In 1998, Stan \n Davis and Christopher Meyer, two collaborators of the Ernst \n & Young Centre for Business Innovation, wrote a groundbreaking \n book under the title: ‘BLUR. The speed of change in the connected \n economy.’ The authors defined blur as ‘the accelerating pace \n of change of our post-modern economy’. They wrote: “Because \n we are so newly caught up in the whirlwind of this transition, \n we are experiencing it as a blur.” In the meantime, in some \n business circles, ‘BLUR’ has acquired the status of a cult \n book. Raving about this book may be exaggerated, but its main \n message is certainly worth to be pondered on: three forces, \n also called the ‘trinity’ of the blur -speed, connectivity \n and intangibles- are setting the new rules of doing business! \n <\/p>\n
What could ‘speed, connectivity and intangibles’ \n mean for the garment sector and especially for the sourcing \n activity?<\/strong> <\/p>\n Speed!<\/strong> However, ‘lean retailing’, a business model that centres \n on quick response, low inventory costs, rapid-moving stock \n and transferring responsibility for inventory management to \n suppliers, is not only a question of speed, it’s as well a \n question of connectivity. In the broader sense of the word, \n connectivity is putting everybody and everything in connection \n in one way or another. (In a more narrow sense, connectivity \n is the ability to make products that link electronically to \n information bases, an ability that might be displayed at the \n next Avantex fair in Frankfurt). <\/p>\n Be connected<\/strong> In the field of fabric and clothing sourcing, many sourcing \n operators (manufacturers, retailers, agents) are increasingly \n eager to be connected globally. Sourcing fairs which continue \n frustrating their visitors’ desire for global connection (e.g. \n by excluding the offer of non-European suppliers) are understandably \n losing interest. Not surprisingly, Texworld in Paris and Intertex \n in Milan, international sourcing events aimed at textile manufacturers \n from non-European countries, have grown rapidly. These fairs \n are complementing respectively Première Vision in Paris \n and Moda In Tessuto in Milan, thus creating temporarily in \n both cities the ‘global search machines’ the outsourcing companies \n want. <\/p>\n Another sourcing event that has grown rapidly by becoming \n global is Fatex in Paris. A few years ago, this annual clothing \n manufacture and sourcing trade fair was an exclusively French \n affair (with French exhibitors only). Then the organisers \n decided to open up onto the international area. In 2000, 103 \n foreign exhibitors moved in. In November 2001, foreign presence \n doubled to 207, or 42% of the total number of exhibitors (not \n even included the 47 French companies with delocalised units). \n From 2002 on, Fatex will adopt a seasonal rhythm, organising \n a spring and an autumn edition, simultaneously with the private \n label fashion fair Intersélection. <\/p>\n That especially the leading Western clothing companies want \n to be connected globally doesn’t mean they are playing around \n on the globe like young kittens. Devangshu Dutta, ex-KSA-consultant \n and co-founder and director of the supply chains solutions \n company Creatnet Services Ltd recently pointed out that in \n the 1990s a scientific sourcing principle began to be applied. \n It was good to cut down supplier numbers, since this reduced \n the management effort on the part of the buyer to constantly \n look for new suppliers and maintain current relationships. \n Devangshu Dutta thinks that the supply base consolidation \n has gone a step too far. He’s pleading a new deal. Outsourcing \n companies should acknowledge that the business of clothing \n retailing needs a healthy balance between predictability and \n innovation. Buyers should make a mental division between ‘largely \n predictable products’ and ‘fashion products’. For ‘largely \n predictable products’, supply base hopping is almost certainly \n the wrong strategy to follow. On the other hand, putting a \n long-term commitment on any significant proportion of the \n fashion segment to specific suppliers can be counter-productive.<\/strong> \n The competitiveness of supply bases is changing all the time, \n and suppliers are constantly developing new capabilities around \n the world. Therefore, buyers should keep their doors open \n for new suppliers to walk in and display their capability. \n <\/p>\n Focus on value-creating ‘intangibles’<\/strong> In 1997, Sara Lee Corporation (Wonderbra, Champion Sportswear, \n Hanes underwear,…) announced it was embarking on a \n massive ‘de-verticalisation’ program. Chairman and CEO John \n H. Bryan explained the decision this way: “Our de-verticalisation \n program is designed to enable us to focus our energies and \n talents on the greatest value-creating activities in our business, \n which is building and managing leadership brands.”