PREFERRED SUPPLIER
98 %
of the buyers are
confident that India
will remain a preferred
destination, but only
for India-specific items
and small quantity
orders.
87 %
agree that India is not
competitive enough
to challenge China
and its satellite textile
countries like Vietnam/
Cambodia etc.; and not
even the duty-free/FTA
converting destinations
like Central America/
North Africa and cheap
labour destinations like
Bangladesh and now
Ethiopia.
continuous high efficient sharp
price production, and also, on
chief value synthetic (CVS)
production. 87% agree that India
is not competitive enough to
challenge China and its satellite
textile countries like Vietnam/
Cambodia etc.; and not even
the duty-free/FTA converting
destinations like Central America/
North Africa and cheap labour
destinations like Bangladesh and
now Ethiopia. 6% claim that Brand
India is strong and talking about
competition from destinations
with totally different composition
is unfair.
While 12% of buyers surveyed feel
that compliance is still a concern,
they admit that the concern does
not extend to safety but more to
issues of worker rights. In fact,
a whopping majority (88%) gave
thumbs up to India’s efforts on
compliance and pointed out that
“our serious commitment to strict
adherence on compliance is the
major point that is attracting
buyers/brands. We are definitely
ahead of our peers on Health
and Safety.”
A detailed run down on our
discussion with the individual
sourcing offices follow. It is obvious
that opportunities exist and it is for
the suppliers to raise a claim for
the title of ‘Preferred Supplier’.
Value for Money
MI C H AEL STEN
Commercial Manager, KAS Pty Limited
H
owever much we may talk
about the industry evolving
and changing, the core values
that have driven the industry for
years remain the same. Today,
a balance of price, ethical and
compliance, quality and timely
deliveries are as important as
they were a decade ago. For
Kmart, the right price for a
product is a major concern, as our
commitment to our shoppers is
very straight forward – everyday
items at the lowest price. ‘Value
for money’ is our motto, this is why
a ‘preferred supplier’ for us has to
align with this commitment.
Within KAS – Kmart Australia
Sourcing – the buying arm of
Kmart, as one of Australia’s
largest discount department
store retailers, we provide a
comprehensive end-to-end service
to Kmart covering sourcing,
merchandising, packaging, quality
assurance, quality control and
international supply chain with
approximately US $ 1.5 billion
in shipments annually. It is our
responsibility to source as per
the vision of the company and
keep our shoppers coming back
for more. We have 200 stores in
Australia and 20 in New Zealand.
And though the economy has
been sluggish, we have been well
positioned at the value-end of
the market.
Though price drives us, we are
not always on the lookout for
the cheapest destination. Our
decision on where to source is
guided by stability of business
conditions and a transparent
knowledge of working conditions,
ensuring that the suppliers we
partner will produce in an ethical
and sustainable manner. Unlike
many other retailers/brands at
this point we are not looking at
Ethiopia. Many may argue that
when competing at the lower
end of the market segment,
nothing but price matters, but
A ‘preferred
supplier’ for us
is one who wants
to grow with us;
who knows how
to meet our price
points and is
confident that their
capacities will
remain booked.
that is a misconception. We have
to determine where to draw a
line, what quality we want and
what price we are willing to pay,
based on our customer profile
and market positioning. We have
to ensure that while meeting the
price, factories are not cutting
corners and exploiting their
workforce. This is very important
to us. Kmart Australia uses the
Business Social Compliance
Initiative (BSCI) country risk
classification to determine high
risk factories.
A preferred supplier for us is
one who wants to grow with
us, who knows how to meet our
price points and is confident
that their capacities will remain
booked, allowing the supplier to
concentrate on the products and
not worry about where the next
order is coming from. We have
great partnerships in China and
Bangladesh on volume business,
but India is more fashion, and
though the suppliers here are not
as competitive on volumes, they
are good in certain categories
that complete our collection. Also,
the soft goods and home segment,
especially towels from India is
very competitive and we have
some dedicated suppliers that
have been working with us for a
long time.
It is also important for us that
our suppliers are flexible to
change…, willing partners
in meeting evolving needs.
Today, we want to reduce our
investment in inventories, which
means faster lead times and
speed to market. So depending
on the product category, we are
working with our suppliers to
reduce time taken in the whole
process, from 120 days, and even
90 days is no longer acceptable.
Here we are partners, working
out ways to put the products
on the store shelves faster. The
supplier has to be responsive
to ideas and must be willing to
drive efficiencies within their own
business to sharpen price and
improve delivery.
The real change that has come
is that we are now fostering
partnerships to grow together.
The operational risks of working
with new factories all the time is
very high, so while relationships
used to be transactional in the
past, now they are long term and
strong with suppliers planning
capacity building on projections
that we make for the future. There
is investment of interest from
both sides and that has made the
business more stable, even as
market conditions are difficult and
margins reducing.
www.apparelresources.com | JULY 1-15, 2017 | Apparel Online India
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