SGB Question: Is The Supply Chain Crisis Over?

Article From：SGB Media 

 

 

SGB Executive reached out to industry executives to get their perspectives on the supply chain’s ongoing recovery efforts. Responses surveyed from Case And Zippo, Cascade Designs, Hot Chillys, Land Energy, Lowa, NetVirta, Reima, The Woolmark Company, Tread Labs, TRE US, and Vibram are outlined below.

 

Linda Butler

EVP Materials Management, Case And Zippo

Materials inventories show signs of rebound and recovery, though prices within certain commodities remain high, and freight costs overall have risen. Like other U.S. manufacturers, we feel the ripple effects that war, natural disasters and labor strikes impart worldwide.

 

Keith Patterson

Director Of Supply Chain, Cascade Designs

Since our company operates factories in the U.S. and Europe, in addition to working with partner factories globally, we felt we got hit from all sides during the last two years. Today, most aspects of the business have returned to pre-pandemic levels, or at least much less disrupted. For example, while lead times on some items remain extended, they are not near those experienced during the pandemic’s peak. And the global labor markets have mostly stabilized, leading to predictable product delivery. Most importantly, the pandemic reminded us of the importance of close collaboration with everyone in the value chain, and we’re continuing to make the strengthening of those relationships a key effort this year and into the future.

 

Steve Lee

SVP Of Sales, Hot Chillys

We do not think the supply chain crisis is over. It may be less of an issue than the past two years, but we do not believe things will be “back to normal.” We have noticed that transit times from overseas appear to be increasing from eight weeks to 11 weeks on average. We hope this is just a blip, but it appears to tied to the freight companies wanting to maximize the amount of product on the ships and thus having ships wait in dock longer to fill before leaving. Also, ongoing COVID issues in China seem to be slowing the flow of raw materials out of the country.

 

Scott Colosimo

CEO, Land Energy

We are in a unique position because we manufacture in Cleveland, OH, which is a clear benefit. We have close proximity to quality control and can adjust as needed but also contribute to the local Cleveland economy. We never lose sight of this distinct advantage, and we love supporting the local community.

 

Having said that, we work with parts not made here. Globally the supply chain has improved, and shipping times and costs are stabilizing but not returning to pre-2020 reliability. Established manufacturers have adjusted, securing raw materials earlier than in the past decade. Experience in past cycles proves to be the best cure for this cycle. Our suppliers are not hurting for work, although they are hurting for people to do the work.

 

Inflation and import tariffs make manufactured goods more expensive, putting pressure on cross-border trading. The doomsayers preaching recession, recession, recession seem hell-bent on making one happen;

 

however, there is positive news—the general consensus is bullish on a slow but continued improvement as markets adjust to longer lead times. 

 

Peter Sachs

GM, Lowa

For Lowa, the crisis has receded; however, there are many challenges left in its wake. The supply/demand curve is still off-balance between retailers and brands. The curve is still off between the brand and factory production. Shipping times across the Atlantic are back to a manageable time frame, but it still costs significantly more to ship a container today than pre-pandemic. Our retailers still have challenges managing inventory they have and still don’t have. They fear, rightfully so, inflation and labor shortages, and since we are in winter, there is lots of winter in the West and virtually no winter in the East. The pendulum is still swinging back and forth but more calmly than last year.

 

Jeff Chen

Co-Founder & CEO, NetVirta

I don’t believe the supply chain crisis is over. Brands have been drowning in excess inventory from returns and overproduction, contributing to the lack of warehouse space and exacerbating the crisis. It’s more important than ever for brands to cut down on dead stock, and I see two major paths to making that happen. First, reducing returns. Brands can reduce returns by incorporating accurate sizing tools, like smartphone 3D body scanning, into their e-commerce experience so customers choose the correct size the first time. The second, shifting production models from ready-to-wear to made-to-order. When brands start producing goods on demand rather than in large quantities that sits in a warehouse unsold, it drastically cuts back on inventory.

 

Nicola McLeod

Director Of Sales, Reima

From a supply chain perspective, we see positive improvements in costs and timeframes. Very different than what we experienced in the last two years, and our Spring/Summer shipments have been nearly 100 percent on time and in full.

 

John Roberts

CEO, The Woolmark Company

Due to the continued threat of supply chain disruptions, more and more brands are looking to diversify their supply chain base, and even more, are looking at nearshoring to reduce their risk. The Woolmark Company continues to support brands in this endeavor as we strategically collaborate and partner across the various stages of the wool supply chain. We continue to invest in new and emerging markets to foster innovation and empowerment by connecting brands to manufacturers with innovative wool, yarns and fabrics to bring manufacturing closer to consumer markets to aid in reducing supply chain-related risks.

 

There continue to be disruptions in global supply chains, especially for natural fibers like wool that require unique and specific processing that can only be done in certain parts of the world or more limited capacities. Macroeconomic pressures, as well as logistical bottlenecks, also continue to affect global apparel and textile supply chains.

 

EJ Riordan

President & CEO, TRE US

For TRE US, Inc., our supply chain issues are limited as we produce at our European factories and use local suppliers here in the U.S.; however, speaking with retailers, I see a shift from Asia suppliers to U.S. and European suppliers with lead times and transportation times continuing to impact retailers and distributors in the U.S.

 

Mark Paigen

Owner & Founder, Tread Labs

Tread Labs was not impacted as deeply by supply chain issues as other brands. Our Asian suppliers were largely functioning; longer transit times were most onerous. Shipping time and costs have plummeted over the last few months. On that front, we are largely back to normal. Open travel to China is a significant advantage as we can now have in-person factory meetings to build relationships and foster innovation.

 

Fabrizio Gamberini

Global Chief Brand Officer & President, Vibram

Vibram collaborates with over 1,000 brands worldwide, so our point of view is privileged and inclusive of different inputs from different parts of the world. Brands are still navigating supply chain complexities and the related high prices (i.e., labor, energy, transportation) generated in the last 12 months. 

 

All of them need to cope with the following:

 

Terms: We often receive requests for granting pay delays to many of the factories we work with;

Contributions: Requests from factories that invested in people to raise capacity in mid-2022, that they need to keep in this slow down, asking us to pay for; and

Tooling: Requests for financial support with a contribution from the factories that invested in tools to meet high demand.

Vibram, in these situations, is not penalizing them. We would pay the price in a disservice later on. It is a partnership, and we pay with lower margins. Is the situation improving? Yes, but very slowly. We hope that toward the second half of 2023, it will be better for all.