Magazine that helps you do your business right. Issue 03 / 2013
www.iTradegood.com
The Value of a ‘Made in USA’ Label and the American Story
Photo credit: © lev radin / Shutterstock.com
US Fashion:
Meet trusted suppliers in the Tradegood community. = Look for the different colored smileys in our supplier profiles. The colors represent their level in the “Business done right� verification process.
www.iTradegood.com
Business Chain Issue 3
Cover Story 04 US Fashion: The Value of a ‘Made in USA’ Label and the American Story
Foreword
Features 07 From Horsemeat Scandal: How Well Do You Know Your Supply Chain?
In February, Tradegood landed in Germany and the European market, formulated a partnership with GermanFashion. We also held our first Overseas Delegation in Las Vegas and Los Angeles. In March, Tradegood introduced its signature Buyer Summit event in Shanghai again and invited in-demand speakers from the UK (Trendstop.com) and USA (AAFA and WRAP) for different seminars. We set up a strategic partnership with Trendstop.com. In April, Tradegood held a series of Supply Chain Forums with speakers from Germany (GermanFashion) and Trendstop.com (again!) in three cities. We also put on a Buyer Summit in Shenzhen for interested buyers and suppliers. The above are just some of the big names. Head to our website to see all of them!
09 Obama II and the President’s Legacy On Trade: Champion or Loser?
1 1
Backup Sourcing: Prepare for the Unexpected
About Tradegood 12 Good Case: Enabling targeted sourcing for new handbag and accessories star
12 14
Platform Update
16
Event Calendar
Good News: Happenings in China, Europe and Americas
We are sure the upcoming three quarters will be just as fulfilling as this one, if not better. Spring is over, let’s hop into an energetic summer together!
Business Chain Issue 3 Published by Marketing Division of Tradegood in May 2013. Please send enquiries or comments to marketing@iTradegood.com. All rights reserved. No reproduction of any part of this publication is allowed without prior written authorization from Tradegood.
Tradegood
TradegoodCommunity
@TradegoodTweet
Tradegood
BC
COVER STORY
US Fashion: The Value of a ‘Made in USA’ Label and the American Story The tipping point to ‘Made in USA’ fashion New York City, London, Paris and Milan. What do these four cities have in common? Yes, you are right. It’s fashion. The four cities are known universally as the fashion capitals of the world. Every half year, these cities stage fashion weeks, during which designers showcase their upcoming collections for the next seasons and buyers commit to orders or incorporate the designers themselves into their retail marketing. It is also an opportunity for the media to provide sneak previews of upcoming fashion trends. Of the countries where these fashion capitals are located, the USA is the one whose government has launched a nationwide initiative to revive and support domestic apparel manufacturing. When we talk about US fashion, which brands immediately come to mind? Marc Jacobs, Kate Spade, Calvin Klein, DKNY, and Ralph Lauren should be some of the names on the list. For those who are familiar with these brands, it’s no surprise that none of them manufactures 100% of their products in the USA. Instead, all of them have opted for offshore manufacturing. Even luxury brands like Marc Jacobs do not necessarily have their clothing or handbags produced domestically. Some may be made in Italy, but not in the USA. This may be a disturbing fact to some, even more so when Team USA’s Olympic uniforms were found to be made in China last year. After the decade-long decline of US apparel manufacturing, does the ‘Made in USA’ label still not carry enough weight to enable US brands to shift their production back to the USA? This may no longer be true when the demand for locally made products has recently been gaining unprecedented momentum. The tipping point will be when American spirit and pride add to the label a value that cannot be determined by an economic equation alone.
Team USA’s Olympic uniforms incident As an official outfitter of the US Olympic and Paralympic Teams, Ralph Lauren was 04
Business Chain Issue 3
the designer of 2012 Team USA’s official opening and closing ceremony parade uniforms. However, to the dismay of many Americans, these uniforms did not bear a ‘Made in USA’ tag, but only the colors of the USA with a ‘Made in China' tag.
label can mean a significant increase in labor costs when compared with offshore manufacturing in apparel-manufacturing hubs such as China and Bangladesh. In the business world, the obvious question is whether the value of the label is high enough to offset the increased costs and make financial sense. According to a survey released in November last year by Boston Consulting Group, 80% of Americans are willing to pay more for ‘Made in USA’ products. Helping manufacturing jobs to return to the US was what 93% of these respondents were hoping for when purchasing US-made products.
© AP/Ralph Lauren
US Olympic athletes, from left, swimmer Ryan Lochte, decathlete Bryan Clay, rower Giuseppe Lanzone, and soccer player Heather Mitts modeling the official Team USA Opening Ceremony Parade Uniform designed by Ralph Lauren. There was a public outcry from Americans when it was learnt that the official team uniforms were made in China.
This apparent contradiction sparked media interest in the US election year, when President Obama was criticized as not tough enough on China in SinoUS trade affairs. Whether the Olympic uniform story had touched the American patriotic soul or their egos, Americans were crying for locally made uniforms for Team USA, and Ralph Lauren then promised to bring onshore the manufacturing of Team USA’s uniforms.
