Supplier's "future tense"

In front of the company's annual report, in the center of the white cover is a long color photo of five slender Western girls in casual white dresses, snuggling on a sofa.

After opening the company's annual report, the first thing that catches the eye is the company's "competitive advantage" slowly presented in azure blue: our multi-brand, multi-channel and multi-regional combination allows us to flexibly respond to new developments in the distribution field. Trends and new changes in consumer behavior that help us protect shareholder value.

On the page opposite "Competitive Advantage," the 37 brands of the fashion company with net sales of $4.2 billion line up.

A 5-page white-backed message from the company's chairman and CEO, inserted in the coloring pages that follow - bright models showcasing the company's different brands of clothing. Dedicated to a section on 'Sourcing - an area of change', the speech reads: 'Faced with the dramatic impact of the removal of textile quotas in 2005, we are working particularly closely with our logistics suppliers to ensure we have sufficient capacity to handle and Delivering our goods." The speech added: "Our diverse portfolio is strongly supported by core competencies in design, procurement, logistics and brand management."

This is the US-based Liz Crab Company. Claiborne Inc.), is engaged in the wholesale and retail of apparel and accessories. The many brands of the Riscreb Company cover almost all areas of clothing, from classic to modern, from professional to leisure, from mass to elegant, from urban life to country style. Its products are sold in virtually any retail format, including upscale and mainstream stores, specialty stores, promotional chains, e-commerce sites, consignment stores, and supermarkets. What do these mean for a company's purchases?

Simple white and rich color seem to be a metaphor for this. "We currently have about 400 suppliers around the world, and it will be halved in a few years." Diane E. Long, the company's chief representative in China, seems to be contradicting her thinking - she really means, More brands doesn't necessarily mean more suppliers. 17% of the company's global procurement comes from China. Such a plan is both a rare opportunity and a daunting challenge for Chinese suppliers. Perhaps you can turn challenges into opportunities by listening to what Diane Lang, who is also chairman of the U.S. Chamber of Commerce's Procurement Committee, has to say.

China Meaning

What does sourcing from China mean to your company?

Riscoleber began sourcing from China in 1984, and its meaning has also changed. In the beginning, the purchase was purely for price, for the simple reason that the cost in China was lower than in other countries. Later, compared to the 35 countries we source from globally, the efficiency of China's supply chain has improved a lot, and the contribution of sourcing from China to the company's value is not just price - you can always find countries with lower costs - China is almost The ability to manufacture any product and deliver it on time, this ability, the competitiveness of this supply chain, and the optimization of roads, ports, customs, make sourcing a contribution to the value of our company.

What is your organization like in China?

Risk Crabbe's team in China is large: there is a company in Shanghai, a company in Taiwan, and Hong Kong is the management headquarters in Asia. At the same time, there is an agency in South Korea, which is also managed by the Chinese team.

General Process

How do you organize your people in order to do good purchasing?

We have two groups of people who are very important to purchasing. One is the commodity purchasing team, which coordinates with suppliers on the products the company wants to purchase, and also does pricing work. They have a solid understanding of the product the company is looking for. The other is the technical and quality team, just as important as the first team, who work directly with the supplier's factory personnel to guide the process of manufacturing the product. A new change coming soon is that the merchandising team will pay more attention to product development. We want factories to do production management, and we focus on designing more creative products.

You mentioned that the factory does production management, and you focus on design. Are you using OEM?

I would say OEM is an old model. For example, a designer in the United States said to a Chinese factory: "I want this product, this color, this size. You must not invent, just produce as I said." This is OEM. And with the new model, it wasn't enough for the OEM to design a manufacturing sample, they went a step further and said to the designer, "Yeah, you're right, but why not use pink instead of red? Why not make it a little rounder. , not the way it is now? I've done market research, and I think the market needs big products, not small ones. I'll give you a few more samples." They think like designers, which is different from OEMs Big difference, OEM doesn't call you to innovate.

Today, fashion trends in clothing are changing so fast that even buyers' designers don't know exactly what they want, and they don't have time to travel the world to examine the changing trends of clothing. On the contrary, suppliers have the opportunity to see other markets and other products, and they have the conditions to think like buyers. This is partnership.

What is your procurement process like?

Over the years, we've been dealing with pretty much the same vendors. Today, it is difficult to become a supplier to Riscribe. We are a fashion company, there is a problem with seasons, the seasons change, the trends of fashion also change. For each new season, we first have to do a trend analysis, what style do we need, what color, what pattern, and so on. At this stage, the supplier may be asked to make samples of certain styles to evaluate the effect.

Next comes the production of pricing and sales samples. We have "Sales Week" in the US, if the sales samples sell well, we will place an order and the supplier can start mass production.

How do you select suppliers?

First, we will conduct a factory audit, we will see if the factory complies with China's labor, fire and safety regulations, if they pay their workers correctly, and if they maintain the factory's safety standards. We look at their technical capabilities, how often the machinery is maintained and kept clean, whether there is enough machinery and equipment to produce the quality of product we require, and how fast they can make samples. We also look at the attitude of the supplier's management, whether they are flexible and willing to change. Then there is the price. We won't focus on price at first.

