Fashion Enter Featured in Just Style – Re shoring – Has its time finally arrived?
August 20, 2019 - August 20, 2019
On the 10th April 2019, Malcolm Newbury featured Fashion Enter in his article for Just Style entitled Re-shoring – Has its time finally arrived? Here is a section from the in-depth article:
Cost and time are the two big factors influencing off-shore versus domestic sourcing decisions. But other issues also come into play, such as ethics, sustainability, and patriotism. Here industry consultant Malcolm Newbery weighs up the arguments for and against, with a look at look at two companies in the US and UK who are surviving and prospering from re-shoring.
Re-shoring is the process of returning clothing manufacture from (predominately) low cost sourcing countries to domestic suppliers. In a recent just-style article – ‘Made in the USA’ apparel – Who’s selling what and for how much?’ – the following statements were made:
- That 46% of US fashion brands and apparel retailers said they sourced “Made in the USA” products. The fact is that 97% of US clothing consumption is imported.
- That by 2025 over 20% of consumption could come from “near-shore” sources (McKinsey and Business of Fashion: The State of Fashion 2019).
Of the top ten retailers selling “Made in the USA” apparel, according to EDITED in 2018, only one bought over 10% of its product lines from America. The weighted average was less than 1%. So, it is a very small niche and it is overwhelmingly womenswear. This is the clue to its potential. Womenswear trends are shorter lived and harder to predict, so quick response, shorter lead times and speedy replenishment might be a powerful commercial advantage.
A very brief history of off-shore sourcing
Where and when did domestic manufacturing all go wrong? The answer, for the US, UK and Western Europe is the 1980s. Driven by weak economics and fierce fashion retail competition, buyers sought the lowest prices.
- The US, despite efforts to keep production domestic using the “quick response” by-line, started to move off-shore but locally (near-shoring).
- The UK followed its colonial history and went to India, Pakistan, Bangladesh and China through Hong Kong.
- Western Europe went to North Africa (France and Italy), Eastern Europe and Turkey (Germany).
Sometimes this was done by investing in their own or closely controlled supplier’s factories. But this proved to be a risky strategy (sometimes referred to as the “baby bird”). If you have a baby bird, mummy and daddy bird have to constantly feed it worms. At one well-known UK retailer, we even called it “feeding the factories.” We had to give them a steady supply of purchase orders, even when we did not want to. So, in the 1990s, investments were quietly disposed of and retailers and brands turned to sourcing from low-cost independent manufacturers.
The final bursting of the barrier to low-cost sourcing was the end of the Multi-Fibre Agreement in 2005. When that happened, it ushered in a free-for-all. Every retail and branded buyer in the US and Europe jumped on a plane and went to China. China is now the largest exporter of apparel in the world by both value and volume.
Of course, there are still tariffs, and at the moment a nasty trade war between US and China. But the tariffs have not prevented an ever-growing percentage of clothing being imported from the Far East, the Indian sub-continent, Turkey and Central America.
To make this theoretical argument for the advantages of re-shoring practical, just-style has interviewed two companies, one in the US and one in the UK. The companies are Suuchi Inc based in New Jersey, New York State; and Fashion-Enter based in London, England. Neither would traditionally be thought of as capable of surviving and prospering in a low-cost sourcing world. We asked them six specific sourcing questions to which we got the following answers:
Q1: What, in general terms and as a %, do you think the difference in landed price is between you (US and UK) and China?
A1: Suuchi – “The % varies from project to project, at times we can be 30% more expensive than China, all the way to 50%. The biggest differentiator is that the MOQ’s are much lower stateside, which allows brands to stay lean and reduces the needed investment per production run. Although the initial investment might be higher, brands save thousands of dollars avoiding customs fees, lost inventory, low-quality products, and delays in receiving their final products.”
A1: Fashion-Enter – “We cannot answer that question, because we do not have data for China costs. But we know that we are more competitive on low work content garments.” These answers corroborate both the cost figures in Table 1, and the views put forward in a just-style article about the competitiveness of high and low-cost manufacturing on different garment types.