Added value for the tag One of the reasons why US fashion brands do not wear ‘Made in USA’ tags is because of the extremely strict requirements regarding labeling. The ‘Made in USA’ label is regulated by the Federal Trade Commission (FTC), and must comply with the labeling standard that ‘all or virtually all’ of a product should be of US origin; that is, all significant parts, processing and labor that go into the product must be of US origin. Given that apparel manufacturing is labor intensive, earning a ‘Made in USA’
Though the silver lining reveals that 55 cents in every dollar spent on products made in China actually goes to US companies and workers, the patriotic battle and trade-deficit numbers are what make it matter to the government and its people for more ‘Made in USA’ tags. A ‘Made in USA’ label on clothing may give Americans a good feeling, but can this feeling be shared by non-Americans as well so that they will pay a premium for ‘Made in USA’ fashion wear?
The truly American brand In recent years, younger US brands have paved the way to success by living the American values. One such brand is American Apparel. While the world is going for horizontal integrated sourcing and manufacturing, American Apparel is advocating vertical integration of the supply chain. They claim that by going vertical, that is to keep the entire manufacturing operation within the shortest distance and with the fewest tiers possible, the company can not only save unnecessary fuel expenditure but create jobs for more than 5,000 Los Angeles employees. A close-to-market manufacturing approach can also help the brand closely align with market demand. Another value proposition offered by American Appeal is the assurance it gives to consumers about the working conditions of their workers. ‘Sweatshop Free’ is their slogan. Their garments workers are also known to be the highestpaid garment workers in the world. On top of all these, American Apparel advocates for immigration and gay rights.
© American Apparel
American Apparel’s factory in Los Angeles
American Apparel has all the values it needs to touch the American soul. It now owns the largest individual garment factory in the United States, sells its products in over 260 stores worldwide across 19 countries, and is listed in the American Stock Exchange. From its sales volume overseas, it can be inferred that one does not have to be an American to appreciate the American spirit behind the brand.
Believers in the ‘American Religion’ At a True Religion store in Hong Kong, located in the shopping mall of International Financial Center (IFC), the commercial building in the city with the sky-high rents, the store manager proudly
told customers that all denim jeans were USA made. Priced in a range of around US$250 to US$400 per pair, the True Religion jeans really are luxury items for the casual dresser. True Religion was started by an American in 2002 based on the principles of quality, authentic American-made denim, with timeless appeal and a vintage aesthetic. For years, Hollywood stars and celebrities have been seen wearing the luxury jeans and their fans are following suit. As a 400-million-dollar company listed on the NASDAQ today with 125 standalone stores worldwide and a distribution network in 50 countries on six continents, True Religion has proved the value of quality American-made denims. American Apparel and True Religion are examples of how US fashion brands successfully bring to new heights their unique positioning through differentiation and by building brand security through a loyal group of local and overseas customers. Their stories have proved that there are non-American believers in US fashion brands because they represent real quality as well as liberal beliefs, which are always backed by a good American story.
The emergence of an ‘Onshoring’ trend At the opening session of the 2013 AAFA Annual Executive Summit, Kevin M. Burke, President and CEO of the American Apparel and Footwear Association (AAFA), said: “In 2011, domestic apparel and footwear manufacturing increased 7.9% and 11.1% respectively, and we expect the 2012 numbers to be even greater, as the ‘Made in America’ momentum for apparel and footwear builds.” The numbers are showing a ‘comeback’ for US apparel manufacturing. Yet, it is noteworthy that still less than 3% of all apparel purchased in the USA today is manufactured domestically. During an interview with Tradegood, John M. Martynec, Vice President, Manufacturing, of Brooks Brothers, explained the difficulties the company has encountered in domestic manufacturing. Not only is there a lack of skilled workers, but getting the right fabrics and setting up factories are not easy tasks. His vision is to make one product in 1,000 ways and to be flexible.
Business Chain Issue 3
05
As the oldest menswear chain in the USA, and which now has manufacturing facilities from New York to North Carolina, Brooks Brothers has dressed a number of US presidents, including Abraham Lincoln and the current US president, Barack Obama. The latter wore a Brooks Brothers coat, scarf, and gloves during his inauguration in 2009. Today, the majority of its products are imported from other countries, though it keeps some of the premium lines to be manufactured locally. Despite the fact that apparel manufacturing in the USA has its obstacles, and can be impossible for brands and retailers which require largescale production, there is definitely a re-emergence of smaller-scale manufacturers and vendors that answer to the demand for US-made fashion. All American Clothing Co. and USA Love List are some of the sites that have emerged in response to consumers’ demands. The stress on ‘Everything we sell is USA-Made’ is prominent. Department store websites such as Macys.com and Nordstrom.com have also answered to this trend by linking products to ‘Made in USA’ searches.