<\/strong> \n The first de-verticalisation transaction to be completed by \n Sara Lee was the divestiture of nine yarn and textile operations \n related to its United States products business to newly-formed \n National Textiles, LLC. <\/p>\n About Nike, Davis and Meyer wrote: “Nike became the leader \n in its industry by keeping all kinds of traditional capital \n off its balance sheet, putting it in the hands of the suppliers \n instead. Nike’s own value-producing capacity is its \n design capabilities, marketing acumen, positioning, and distribution \n channels<\/strong>. Together, these accumulate into intangible \n strengths that yield much higher returns than would traditional \n capital investments.” <\/p>\n Also Naomi Klein, the author of ‘No Logo: Taking Aim at \n the Brand Bullies’ and her likes assert that in the new global \n economy, brands represent a huge portion of the value of a \n company and, increasingly, its biggest source of profits. \n Therefore, they say, companies are eager to switch from producing \n products to marketing aspirations, images and lifestyles. \n They are trying to become weightless, shedding physical assets \n by shifting production from their own factories in the first \n world to other people’s in the third. However, Naomi Klein’s \n outraged claim that consumers are being manipulated by big \n corporations and their brands appears to be a one-sided opinion. \n Surely, brands have influence on the behaviour of the consumer, \n but the contrary is also true. Often, consumers dictate to \n companies and ultimately decide their fate. As an example, \n Nike has had to revamp its whole supply chain after being \n accused of running sweatshops. Managing ‘intangibles’ such \n as brands is becoming increasingly difficult. Annual tables \n of the world’s top brands, which used to change little from \n year to year, now show that many brands are falling from grace \n and that newer, nimbler ones are replacing them. Not only \n companies, also countries have to carefully administer their \n ‘intangibles’. Outsourcing clothing retailers and manufacturers \n tend to favour sourcing from countries that they are already \n familiar with. However, if they fall out of love with a country, \n it’s extremely difficult to coax them again into new business. \n This has been the fate of Yugoslavia under president Milosevic. \n Though Yugoslavia can presently offer the former European \n customers of its once flourishing CMT-industry a pretty low \n salary level, a well educated workforce, rapid land and air \n connection, an improved human rights situation and a sufficient \n level of political and economic stability, very few traditional \n customers did yet return. <\/p>\n","protected":false},"excerpt":{"rendered":" In 1998, Stan Davis and Christopher Meyer, two collaborators of the Ernst & Young Centre for Business Innovation, wrote a groundbreaking book under the title: ‘BLUR. The speed of change in the connected economy.’ The authors defined blur as ‘the accelerating pace of change of our post-modern economy’. They wrote: “Because we are so newly […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-3315","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n
\n In their book, Davis and Meyer refer to Benetton, which gained \n fame for engineering a sourcing system so seamless it cut \n months out of the traditional supply chain. Speed was the \n driver. And because the company could tie its production to \n retail activity, it kept the hottest items in stock and was \n left with little to unload in end-of-season sales. Not mentioned \n in BLUR, but presently even more successful ‘speed performers’ \n than Benetton are the champions of ‘lean retailing’, such \n as Zara\/Inditex and Hennes & Mauritz. <\/p>\n
\n A company with a great record in terms of ‘connectivity’ is \n the Sri-Lanka based company MAS Holdings, whose ambition it \n is to become world leader in the intimate apparel sector. \n MAS is engaged in a number of enterprises in several countries, \n all of which are joint ventures with at least one other party. \n Over the years the company has devoted itself to a thoughtful \n supply chain architecture. <\/p>\n
\n The Ernst & Young fellows Davis and Meyer admit that ‘intangibles’, \n the third component of ‘blur’ is not a brand new element of \n the economy. The intangibles have, in fact, grown quietly \n as part of the economy, without calling too much attention \n to themselves. The authors mention four types of intangibles: \n services, information, the service component of products and \n emotions. They pretend that every offer has both tangible \n and intangible economic value. However, the intangible is \n growing faster. The outsourcing of the clothing manufacturing \n activities can be seen as an effort to move away from the \n tangibles in order to concentrate on the intangibles. <\/p>\n