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NEAR-sourcing
has for some time been highly touted as
the next great trend in the global supply
chain. Yet for all the talk of this phenomenon
we have seen very little evidence of it
to date.
Consumers
in the western world continue to grab items
from shop shelves that are overwhelmingly
marked with the "made in China"
label.
But
in the fashion and apparel industry it appears
that non-China sourcing is gaining ground.
It is a trend that leading US-based 3PL
UTi Worldwide has observed.
"We
in UTi have noticed in the last twelve months
or so that there is some shift in production
happening, whereby in the last 20 years
most of it was produced in the Asia Pacific
and we can see a trend in near-sourcing
by companies now,¡¨ UTi Worldwide global
vice president for fashion and apparel,
Christian Bonnet said.
For
companies based in the US they are increasingly
looking back to countries like El Salvador,
Guatemala, Nicaragua and Mexico for their
sourcing needs.
But
it's not just Americans that are looking
to source closer to home it would appear.
Mr Bonnet noted that some European fashion
and apparel retailers were now looking at
Turkey, Morocco and Tunisia again, as more
attractive sourcing options as opposed to
China.
Even
within Asia itself apparel production is
beginning to spread beyond China to Bangladesh,
Vietnam, Cambodia and even Myanmar.
"There
is a lot of interest in Myanmar at the moment,"
the fashion and apparel vice president said.
While
this news may lead one to conclude that
this is finally the beginning of the end
for the ¡§made in China¡¨ brand, Mr Bonnet
is also quick to point out that at this
point in time China remains the undisputed
leader of not just fashion and apparel manufacturing
but manufacturing in general.
There
have been many detractors over the years
warning industry insiders and observers
alike that the ¡§China freight train¡¨ will
eventually come to a grinding halt.
These
people at various points in time over the
past decade have pointed to a number of
factors that they believe were tell-tale
signs that China sourcing was in decline.
The leading argument today is the rising
cost of labour within the country.
But
despite these warnings, the fact remains
that China is still the factory of the world.
The
shift that UTi sees appears to have more
to do with a rise in supply chain segmentation
on certain items, given the growing complexity
of the global supply chain and the need
among various shippers for more flexible,
tailor-made solutions.
"It
[near-sourcing] really concerns the items
usually at the high end of the collections.
There is a good production output in the
countries that I mentioned because they
used to produce these garments before they
were lost to China. Therefore the knowledge
and production capacity is there.
"This
is really being driven by the market. It
[garment shipments] needs to be delivered
on a weekly basis. So it's either you airfreight
it from Asia or you are able to find a way
to deliver it faster. You need more flexibility
in terms of production and therefore it
needs to be closer to home," Mr Bonnet
said.
In
the high-end fashion and apparel supply
chain, where margins allow the focus to
shift to speed-to-market rather than cost,
more shippers are looking increasingly to
an airfreight option as opposed to the traditional
ocean freight.
This
is something that a lot of companies are
now looking at, the UTI executive said.
As
for how China will fare in the near term,
Mr Bonnet is confident that the country
will remain a stable source of business
for the fashion and apparel sector, particularly
after the last year's blow to Bangladesh's
reputation as a good sourcing market following
the tragic factory collapse and the subsequent
scrutiny over working conditions and how
employees are treated in that country.
But
in terms of strong growth in 2013 the senior
executive is looking to markets beyond China.
"I
see a shift of production, especially in
the leisurewear area to Vietnam, Cambodia
and Indonesia. I see quite an increase in
orders there,¡¨ he said.
Ultimately
China will remain the factory of the world
for the foreseeable future. However, with
the growing complexity and varied needs
of shippers throughout the world today trends
like near-sourcing are certainly on the
rise, as is the trend to look elsewhere
in Asia rather than China for one's sourcing
needs.
This
does not mean that China will lose its position
atop the manufacturing chain, but rather
it means more supply chain management solutions
that logistics companies like UTi can offer
to their customers.
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