnerships is that to reach the full potential of supply chain partnerships, you need to have the entire supply chain collaborating.

Drawing from his experience as a leading provider of supply chain technology platforms, Magel pointed out that technology is a vital part of enabling connections for all supply chain processes and parties. "The more connected you are, the better both parties can drive down costs, improve efficiencies, increase visibility and ensure deliveries. One way this gets done is by retailers/brands directly supporting the investment in technology. Another option, in the mutual benefit approach, is to build the cost of technology into the purchase order based on volume and other criteria."

Questions posed by a largely manufacturing audience also made it clear that to achieve mutually beneficial relationships, the traditional sourcing focus based on the lowest price per unit needs to change to enable them to deploy the technology, processes and workforce required to allow for the advanced form of collaboration being discussed.

When asked about basing sourcing prices on mixed margin versus cost per unit, Mathes explained, "The main reason that the focus on price per unit is so widely used is that it is simply easier to measure than other metrics. Somehow, you must look at the higher value that you can get from a supply chain to achieve needed change. There is a lot of mathematics that must be done to move forward."

"Brett is correct”, declared Magel, “but I am seeing a lot of conversations on how that equation works. Many companies are moving from chasing the cheapest needle to working to understand the full cost of bringing their product to market. So, I see an openness between the parties to redefine cost."

Expanding the discussion, Magel also noted, "This new way of looking at costs also has many considering the benefits of nearshoring production to Central America, where they can factor the cost and timing of goods to get a clearer picture of costs. The other opportunity or challenge (depending on your viewpoint) is the ESG movement and the growing regulations surrounding it. This is also a critical driver for a new level of collaboration."

Mathes concurred, "These regulations are pushing a change that economic discussion and force that digital collaboration. In addition to nearshoring and shared risk/reward partnering, we will see more people working for the benefit of each other versus getting into their perspective corners and fighting for that extra nickel."

Concluding the session with more discussion on technology, Guarino asked Magel how things have changed in how companies share innovation and platforms. Magel responded, "Technology is constantly evolving, and the requirement for collaboration is changing how fashion and sewn products companies look at technology. Where many used to invest in proprietary platforms primarily to minimize costs, most now realize that it's very difficult to collaborate across islands of technology. We now see many more conversations around standardized platforms, or at least standardized APIs and open and published communications tools. A similar change occurs around the traditional build versus buy technology question."

Sharing examples of open systems technology benefits, Magel pointed to two technology partnerships on display in the CGS booth on the Texprocess Americas show floor. The first is the integration of CGS' BlueCherry Shop Floor Control solution, a manufacturing productivity and process tracking system, with Inspectorio's cloud-based solution that provides brands and retailers with digital access to quality inspection information on their products as they are being made. This integration also enables brands to track the real-time movement of their products through the supply chain.

The second integration is that of the BlueCherry Shop Floor Control solution with Juki Smart Sewing Machines to provide more detailed visibility into individual manufacturing operations, the efficiency of the machine operator and the machine itself and track the performance and maintenance of each machine.

Magel explained that both examples "show the openness of these systems and how the standardized interfaces make it easy to connect with other technologies."

He also warned, "There is a lot of new technology out there today. But you don't do technology for technology's sake. Chasing the latest and greatest tech is not a winning strategy; it's all about deploying justifiable technology that drives value in your business. Even then, technology isn't always the answer. Because if you can automate a broken process, it just breaks down much faster. Sometimes the value is in looking at your processes. Sometimes, you need to explore what you already have before deploying new technology.

The world of fashion and sewn products is evolving rapidly, driven by the need for collaboration and innovation in supply chain partnerships. To discover more about how BlueCherry can empower your company participation in this manufacturing revolution, visit our website at Explore our comprehensive solutions and learn how our technology platforms can enhance your supply chain processes, improve efficiencies, and drive business value.

This article was published by CGS, Inc. May 25, 2023. CGS, Inc. is a member of SPESA.

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