06
Business Chain Issue 3
The best is yet to come The Obama administration’s National Export Initiative aimed at doubling US exports by 2014 has also put the textile and apparel industry at the forefront. The LA Mayor’s Office is one of the most active among cities in support of driving domestic economic development. In 2012, the Office’s Economic and Business Policy launched the ‘Designed/ Made in LA’ initiative with the aim of raising the profile of Los Angeles brands domestically and around the world. The initiative’s five-pronged approach includes an online resource guide to easily identify local manufacturers. The Office has a first-of-its-kind public-private partnership with Tradegood to build an LA manufacturers database for US apparel manufacturing. As today’s fashion world calls for shorter product cycles and greater flexibility and variety in product differentiation, the fast-fashion model that is used by many US domestic manufacturers can provide an added advantage to the industry. These manufacturing bases have a quick response time and enhanced design capability, which gives brands and retailers the flexibility to make big
PROMOTE YOUR
BUSINESS WITH
MADE IN LA Mayor Antonio Villaraigosa's Office of Economic and Business Policy’s first-of-its-kind publicprivate partnership with Tradegood to build the LA manufacturers database.
changes to the orders even after the season has begun. Fast-fashion products have proved to have higher sell-through rates than those manufactured by the traditional approach, and consumers are more willing to pay the full retail price. Undoubtedly, there will be a lot more to come from both government and brands themselves regarding the ‘Made in USA’ label. With the American spirit, talented designers and entrepreneurs in the USA should be prepared to welcome more independent brands to the American fashion scene, whether it’s a new Tom’s Shoes or a J Brand.
BC
FEATURES
From Horsemeat Scandal: How Well Do You Know Your Supply Chain? Europe’s latest food scandal is a potent reminder of one of the business world’s most important golden rules – know your suppliers.
It’s being called the “2013 meat adulteration scandal,” and it’s not over. Investigations by European governments are still ongoing as to how horsemeat ended up in products being sold to unwitting consumers both in Europe and further afield. And while the scandal involves a limited number of companies, its impact and the implications for Europe’s food industry will be far reaching, particularly on a continent that prides itself on maintaining the highest standards of food safety and quality. European consumers, producers, and regulators are now asking themselves how this could have happened and whether the systems currently in place are adequate.
How it happened This unfortunate saga started late last year when foods advertised as containing beef were found to also contain undeclared horsemeat, as much as 100% in some cases, in several countries in Europe. Other undeclared meats, such as pork, were also detected. The issue first came to light on January 15 this year when it was reported that horse DNA had been discovered in frozen beef burgers sold in several Irish and British supermarkets. While horsemeat is normally not harmful to health and is eaten in some cultures, it’s considered taboo in many countries and by some religions. The source of the meat was a Romaniabased slaughterhouse that legally slaughtered horses and sold their meat labeled as such. An inquiry by the French government showed that the meat had left Romania clearly and correctly labeled
as horse. It was afterwards that, along the supply chain, it was relabeled as beef. From public documents and media reports, we know that the Romanian slaughterhouse supplied the horsemeat under a contract to a Cyprus-based meat trader that operates in the Netherlands but is owned by a British Virgin Islands holding company. After the horsemeat was delivered to a cold storage company in the Netherlands, the frozen meat was then sold to a French meat processing company. After processing, the meat was sold to another meat processor in France, from where the end products were sold. There are now allegations that the French company that originally purchased the meat from the Netherlands falsified documents regarding the contents of the product.
Know your supplier As the horsemeat scandal dramatically illustrates, supply chains are becoming increasingly globalized, and, as a result, the need to know each of the players along the chain is now more critical than ever. In a February 18 statement, the UK’s Chartered Institute of Purchasing and Supply (CIPS) said that the current scandal was a devastating example of what can happen if you don’t have control and knowledge of your suppliers. It added that supplier relationship management was a key function of a professional approach to purchasing and managing a supply chain effectively. Many companies, even large corporations, get caught out at lower levels in their chain – such as tier 2 and 3 – and although they may have a good relationship with the first tier, they have no idea what the others are doing.
Industry experts recommend that, as commerce moves from local to international suppliers, companies carry out advanced due diligence before starting to work with a supplier or subcontractor. Constant feedback and assessment of suppliers also need to be built into any contractual arrangement. To the extent possible, suppliers should act as an extension of your business and be treated as such, rather than at arms length. In choosing a supplier, try to find those with the same standards as your own company. Having a system of full traceability is also critical, especially if things go wrong. In the food and health industries, there are now numerous quality assurance and traceability systems operating in the market, such as the UK’s Red Tractor Assurance whose logo on a product is a guarantee of quality and origin. Such systems can ensure that every critical step of the supply chain is independently inspected to ensure the product is produced to quality standards from the factory or farm to the consumer. For some companies with multiple sites, it may be worth investing in a system that can centrally hold all product details for staff to access all along the supply chain. In response to the scandal, it is expected that the European Union will impose new legislation requiring companies to better control processes within the supply chain and be more accountable for the information provided on their products. Without waiting for full legislation, on February 13, the European Union’s agricultural ministers announced a three-month program of DNA testing of processed meat across the EU. The Business Chain Issue 3
07
plan calls for 2,500 random tests on processed foods for horse DNA and 4,000 for phenylbutazone (bute), a veterinary analgesic used on horses. Testing has begun, and initial results are to be announced on April 15. Europol, the EU law enforcement agency facilitating the exchange of criminal intelligence between police, customs and security services, is also looking into possible criminal conspiracy to defraud.
