By Mike Todaro, AAPN
I recently moderated a seminar at a trade show called ‘Returning to America.’ There were 3 panelists but I decided to run it in an open, interactive, no PowerPoint, no canned-talk format. Here’s how it opened:
This is not a seminar but it could be a tipping point. We don’t know if the world is flat, but it isn’t level. So this meeting is going to talk about where sourcing is going.
Before we discuss whether sourcing is returning to the U.S., you need to know what never left and what will never return, and why. If you think there is going to be a significant return, let me tell you no one is going to put Humpty Dumpty back together again. When industries left the US, some links in the supply chain were decimated.
There is only one story in this industry and any other industry and it is a supply chain story. Every industry, every country and definitely every company competes as a supply chain. Every article of clothing you are wearing now is the result of a supply chain and it is far more extensive and complicated than you may think. Every significant act of leadership, every project, all answers come from meeting as supply chains. Whether it be balanced sourcing, product development, cycle times, private label, risk assessment, raw materials, social responsibility or, most recently, sustainability, you get to the issues and answers as a chain.
There are 3 aspects to business that work better when you do them as a chain. First is making money. In our experience, it is not do we have good trade laws, it’s are we making money. Profit today seems to be coming from those who are dramatically cutting costs, not increasing revenues. And the claim ‘it costs too much’ usually comes from those who don’t know the REAL costs.
The second is building relationships. Too many people look for the big meeting with the most powerful CEO. But relationships are not big game hunts; they’re more like farming, cultivating them over time. And that’s what both NAUMD and AAPN are, networks of relationships literally built over decades.
And finally, there’s knowing the real costs. That’s where we are today. So many have chased the low cost needle to the furthest ends of the earth and have finally hit a wall. Rising wages, strikes, shipping costs, red tape, lack of social responsibility, activism, weather and other factors are in fact causing many to rethink their sourcing strategy, or more frankly, to develop a strategy where before there were only tactics. Take synthetics for example. We are actively putting together a regionally sourced activewear shirt to show its advantages in value over Asia, not just by eliminating high tariffs on synthetics, but the value of speed to market.
That brings us to ‘sustainability.’ We see in the news that commitment to eco causes and sustainability has never been more top down. It means you now have to balance protecting your profit with promoting your proactivity. We define sustainability to include environmental, social and economic elements. So, as you military people know, they can outsource sourcing, accounting, design, logistics, HR and more, but they can’t outsource responsibility. As we learned in the military, you can delegate authority but not responsibility. Yet, the typical retailer, if such a thing exists, will respond to a discussion like the one we had several months ago on sustainability by saying, “we truly believe in sustainability but it costs too much.”
That’s why the Rocedes Apparel videos on YouTube were made. Yes, Scott Vaughn spent money on his 2,500 people. But in return turnover dropped, absenteeism dropped, training costs dramatically dropped, and quality went sky high. The program was free. It proves to us the famous saying, “not everything that can be counted counts, and not everything that counts can be counted.”
The visibility of sustainability is a tribute to Walmart. They admit 92% of the actions they need to take are with their vendors. But could it be that 92% of the obstacles their suppliers face are within Walmart itself? As we have broken down silos in the supply chain, are there silos within retailers that need to be tipped? Are their measurements right? Can you reward one staff for finding the lowest price and reward another for finding the lowest carbon footprint? We know retail is looking for answers. They are buying what we as a supply chain are selling. It’s a top down program that requires more bottoms up support than ever before, by us, the chain, the ones with feet on the ground all around the world.
Mike Todaro is managing director of the American Apparel Producers’ Network, the only global supply chain organization in the world.
