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Trade Policies, Sourcing and the Fashion Supply Chain

Trade Policies, Sourcing and the Fashion Supply Chain

January 15, 2013

Part 1 of a 2-part series.

Keeping an eye on rapidly changing trade policies is essential for fashion companies. As Thomas Travis, managing partner at Sandler, Travis & Rosenberg, urged fashion executives at the 2012 WWD Global Sourcing Forum, "Companies should focus on turning trade policy to specific advantage. You can be an adventurer, you can be proactive or you can stand by – as long as you monitor these trade developments, because they matter. They distinguish who wins and who loses." 1

Two of the most prominent trade policy initiatives in the news these days include the 11-nation Trans-Pacific Partnership (TPP) free trade agreement that is currently being negotiated. Among other things, the TPP will provide a major catalyst for shifting more apparel sourcing from China to other lower-wage countries, particularly Vietnam. The historic trade pact between the U.S. and Myanmar will also change the sourcing landscape; with labor rates that are substantially lower than China's, Myanmar is poised to become a hot destination for apparel manufacturing. [[more]]

These are only a few examples, though. Dozens of international trade agreements are currently under consideration by Congress and at the state level, covering free trade, child labor and human trafficking and slavery in the supply chain, and other issues. Given the constantly changing landscape of international trade, companies must pay close attention to the impact of trade legislation on the supply chain.  Winning companies will have nimble supply chains and will be able to take advantage of the shifts in sourcing, and the losers will not.

Supply chain systems aid sourcing agility

To win, companies must have flexibility and nimbleness in their supply chains – which means that winning companies will have the right systems in place to manage the supply chain. These systems give them the flexibility to quickly change their sourcing mix -- from one region to another, from one country to another, to switch from one vendor/factory to another, in order to take advantage of all the trade policy changes.

To do this, companies must have one system to report across the entire global supplier base –and to gain the sourcing flexibility that is required, PLM systems must extend into the supply chain by combining traditional PLM with Supply Chain Management (SCM) and Sourcing capabilities. In our next blog post, we'll take a closer look at the characteristics of these systems, and how they can enable more agile, responsive sourcing.

 

1 "Focusing on Trade Policy," WWD, Oct. 9, 2012