After such an investigation, if we are interested in a certain supplier, we may give him a test order to see if he is easy to cooperate with in the process of fulfilling the order and whether he is willing to change. If he does all this on time, we'll tell him "we can officially start". Now, it generally takes 6 months to a year to become our supplier.

Chinese Suppliers

How do you view the partnership between your company and Chinese suppliers?

I think the relationship between the supplier and our company is good. While there will always be some issues, they have changed a lot. I started doing this 7 1/2 years ago, when supplier delivery was always an issue, but it's almost non-existent today. Communication between the two sides is also constantly improving. I am very impressed with this.

In the process of selecting Chinese suppliers, you found that they have areas for improvement?

I want to say three things. One is about the concept of "customer is God", the second is about sales operations, and the third is about hardware and software.

As we all know, China was still a 100% planned economy more than 20 years ago. Although great progress has been made today, it is not yet a complete market economy. Many people don't know how to plan for a market economy, they often say "customer is God", what does that mean? That means "God" is here, in a high position, and they are people in a low position, they wait for "God" to tell them what to do, and they are obedient. But China needs to elevate itself to be more equal to "God" because today's customers say "I'm not God, I just pay, here we need equality, you need to tell me where you can do better Good." The client is actually talking about future development. So every factory needs to be flexible to respond to changes, and we as customers also need to change, really.

What do you think are the sales problems of Chinese suppliers?

I think it's a tradition for Chinese factories to have no real sales operations. What they call "sales" is not really sales, "business" is not sales, that is business management. So, they now need a real sales department, where people are in charge of generating ideas, providing quotations to customers, preparing sales presentations, and showing customers what their factories can do in the future. A good factory manager talks to customers not about today, but about the future development.

What about hardware and software?

Many Chinese suppliers are most anxious to buy hardware such as machinery and equipment, which is actually an easier job. The hard part is how to improve the software, because software is more important to success.

For example. Whenever I read a good English management book and can find a Chinese translation of it, I buy it and give it to my supplier. However, a supplier in turn sent me a book called No Excuses. He was the first Chinese supplier to send me books. His move is awesome.

"No Excuses" is about how to apply the military regulations of the United States Military Academy at West Point to management. At West Point, soldiers answered all questions with only four answers: "Yes, sir!", "No, sir!", "I don't know, sir!", and "No excuse, sir!" Three of the answers were with There are "no" ones. I think many Chinese have a harder time saying "no", they don't know how to say "no". The fourth answer "no excuse" means: I made a mistake, I admit that I made a mistake, I have no excuse for the mistake, but I will not let it happen again.

In China, management is quite an interesting thing. I can only imagine the difficulty this supplier had in managing his factory. With him, the education level of employees is lower, and their understanding is lower. A book like No Excuses that makes it clear to employees what to do and what not to do is a good start to improving software.

You advocate a customer-supplier partnership. As a customer, how does your company help Chinese suppliers?

We have always provided technical support to our suppliers. We have a very professional team to communicate with factories, help them translate technical data and answer their questions. We help them do factory assessments to identify deficiencies in the process. We have Quality Assurance Centers in China and also help them to set up Quality Assurance Centers in their own factories. Some suppliers even delight their other customers with these systems we provide.

Future suppliers

You say that both customers and suppliers have to talk about the future, so what kind of suppliers will win the competition in the future?

In the past, a good supplier offered three things: price, quality, and on-time delivery. In the future, successful suppliers will use these three skills as the basis for starting a supply relationship, and they will also be able to develop products, create new fabrics, and provide new samples.

The second point is that the market reacts faster. Some Chinese suppliers don't seriously consider the importance of samples, and the problem in the future is that we don't have much time to spend on the repetition of samples - that is, the factory makes the sample, we correct it, remanufacture, and correct it again. We are now focusing on the whole process, and when we say "the market is more responsive", we don't just mean the production stage - which is very short now - but also the pre-production stages like building samples, product development.

Previous product development took too long. Now we say to suppliers "you are our long-term partner, so you need to have the ability to develop products with us. And, you don't waste time repeatedly building samples, we need you to do the first sample. "- Some of our brands want to use such samples as sales samples.

Third, future suppliers should be keen to use new technologies. Not only in administrative offices, but also in factories, to improve factory processes, all technologies can be used through the Internet.

In China, many factory managers are not highly educated. This is different in India and Sri Lanka, where factory owners have transitioned to the second generation, a generation of well-educated young people who study abroad and hold degrees in management. After they returned to China, they knew how to improve the factory to be more efficient. Chinese suppliers are still competing at the level of price and volume. To be successful in the future and in the new world, they will have to change from competing only with domestic factories, understand how to compete globally, and are working on factory processes and efficiency. Improved factory competition in Korea, India, Turkey, South America.

Last question, what trends are emerging on the horizon for global sourcing?

I think it's safe to say that most buyers will reduce the number of suppliers and concentrate suppliers to fewer countries.

Consistent with partnerships, there will be more and more suppliers and buyers working in the same office, ie a "close-up" relationship.

In addition, suppliers who will succeed in the future will be those who are committed to product development, study abroad, and grasp market dynamics and needs.