ingredient information may no longer be voluntary. Companies therefore should start thinking in terms of pre-empting any new requirements or legislation as a way to avert potential damage to their reputation or bottom line. It may be more cost-effective to introduce the necessary systems early than to later have to spend resources recovering one’s reputation, which can take time while others are gaining market share.
What this means is that having a robust in-house means of accurately collating, monitoring, and managing product and
Change must come from the top Some companies are not waiting around to take action. The British grocery conglomerate, Tesco, which has had to pull four products off its shelf, as of midMarch, has revealed plans to clean up its food supply chain in the wake of the scandal. Its Chief Executive, Philip Clarke, promised fewer imports of meat from other countries, closer relations with British farmers, and a stronger in-house system for testing products. He said Tesco was counting on the government After the scandal, food safety comes first.
08
Business Chain Issue 3
to come up with a better way of testing food products to avoid similar scandals. However, he cautioned that the industry could not guarantee that a more robust system would not translate into higher costs for the consumers. But not everyone in industry or government may be ready to embrace change. In a recent survey by CIPS, it noted that 86% of supply chain managers did not believe that regulators understood supply chains, while 36% claimed that their chief executive was not engaged in dealing with the potential risks from supply chain mismanagement. The good news is that 62% of companies surveyed said they were treating potential risks in the supply chain more seriously following the recent scandal. Whether it’s the unwillingness or incompetence of the companies to exercise better supply chain management, in today’s flat world, your supply chain is likely to consist of suppliers from multiple countries. Knowing who your suppliers are and having a transparent supply chain will provide competitive advantage to your brand while minimizing reputational risks.
BC
FEATURES
Obama II and the President’s Legacy On Trade:
Champion or Loser?
Anyone watching last year's US Presidential debates would have walked away with the feeling that US-China trade relations were headed for troubled waters, no matter which candidate occupied the Oval Office. Republican challenger Mitt Romney’s repeated promise to designate China a currency manipulator the moment he stepped into the White House became his siren call for stronger measures against China’s alleged unfair trade. In the final presidential debate, Romney claimed that China was engaged in a “silent trade war” against the US. President Obama, for his part, boasted that his administration had already initiated more trade cases against China than the previous Bush Administration did in its two terms and promised more tough measures to protect US jobs. He triumphantly pointed to the US win over China in the WTO on tires as a showcase of his get-tough policy. Well, as they say, the rest is history. Romney was roundly defeated, the renminbi has appreciated against the US dollar, and US-China trade tensions have dialed back for the time being. So where does this leave the Obama administration and its second term trade agenda? We were allowed a sneak preview of what to expect on March 1 when the administration delivered its annual Trade Policy Agenda for the coming year. Strangely, neither a new US Trade Representative nor a Commerce Secretary had yet been named. One can only hope this was not a reflection of the new administration’s priorities on trade, but rather a case of saving the best for last.
Obama’s first term: where was the “Yes, we can?” While President Obama’s first term trade policies are unlikely to offer hints of what to expect over the next four years, one thing is for sure – Obama II will be different. In Obama I, the
president’s energies focused on passing free trade agreements with South Korea, Columbia, and Panama. He also ramped up negotiations on the Trans-Pacific Partnership (TPP). These, however, were largely leftovers from the Bush Administration. Where Obama made his mark was in his high-profile efforts to double US exports by 2014. He also established a US trade enforcement council and made greater use of WTO dispute settlement mechanisms, heightening trade tensions with China in the process. Critics say this was merely the picking of “low hanging fruit”. They highlight the president’s poor handling of fights with Congress as portents of even tougher battles ahead in his second term, assuming he brings forward some big trade deals. The president’s lackluster trade performance was also evidenced by stalled WTO negotiations on a new trade round and the unwillingness of the White House to push for renewed Trade Promotion Authority (TPA) from Congress, which is a prerequisite for passing any new trade agreements.
The next four years: creating a trade legacy So, what can we expect in Obama II? Having acted cautiously during his first term, some expect Obama to now be more aggressive on trade in his second. Given that this will be his last term, it is likely he now feels he has more space to make some bold moves.
launching a trade and investment agreement with the European Union, and restarting WTO negotiations with a focus on trade facilitation, expanding the Information Technology Agreement, and a new International Services Trade Agreement. Managing the difficult trade relationship with China will also be a central theme in Obama’s second term.