Q2: What is your average lead time from customer order to delivery, assuming that the fabric is available immediately?
A2: Suuchi – “Once all fabrics and trims are in-house, we say to estimate for 4-6 weeks for product development and another 4-6 weeks for a finished product.”
A2: Fashion-Enter – “After product development time, we can manufacture in 3-4 weeks, and sometimes in 2. Of course this depends entirely on the retailer working very closely with us. It also depends on our arrangements with UK fabric suppliers, which are very flexible and quick. It is all about being nimble.” Fashion-Enter also quoted a specific example of speed and flexibility. “We had an order for pink bulk dresses. We quoted 6 weeks (3 weeks fabric production/sealer and 3 garment manufacture). Fabric came in 3 weeks. We sent bulk to customer for approval. Bulk was fine but this shade had stopped selling so they requested we swap to black (stock) and use the pink fabric on skirts (which are still selling). We did this and delivered the garments within 3 weeks. Had the garments been bought from Asia, at 3 weeks before the delivery was due the garments would be on the sea, therefore changes could not be made. Therefore discount would probably have had to be applied immediately to facilitate timely sell-through, whereas the UK made garment will probably sell through at full price.”
Q3: What customers value your domestic manufacturing and therefore buy from you on a regular basis?
A3: Neither company was prepared to quote specific customer names, for client confidentiality reasons. But we do know that they both have a substantial customer list of high profile retailers.
Q4: What other non-cost factors (such as quality, reliability, the “made in” label, etc) help you sell?
A4: Suuchi – “Transparency within our supply chain through the use of our PLM platform is a big selling point for our clients (see more about PLM in Question 5). Being in a similar time zone, speaking the same language, and quick response times have been valuable attributes to our clients. Then the quality, reliability, and “Made in USA” label are important as well. A lot of our clients come to us after having bad experiences with overseas production. Being woman-owned is also something that has helped differentiate us from the competition, while providing our clients with branding power.”
A4: Fashion-Enter – “Our quality is highly regarded. Our reliability is excellent because of our nimbleness. And, of course, there is a “Made in UK” advantage. But we rely on facts to persuade potential customers to use us, not on emotion. The facts are based on speed-to-market and the exit margin the customer achieves by sourcing in the UK.”
Q5: Do your PLM (product lifecycle management) systems give you any advantages over low cost suppliers?
A5: Suuchi –”Our PLM, the Suuchi Grid, provides our clients with a fully visible supply chain, which eliminates any guesswork on when your production is going to be completed. This allows our clients to strategically plan around each stage to ensure they have successful product launches. Our PLM is also a communication hub for clients, manufacturers and suppliers, which eliminates missed emails and speeds up response times. Product-related documents are stored on the Suuchi Cloud, which helps brands keep everything in one secure location. With the recent launch of our PLM app, clients are now able to track their projects on-the-go. All of these features provide Suuchi Inc with a major advantage over traditional apparel manufacturers.”
A5: Fashion-Enter – “They undoubtedly do. We have integrated PLM incorporating CAD and CAM for design and product development, cutting and work-inprogress control. Without this, we could not be nimble. We are happy to share this data transparently with our customers, if they want it.”
Q6: What do you think the potential is for domestic manufacturing in terms of: – Your growth? – The domestic industry growth as a % of the market?
A6: Suuchi – “With a 30% month-to-month growth rate, we have seen first-hand the potential for hyper-growth and we’re just getting started! As our process continues to evolve through automation and the Suuchi Grid, we are confident that Suuchi Inc will become the leading US-based apparel manufacturer in the coming years.”
A6: Fashion-Enter – “We are currently investing in enlarging our production capacity, with an extension to our factory which will open in April 2019. But the problem of manufacturing growth in London is getting the sewing machinists. The problem is the churn of sewers who cannot work to our levels of speed, accuracy and efficiency. It is not a constraint. It just makes growth slower. Training stitchers is always a priority for us.”