The International Apparel Federation (IAF) is unique because it is the only association in the apparel industry that spans the globe with a membership of more than 40 national associations and numerous globally operating brands and retailers. The IAF’s tagline is therefore not surprisingly, ‘building bridges across continents’.
Interestingly in these very turbulent economic times, building bridges is getting easier as our world has become more interconnected; we are all acutely aware of the economic situation in other countries. For example, as apparel power houses such as India, China and Turkey rapidly develop their apparel industries and apparel retail sectors problems, Indian and German private label manufacturers are becoming very similar. Across the apparel world we are learning to speak the same language.
This is good news and therefore building bridges across continents is not simply a romantic notion. It is said that it is not just companies that compete with each other, it is their supply chains that compete. Having the cheapest sources of supply used to be a fair definition of a good supply chain for a Western brand or retailers. These days are over. Good supply chains are defined by the effectiveness of the relations within the chain. For brands and retailers and their manufacturers to speak the same language is a prerequisite for an effective supply chain.
In a witty article in CMAI’s Apparel magazine of April 2012, CMAI’s president and IAF board member Mr. Rahul Mehta laid bare how often the buyer is too focused on getting the supply chain to work by putting as much pressure as possible on the manufacturer. This method ignores the idea that maybe the buyer is making some serious mistakes. Solving these might improve the supply chain much more than any type of pressure can achieve. We see now a strong growth of collaborative planning software packages, often available ‘in the cloud’ and giving the entire supply chain ‘one version of the truth’. After a recent demonstration of one of these packages an honest clothing buyer remarked that the main advantage of using this package for his company had been that he and his colleagues could not hide their mistakes anymore. The entire supply chain process is laid in the open, across the globe, forming one big network of bridges across continents. Talking the same language then, looking at the version of the truth that is interesting for entrepreneurs – the bottom line is the starting point for achieving excellence.
To be honest, excellence is what is needed in a world where the industry is facing a rather formidable plethora of adversity. In Europe, the economies are in a squeeze. Too many cuts on government spending will stifle growth as we see happening now. But too much spending will be punished by the financial markets driving up interest rates on government loans (that are too large). Many European retail markets are experiencing a second recession and of course this is hurting fashion suppliers and retailers active in Europe. Mario Draghi, the President of the European Central Bank in a recent press conference lowered the expectations for 2012 to a spread ranging from a contraction of 0,5 percent to a miniscule growth of 0,3 percent. He says there are sign of stabilization of the crisis but he expects recovery to take longer than expected earlier. In addition, the threat of increasing inflation is growing, giving governments less room to maneuver to stimulate economies.
In India of course the adverse market conditions in Europe are bad for business. In addition, I read that the Indian apparel industry is hurt by rising expenses such has transport costs and especially the costs of credit and that infrastructural bottlenecks are hampering competitiveness.
We could go on like this and become depressed, but this is not how the global fashion industry works. The economic situation is a given. Individual companies, even whole industries, cannot really do much to change the relentless up and down rhythm of the world economy and they cannot, at least in the short run, really influence financial and political developments. Fashion brands and retailers operate on the flow of seduction of customers and creating a positive feeling. The global fashion industry, with its many SMEs and its flexible and creative tradition, is very capable of growing against the stream. For instance, we are witnessing a revolution in B2C internet shopping presenting us with a fantastic opportunity to match consumer demand and the supply of fashion. This creates room for manufacturers to compete relatively more on speed and on flexibility than on price. This in turn creates new opportunities for manufacturers that are faced with rising costs, as long as they manage their supply chains in a modern way, based on transparency and collaborative planning.
It is therefore very much in line with this positive view of the entrepreneurial power of the global fashion industry that the IAF has titled its annual convention Fashion Business in a Changing Environment. Growth is about turning changes into business opportunities. To be able to do so in the best possible way requires a flow of information and ideas between people. To make use of the opportunities in markets in other continents you have to speak to local people and build up a network in these markets. To put yourself in the position to fully benefit from new ideas, you have to meet and listen to a whole range of people from ‘new networks’.
This is just what the IAF has set out to do. We build bridges between people on different continents. We build bridges between ideas from other industries and the fashion industry. All of this is happening at the 28th IAF World Apparel Convention to be held on 26 and 27 September in Oporto, Portugal.