Trans-Pacific Partnership (TPP) One of President Obama’s defining foreign policy initiatives has been the socalled “pivot to Asia,” of which the TPP free trade agreement negotiations are an integral part. Were TTP to fail, therefore, it would place a lasting blemish on the president’s reputation as “America’s first Pacific President.” With such high stakes, the administration has pledged to “strive to complete the negotiations this year.” With most tariff barriers in the region already eliminated, what remains are the so-called “behind-the-border” impediments to trade and investment. This is where the TPP wants to be a pioneer, and its proponents are pinning hopes on it becoming the vehicle that takes us toward a future Free Trade Area of the Asia-Pacific Agreement that would include all of APEC. TPP negotiators, meeting over the past three years, have been down in the trenches fashioning new rules on such arcana as regulatory convergence, supply chain management, and crossborder services
Indeed, the 380-page Trade Policy Agenda issued on March 1 is a useful compass for gaging the president’s thinking, packed as it is with oldies from his first term, together with some ambitious pronouncements for opening up new markets over the next four years. If successful, the president could end his term with an enduring legacy as a free trade champion. Topping the list are: concluding the TransPacific Partnership (TPP) negotiations, Four more years.
Business Chain Issue 3
09
trade. While hardly sexy, these are the indispensible facilitators of global trade. Given that most TPP members are major service economies, the TPP features a fast-track services liberalization agenda that advances long-standing goals in the WTO. Home to more than 40 percent of the world’s population and 40 percent of world trade, the Asia-Pacific is poised to continue growing faster than the world average through 2016. Following the addition of Mexico and Canada to TPP negotiations in 2012, the big unknown for 2013 is whether Japan will join. While its participation would slow down the talks, it would add economic weight to the TPP while increasing incentives for others to join. One former US trade official, however, cautioned recently that if Japan joined the talks, TPP negotiations would unlikely conclude before President Obama left office. While China has been absent from TPP negotiations, the US has expressed its openness to China’s participation. However, given the TPP’s high standards and the deep reforms China would have to undertake, it is highly unlikely it would enter the fray any time soon. Transatlantic Trade and Investment Partnership (TTIP) If negotiating the TPP isn’t daunting enough, President Obama announced early this year his intention to launch negotiations with the European Union (EU) on a comprehensive Transatlantic Trade and Investment Partnership (TTIP). This is a massive undertaking and could make TPP negotiations look like a walk in the park. The EU is currently the US’s largest bilateral trading partner. Most tariffs between the US and EU are already low. Improving market access, therefore, will require addressing similar “behind-theborder” regulatory barriers as in the TPP, such as EU restrictions on GMO products and divergent pharmaceutical, health, and safety standards. Prior experience trying to reduce such barriers in the Transatlantic Economic Council suggests
10
Business Chain Issue 3
that making progress in these sensitive areas will not be easy. However, the US believes that a successful TTIP would “create new business and employment by expanding trade and investment opportunities in both economies.” Agreements on mutual recognition, testing and certification, and standards will be essential features of any TTIP. Reviving the WTO Despite all the headline-grabbing news on free trade agreements, the Obama Administration pledges it is equally committed to multilateral trade and the WTO, saying it “remains the primary forum for liberalizing multilateral trade, developing and enforcing global trade rules, and serving as a bulwark against protectionism.” The US announced this year that it would continue to lead efforts to move negotiations, which stalled in 2011, along “more constructive and productive pathways.” It sees the next WTO Ministerial Conference in early December in Bali as a pivotal moment, given that the WTO will launch negotiations on an ambitious International Services Trade Agreement. Its centerpiece will be the removal of impediments to global services trade, with the aim of enabling service providers to compete on quality and competence, rather than nationality. The US will also be pushing for comprehensive coverage of services, as well as transparency and predictability in regulatory policies that now present barriers to trade. A key feature will be new provisions to support services trade through electronic channels.
US-China: managing tensions US officials are fond of saying that the US-China relationship “continues to mature and evolve.” Nowhere is this more true than in trade where, despite major differences, strident accusations, and a series of trade actions
against each other, the two economic giants have managed to prevent tensions from escalating. The increasing use by China of WTO mechanisms is a measure of this maturation. The US will be expected to continue its multi-pronged approach to trade relations with China – dialogue, negotiation, and enforcement. In particular, the US wants to advance bilateral investment treaty (BIT) negotiations to increase protection for US investors. Another US priority will be getting China to submit a comprehensive offer to join the WTO Government Procurement Agreement, which would provide substantial access to one of the world’s largest government procurement markets. Protecting US intellectual property will remain a US priority in Obama II, as will hacking and cybersecurity, which US officials say has moved to the front of US concerns about China. While there may be occasional dustups, history shows, however, that any US president who acts out threats to be too tough on China can end up later reversing course. Recall President Clinton’s reference to China’s leaders as the “butchers from Beijing” and his promises to get tough on trade and human rights, only to have him support China’s entry into the WTO. Similarly, Obama II is likely to deviate little from the historical course of incrementally improving USChina relations. This is because no single issue is larger than the relationship itself. The president is therefore likely to pick his fights carefully, using a mixture of quiet diplomacy, US trade laws, and WTO remedies.
