Episode 19: Why businesses are changing from a Supply chain to a Supply lattice
Supply Chain, Supply Lattice, Fashion design, Product development, Sourcing
Welcome to the Fashion Unearthed podcast. If you need help navigating the fashion industry sustainably, you have come to the right place. I'm your host Belinda Humphrey and my hope is to simplify the fashion industry so that businesses can make the best decisions for people, planet and product.
Hello, and welcome to episode 19 of the Fashion Unearthed podcast. Today's episode touches on all three of my main areas, conscious creation, celebrating people and regenerative planet and I was inspired to talk about this a bit more because of a recent premier vision talk. But also because I get a lot of questions about either how to find a manufacturer or fabric supplier or mill and these questions really link back into today's topic of the supply chain.
So the term supply chain is an umbrella term that's used to describe the whole process from brand or head office right down to raw material suppliers. Finding a manufacturer or fabric is just one component of a supply chain and to coincide with this episode, there's a new freebie in the website shop mapping your supply chain. It's a simple document designed to outline the four to five tiers, and get you thinking about what you already know about your supply chain and what you need to uncover.
But getting back to today's topic, why businesses are moving from a supply chain to a supply lattice. I don't need to tell you or remind you that the world has changed rapidly in the last few years and actually is still changing I feel, but as well as accelerating change it's also highlighted flawed business practices and left many exposed because of the way they've structured their supply chain. Add to that consumers demand for transparency and many businesses have realised they don't actually know all their supply chain tiers.
A recent survey from Wunderman Thompson reported that 88% of people that they surveyed believe that sustainability should be a standard business practice and 60% of consumers actively choose companies that are more environmentally responsible. So I guess the implication of not knowing your supply chain tiers or your impact or the practices that are being used or involved in your process means that you could be missing out on potential customers or just missing the mark with what your customers are looking for.
So limiting risk and making sure that you're appealing to your customers are already a couple of compelling reasons as to why you might be examining your supply chain. But on the positive side, changing the supply chain to a supply lattice can also eliminate excess lost sales and drive down environmental impact. If you aren't producing too much, this will also reduce your need to rely on sales or markdowns and this in turn will increase your profitability.
So getting back to that Premiere Vision talk earlier this year I mentioned it was a panel discussion around what the supply chain would look like and on the panel was Bill McRaith, Chief supply chain officer at PVH. Who is the parent company for brands such as Calvin Klein and Tommy Hilfiger. Keeping it simple, he broke it down into a minimum of three layers, onshore, nearshore and offshore. On reflection, I think a lot of European businesses might already be using a version of this model. When I worked at Ben Sherman in the UK over 10 years ago now, we sourced from China and Thailand, which would be classed as offshore, Turkey and Portugal, which would be near shore, and also made in the UK, which was onshore. And from memory this was mainly based around supply chain strengths and look, at might have changed now obviously, that was a long time ago and that was a specialty retailer it wasn't a value driven big box retailer. Plus, there were tax incentives to manufacture within Europe, which I think contributed to keeping those doors open.
Whereas in Australia, there's a little bit of that happening still with local production, Fiji and Indonesia. But lots of bigger companies from value to specialty retailers went overseas, and that's where the bulk of their manufacturing and supply chain is. Having said that, though, I know a lot of Australian businesses are actually examining their supply chain too.
So going into a bit more detail offshore is described as a "low slow" model, which would apply to staple or more core items, some things that have maybe a bit more predictability in their saleability. Near shore is a "high fast" model he describes. It's a model that maybe slightly more expensive to operate, but is required to be more responsive to fashion trends and deliver consumers only what they want while buying less of the wrong stuff. And if you listened to my other podcast about Black Friday and the sales and the structures and mechanisms in place in fashion already, you would know if you can predict more of what your customer wants, then that's a good thing. And finally he goes on to explain that onshore is the "Express Model". An example of that for PVH Corp would be made in America. which he describes as a programme that they've been looking at for at least five years and is relatively self explanatory. He said they tried it with CALVIN KLEIN JEANS and had them completely vertically made in the US from the yarn, tothe finished product and it's more expensive than the other two models, but it allows them to design develop and deliver products to stores or directly to consumers very quickly, get the feedback from the customer and respond once they have voted on the winners. He also highlights that this eliminates the need to air small batches or units of an item from offshore locations, which has negative impacts on the environment.
So maybe it's not a totally new strategy more of a conscious choice to implement this back into supply chains, particularly where they've been very one dimensional or linear.
Another thing that stuck in my mind is a statistic I read that two thirds of the average company's environmental, social and governance footprint lies with suppliers. McKenzie reported that for most products 80 to 90% of greenhouse gas emissions are indirect emissions that occur across the company's value chain. Which to be honest, I wasn't surprised about but what stuck in my mind is the opportunity for businesses to pass this off as the supplier or manufacturers problem to solve. Whereas to make true change the brand or business needs to take ownership of those emissions. By placing the order they're responsible for that too.
Leading on from that I want to highlight a couple of great examples where brands are truly partnering with their supply chains, and financially supporting them through the change.
The first one comes from outside the fashion industry from Unilever, who are paying 40% of the cost to plant cover crops to support farmers. So cover crops are more about planting to enrich the soil rather than the actual food production, but it shows a commitment to regenerative farming and a better practice.
The other one I want to mention is a women's fashion brand Christy Dawn, who is raising money to support regenerative farming through a land stewardship programme. And customers can buy a plot of land for 320 Australian dollars, which covers the cost of farming cotton regeneratively. But before this, they partnered with the farmers and artisans at Ashanti collective, to replenish soil on 24 acres of depleted soil to produce their regenerative cotton for their women's brand.
Both examples show a trusting relationship between both the brands and the farms. But of course, when we're talking about supply chains or supply lattices, they're generally only detailing the first half of a product lifecycle. The next part is to make sure that it's as equally as good backwards in terms of collecting, sorting, recycling or redistributing. And I've covered some of that in Episode Four where I talked about the Take Back programmes. Getting this part right is crucial in the step to circularity.
So hopefully that's giving you something to think about when you're assessing your own supply chain and like I said, there's that new little freebie on the website that will help you map out where you're at at the moment and help you think about where you might want to change things or where you need to ask more questions. A quick reminder that if you're into the latest developments within fashion and sustainability, I send out a monthly newsletter which you can sign up to on the website belindahumphrey.com and you can DM me on Instagram @belindahumphrey_ or send me email firstname.lastname@example.org. And finally, as always, you'll find the show notes or the transcript and any links in the website in the podcast section. Thanks so much for listening. See you next time.
Disclaimer: Whilst every effort is made to ensure that information is accurate at the time of recording, much like the fashion industry itself, this information may change.