California Apparel News

Manufacturers are constantly revising their sourcing strategies, taking the temperature of economic and political conditions around the world to see how it affects their apparel and textile production.

Fritz Winans, senior vice president-corporate, global sourcing and manufacturing at Liz Claiborne Inc., shares his thoughts with California Apparel News Senior Editor Deborah Belgum about sourcing for the $4.5 billion company, whose labels include Juicy Couture, Kate Spade, Lucky Brand Jeans and Mexx.

How has the sourcing world changed in the last five years?

The apparel and textiles industry involves complex relationships that are constantly evolving. Rising costs in China, currency appreciation and potential protectionist actions are forcing companies to rethink how they perceive China in their overall global strategy. The need for a shift away from China gives evidence that a good, flexible supply chain should always be assessed for balance and continually challenged to develop alternative sources in reaction to political, economic and currency instability.

What sourcing changes do you expect to see in the next five years? What countries do you expect to become bigger sources of production as China becomes more expensive?

It is evident that in order to succeed, apparel importers will need to establish and invest in long-term partnerships with manufacturers that have multi-country operations that are flexible and responsive to ever-changing conditions. India, Indonesia, Bangladesh and Vietnam will continue to play a strong role in the future, and countries such as Cambodia and parts of the Middle East are also showing signs of life.

How has the declining dollar changed your sourcing strategy?

The declining dollar along with eroding margins will tempt most in the industry to source in low-cost countries, the benefits of which will be only as good as the product delivered. Supply disruption, vendor maturity, political and economic risk, infrastructure issues, and operational control are all factors that need to be weighed and considered when making sourcing decisions with these countries. Commitment to partnership, compliance and proper implementation and support will go a long way to ensuring beneficial results for all parties in the relationship on a sustainable basis.

What advantages and disadvantages are there to sourcing in Central America?

The key competitive advantage of sourcing in Central America is speed-to-market and the ability to replenish relatively quickly.

Trade agreements make most goods duty-free, which also helps in competing with Asia. Bigger factories are developing better capabilities and becoming more sophisticated at product development, reducing throughput time, making smaller lots and working with customers on developing vendor-managed inventory. Quality and service standards also continue to improve. Disadvantages include the lack of availability of a wide range of fabrics and the needle capabilities found in Asia.

How can the Central American region best compete with Asia?

Central America needs to redefine and redevelop its positioning, offering higher added value.

Innovation and product development by local manufacturers is a critical part of attracting business to Central America. Factories must offer fabric and “after treatment” innovation to their customers. They need to develop enhanced distribution capabilities, enabling them to service customers further along the supply chain.

In addition, local governments must continue to further the progress already made in reducing local barriers so that the region develops as one entity, allowing for fast, borderless movement of goods. Adjustments such as these are necessary and will determine Central America’s ability to compete globally.

Does the presence of a new Cone Denim mill in Nicaragua make the region more attractive for sourcing?

Absolutely. The region must have quick access to local fabrics. Cone Denim is a significant addition to the region and hopefully will encourage other mills to do the same. Mills such as Cone’s, along with the availability of yarns and knitting capability and cumulation of fabrics from Mexico, are critical to sustainable growth in the region.

Does the Dominican Republic–Central American Free Trade Agreement make doing business in Central America any different than when the region was operating under the Caribbean Basin Trade Partnership Act? Why or why not?

Yes, because of the permanency of the agreement, uncertainty is removed. Yarn and fabric mills (e.g., Parkdale and Cone) are now more likely to make investments in the region, and availability of a range of regional fabrics would contribute toward competitiveness. The combination of FTAs, increased regional availability of yarns and fabrics, improved product development, and the low cost of manufacturing, particularly in Nicaragua and Haiti, makes the region very attractive for particular product categories.

What qualities do you look for in a factory and how long does it take to vet a manufacturer before you determine it is a good factory where you want to produce goods?

The effective selection of suppliers is core to the success of our supply chain. We develop partnerships that establish mutual acknowledgement of how important we are to each other. We look for partners who are financially secure and provide reliability, value, quality, service and total support of our ethical compliance standards. How long a decision takes is based on a number of factors and varies from situation to situation.

How do you find your factories? Do people come to you or do you have a resident agent that helps you out?

At Liz Claiborne, we have on staff some of the finest sourcing and manufacturing executives in the industry who understand our reputation is judged by the standards of our suppliers. We take a very hands-on approach to sourcing with executives who understand their business needs and source to those requirements.