The big unknown Much of this, of course, depends on the president’s relationship with Congress and his ability to obtain Trade Promotion Authority, which lapsed in 2007. President Obama’s ability to succeed here will very much determine whether he goes down in history as a trade champion or a loser.
Back-up Sourcing:
BC
FEATURES
Preparing for the Unexpected With globalization taking hold, managing supply chains has become more complex than ever, prompting companies to optimize their sourcing strategies and create back-up plans for unexpected events. Supply-chain disruptions and delays not only have a negative impact on a company’s ability to satisfy orders, but may also damage a company’s brand reputation and stock price, and can even threaten the health of consumers. In fact, as reflected in the 2013 Global Supply Chain Risk survey conducted by Deloitte, global executives are increasingly concerned about the growing risks to their supply chains, with 53% of the 600 interviewed executives saying that supplychain disruptions have become more costly over the last three years.
Growing supplychain risks In an environment rapidly becoming more global in nature, natural disasters and extreme weather conditions such as earthquakes and hurricanes are always a threat to supply chains, while terrorism, geopolitical unrest, cyber crime, trade regulation, currency exchange rates and supplier dependability are also critical factors that may affect the stability of supply chains. The fact that supply chains are getting leaner and longer, as well as their interlinked nature, makes them more vulnerable to a wide range of risks. In the old days, inventory can act as a buffer to allow more time to deal with unexpected events occurring in the supply chain. A leaner and longer supply chain eliminates inventory that makes the handling of unexpected events and supply-chain inconsistencies more urgent and difficult to counteract. In the meantime, it is now more common to see companies dealing with tight logistics capacity and raw-materials capacity as raw-material and energy prices have greatly increased over the past few years. The rising costs of insurance and trade finance make the situation even more
severe. Given all these factors, the situation brooks no delay for manufacturers and distributors to act proactively and develop a contingency plan to cope with any unexpected supply-chain interruptions.
Mitigating the risks There is no doubt that supply-chain contingency planning has become a significant issue for manufacturers and distributors. It is widely agreed that a welldesigned-and-tested contingency plan, with back-up sourcing as one of the key components, can help mitigate the impact when the unpredictable strikes. Since investing in supply-chain contingency planning can really make a difference, companies are advised to take some critical steps to build supply-chain resilience, so that the supply chains can bounce back from interruptions quickly to minimize losses. Identifying a back-up supplier: It is important to have an alternative source to support in case of supply-chain interruptions. Hence, manufacturers and distributors should build relationships with one or more backup suppliers instead of relying on one single source of supply. Maintaining close relationships with suppliers: Good relationships and connections with suppliers are essential and can help manufacturers and distributors stay abreast of any changes or potential risks, so that they can make advance preparations to reduce the risks. Data back-ups: It is vital to back-up all critical information, including customer records, emails, and financial data and store them offsite so that all is kept safe even when an unexpected event occurs. Supply-chain insurance: Production delays or supply-chain cuts can cause great damage to a business and purchasing supply-chain insurance enables a company to offset the losses.
Finding a backup supplier It is clear that, with increased volatility in the markets, companies really have to reshape their operations and make their supply chains more
agile and adaptable. Rather than a total dependence on one key supplier, it is more practical to find one more supplier to act as back-up in the supply chain. Factors which should be considered when selecting a back-up supplier include: 1. Availability and response time: Can the supplier be immediately available and respond to production requests in a short period of time, and meet production goals without delay? 2. Capacity and reliability – Is the supplier a reliable one who is capable of quickly taking up the mission in case a primary supplier fails? 3. Quality of product – How is the product quality? Does it meet your requirements? A supplier who produces quality products can help prevent products returns that may cause losses.
Supplier auditing To ensure that the back-up supplier is reliable, buyers are recommended to include a supplier-auditing process in their sourcing strategies to regularly reassess suppliers' financial stability and market standing and perform a full risk assessment of suppliers, including their business-continuity plans, geopolitical exposure and their processes. Buyers may also seek support from a third party to help source good suppliers. The advantages of leveraging a third-party platform for supplier identification are that it helps you identify a trusted supplier for assurance from hundreds of screened and verified global retailers and sourcing companies, while professional consultation services and capacity building tools are also provided, which enables users to stay ahead of the latest market trends with buyer insights and market updates. The information collected and verified by the third party allows retailers and buyers to measure supplier performance more easily and partner with suppliers who are continuously upgrading their standards. All in all, it is always wise to prepare for a rainy day. Companies that implement preparedness measures as part of a comprehensive sourcing strategy will be more capable of recovering from potential disruptions and other unexpected events, while gaining a competitive edge over others. Buyers, it’s time to come up with your own back-up sourcing plan!
