B2Bing Supply Chains

A month ago when the U.S. announced a bill forcing firms to disclose Xinjiang Sourced Materials it caused businesses to scramble and I started chewing on several points.

1. The demand for materials talent will grow, but there’s an intangible skill-shortage of influencing and selling ability
2. The case for good people here in the world’s supply chain keeps getting made
3. The small/medium brands that lack supply chain reach or visibility aren’t set up to play in the major leagues

On point #3. 2020 has seen the proliferation of small/medium-sized brands typically holding a “DTC” status. Consultancies have been touting these businesses as the future of the industry as we move towards personalisation at scale. Events like that of one month prior cause a headspin for everyone, but for brands without a strong supply chain foundation it’s equivalent to stepping into a black hole.

With 22% of the world’s cotton sourced from China (of which 84% is from Xinjiang) many businesses lack the know-how to shapeshift to this new environment, enter the protagonist – Asia’s Brand Sourcing Offices selling B2B supply chains.

I know there’s a longlist of reasons why its “easier said than done” and it’s been attempted as well as failed at before, but here are some arguments and counter-arguments;

“It’s not a core activity for us, we have enough challenges managing our own supply chain”

Counter: When Christmas is over and we hit 2021 without a vaccine, consumption levels will drop once again. Top this off with a lack of consumer stimulus checks (in the US), add a seasoning of unsold inventory’s reinjection into the retail chain and we’ve got less orders into Asia once again. Alternative sources of revenue streams in 2021 will provide lifelines and maybe even help supply chains turn from a cost only part of the business. The head office changes the way it looks at your business if it represents more than costs on a balance sheet.

“There’re specialist companies that handle this work, we can’t compete with them”

Counter: Speaking from the customer’s shoes or with real empathy is the gap that “branded sourcing offices” can fill. People aren’t “sold” to anymore, trust results in a transfer of capital and businesses want to work with empathy that’s more than cosmetic. Brands know brand supply chain challenges just as well as 3rd parties.

“We don’t work with competitors (other brands)”

Counter: Insularity is one of the root causes of the industry’s woes. We’ve avoided “ecosystem” building, not because of a lack of desire, but because competition has prohibited us from doing so. We’re entering into an era of partnerships and no you’re not going to get a Hugo Boss partnership with Ermenegildo Zegna, but there’s an opportunity to get smaller to medium brands working within your supply chain. You don’t just generate revenue, but you piggyback on the small brand appeal earning a “mentor” type of status.  

Brand sourcing offices have the talent and the reach to positively impact smaller/medium businesses resulting in an exchange in services. Partnerships are no longer “no-nos” and coopetition in the fashion industry is already underpinning progress. Once upon a time back in the 70s The North Face and Patagonia were exploring a supply chain partnership in Scotland (hype link at the bottom)

Backing up the hype

https://www.stitcher.com/podcast/wondery/business-wars/e/68492238