Business Chain Issue 3
11
BC
GOOD CASE
Enabling targeted sourcing for new handbag and accessories star Jack French London (JFL) astonished the European handbag and accessories market just one year ago with their stunning designs and quality craftsmanship.
founder Mr. Jack French attending the latter. At the two events several suppliers caught the new brand’s attention with their outstanding samples and flexible production capacity, and JFL would very likely close deals with them.
As a young enterprise with limited sourcing experience, JFL is encountering obstacles in this field, particularly since they are usually doing minimum-quantity purchasing. Tradegood came just in time to alleviate this problem.
The Tradegood platform provides a robust database for new business opportunities for both buyers and suppliers. Tailored sourcing solutions allow newbies without many resources and a solid network to source product efficiently, and to sustain fast growth in an ever-changing consumer market.
After understanding JFL’s purchasing requirements, Tradegood quickly identified and shortlisted matching suppliers for initial screening by JFL. Two Private Sourcing Sessions were held in Guangzhou and Hong Kong, with
Happy faces from the JFL representative (middle) and suppliers at one of the Private Sourcing Sessions.
“Doing supplier screening and selection through the Tradegood platform is reliable and cost-effective.” Jack French Founder and Designer Jack French London
Learn more about this new star at http://www.jackfrenchlondon.com/
BC
PLATFORM UPDATE
6,361 suppliers found
12
A Brand New Dashboard Design
Enhanced Search Function
We understand that it is not enough to have an online platform which our members may use in just a functional way. We are working hard to improve the user experience; making our platform both a pleasure to use and to exceed your expectations. Accessibility is greatly enhanced with the brand-new dashboard design. You can now find compatible suppliers more easily and get the list of our featured suppliers and upcoming events at a glance.
Having a hard time finding good suppliers? No worries. Finding compatible suppliers is now easier than ever. You can search by product keywords, company names or product categories. A list of responsible suppliers will appear instantly. To dig deeper, pick one to view its supplier profile. Or pick a few to do a comparison in various aspects. Then choose the most appropriate one to be your business partner!
Business Chain Issue 3
The Verified Marks give you the transparency and trust you need in supply chain.
Private Sourcing Program One-on-one private sourcing in which Tradegood staff handpick the most relevant, verified suppliers through a stringent selection process for our registered buyers.
Tell us your sourcing needs.
matching@iTradegood.com www.iTradegood.com
Business Chain Issue 3
13
BC
GOOD NEWS
Happenings in China The first quarter of 2013 has already been a rewarding one for Tradegood, with a number of large- and small-scale events relevant to the supply chain there. On March 20, the Buyer Summit in Shanghai was a resounding success. We received Dr. Wolfhart Hauser, CEO of Intertek Group, and Ms. Jaana Jätyri, founder and CEO of Trendstop.com from UK. What made the Summit more remarkable was the first-ever Photo Studio services – capturing stunning images of suppliers’ products with professional models.
Next day Tradegood moved to Guangzhou for a workshop with our strategic partner Trendstop.com, while on March 22, we headed to Dongguan for a Roundtable with the American Apparel and Footwear Association (AAFA) and Worldwide Responsible Accredited Production (WRAP).
“Tradegood would become an important driver for connecting the global supply chain and the leading source for trusted information and leadership,” noted Dr. Wolfhart Hauser, CEO of Intertek Group.
From March 24 to 25, our supplier members were also given the chance for an in-depth look at new trends at the twoday training by Trendstop.com. A lot more exciting events are on the way. Go to www.iTradegood.com for details!
Tradegood Buyer Summit in Shanghai - Dr. Wolfhart Hauser, CEO of Intertek Group, makes a fascinating keynote speech. Tradegood Buyer Summit in Shanghai – snaps from the Photo Studio.
14
Tradegood Buyer Summit in Shanghai - Close to 300 responsible buyers and trusted suppliers in the hall.
Tradegood/ Trendstop.com Workshop in Tradegood/ AAFA Roundtable Seminar in Guangzhou – the “in” for this season shown Dongguan - Heavyweight speakers and by Jaana. highly inspirational presentations, as well as incisive opinion, attracted hundreds of supplier representatives to the event.
Tradegood Buyer Summit in Shanghai Dr. Hauser (second from right) with our lovely model and Ms. Jätyri (right) at the innovative Photo Studio.
Tradegood/ Trendstop.com Workshop in Guangzhou - suppliers hold discussions with Janna after her insightful presentation.
Business Chain Issue 3
Tradegood Buyer Summit in Shanghai Photo Studio on site.
Trendstop.com Training in Hangzhou – fashion trends decoded.
Happenings in Europe Tradegood is officially in the Europe market! February 1 was the date set for Tradegood’s official launch in the German market. During the press conference given by the GermanFashion Modeverband Deutschland e. V., Mr Thomas Rasch, managing director of GermanFashion, announced the company’s official partnership with Tradegood. Dimitry van Toorn, President of Tradegood EMEA, introduced Tradegood to all invitees and members of the press. The press conference was well attended by about 30 representatives of the press, including reporters from the "Süddeutsche Zeitung" and "Frankfurter Allgemeine Zeitung"
Tradegood Launch in Germany - Dimitry van Toorn, President of Tradegood EMEA (left) and Thomas Rasch, Managing Director of GermanFashion Modeverband Deutschland e. V. at the Press Conference.
newspapers as well as the journal from "TextilWirtschaft". Tradegood generated great interest from all sides, was pleased to answer a variety of questions, and was satisfied with the comprehensive coverage obtained as a result.
Soon Tradegood took part in two large tradeshows in Munich and Frankfurt, Germany to bridge buyers there with over 20,000 trusted suppliers.
Tradegood Launch in Germany - Bridging buyers and suppliers over good coffee by Tradegood Cafe.
Tradegood Launch in Germany - Mr. Jan Gutknecht, Tradegood Specialist in Germany, explains how powerful and strong Tradegood database is.
ISPO Munich 2013 in Munich - Buyers show solid interests in the 20,000+ supplier database of Tradegood.
TW Branchen-Konferenz E-Fashion 2013 in Frankfurt Tradegood Specialist explains the ground-breaking concept of Tradegood to interested buyers
Happenings in Americas Following our launch event at ‘SOURCING at MAGIC’ in August 2012, Tradegood participated in the event for a second time and again stood out as one of the highlights. Our booth was decorated as a café, which allowed visitors to learn more about Tradegood with a cup of good coffee to hand. We hope that this relaxing atmosphere will also extend to the buyers’ sourcing activities, enabling them to conveniently team up with compatible suppliers. Many thanks to all who came to visit us at the event! Soon there was the first Overseas Delegation – SOURCING at MAGIC and Investment Summit 2013. Tradegood management, specialists and supplier members took part in the tour. At the Investment Summit, the panel of experts painted an attractive picture of why California is their best option, and many hot topics were discussed, including tax incentives and regulations, as well as ideas about “Made in LA” and “Made
in USA”, etc. Opportunities in Bangladesh, Mexico, Mauritius and Colombia were also introduced to the attending guests. Rounding off a fruitful trip to the Convention Center, we continued our journey to the Chamber of Commerce in Los Angeles to learn more about the concept of “Made & Designed in LA”. Our delegation not only concerned itself with concepts, however, but also toured retail outlets and the Fashion District in Los Angeles for a more indepth understanding of the US retail market.
SOURCING at MAGIC - Matching serious buyers with trusted suppliers at our booth
SOURCING at MAGIC – perfect sourcing match made here! Investment Summit 2013 - The panel of experts paints an attractive picture of why California is a great investment opportunity during the Investment Summit.
Overseas Delegation - at the Chamber of Commerce in LA after a lively discussion on "Made & Designed in LA".
Overseas Delegation - Smiley faces at the LA Mayor's Office.
Overseas Delegation - Visiting the Fashion District in Los Angeles for a more in-depth understanding of the US retail market.
Business Chain Issue 3
15
SUN MON TUE WED THU
May
FRI
SAT
1 2 3 4
SUN MON TUE WED THU
June
FRI
SAT
SUN MON TUE WED THU
1
FRI
SAT
1 2 3 4 5 6
5 6 7 8 9 10 11
2 3 4 5 6 7 8
7 8 9 10 11 12 13
12 13 14 15 16 17 18
9 10 11 12 13 14 15
14 15 16 17 18 19 20
19 20 21 22 23 24 25
16 17 18 19 20 21 22
21 22 23 24 25 26 27
26 27 28 29 30 31
23 24 25 26 27 28 29
28 29 30 31
30
July
May 7-9 National Hardware Show
Jun 10-13 Texprocess
Jul 3 White Label Fair 2013
Las Vegas, USA Las Vegas Convention Center
Frankfurt, Germany Fair Frankfurt
Berlin, Germany U3 Bahnhof Potsdamer Platz
May 13-22 Tradegood Gazillion! Workshop
Jun 14 Buyer Summit
May 13 May 14 May 15 May 17 May 20 May 21 May 22
Shenzhen, China
Jul 7-13 The 13th China International Fashion Brand Fair-Shenzhen
Shanghai, China Wuxi, China Ningbo, China Quanzhou, China Dongguan, China Chaozhou, China Shenzhen, China
May 22 Buyer Summit Shanghai, China
June 26 Tradegood and Sourcing at MAGIC Seminar (CANAIVE) Mexico City, Mexico
June 27 Tradegood and Sourcing at MAGIC Seminar (CITEX) Puebla, Mexico
Shenzhen, China
Jul 14-16 Cosmoprof North Amherica Las Vegas, USA Mandalay Bay Resort and Casino
Jul 19-22 California Gift Show Los Angeles, USA Los Angeles Convention Center
Event Calendar Business Chain
Want to read more?
TG-BC-V3-0513E
Learn about what is going on in your supply chain.