I have recently seen many an article that tells us the importance of maintaining and nurturing supplier relationships (Nurture?), to ensure long term benefits for both parties.I would really like to meet this mythical creature called “Long Term Benefits For Both Parties”. Unfortunately in the real world this unicorn rarely exists. If you can maintain a mutually beneficial supplier relationship in the apparel industry for more than three years, you have caught the leprechaun, and his pot of gold.
Now, I have said, rarely. It is more likely to exist doing local production, due to common business culture, common social norms, protocols, etc.
Offshore is another issue. Different cultures, business cultures, social norms, protocol and other rubbish, that gets in the way of business dealings.
If long term supplier relationships existed, there would not be the job requirement, usually seen in sourcing related jobs, that specifies continuous sourcing of potential suppliers. This is an obvious requirement, as relationships can turn on a dime (actually, 5 cents a garment will guarantee a turn), and you need back up suppliers for your back up suppliers.
This constant need to source new suppliers, even resulted in a new job title in the apparel industry. “Supplier Relationship Manager”. Do not let this nifty title fool you. It should read “Find New Supplier Sharpish Manager”.
There are the obvious reasons for choosing not to use a supplier anymore (quality, late delivery etc), but there are often other reasons to keep in mind.
First, there is the price creep. Come the second season with a supplier, and you are often hit with a 15 to 20 percent price increase. This is a deliberate tactic. You will hear two common reasons. One, they gave you a special price as you were a new customer. Common in China. Two, your orders were very difficult, so they were under costed.
When this inevitably happens, simply walk away, and head for the nearest back up supplier. Sure, prices increase, but not close to the % suppliers claim. It is good to have an idea of commodity prices used, to challenge suppliers, and also remember the obvious. An increase in an input price of 15%, does not mean the garment cost increases by 15%. Many do not see this obvious miscalculation. I trust you do?
Secondly, most apparel manufacturers are not concerned with long term relationships, no matter what they tell you. They all want a Wahlmart order, until they actually get it. By the time they realize that they should have developed relationships with smaller, less stringent buyers, they are out of business, as they invested everything in the massive order, that killed them.
They will just tell you what you want to hear. They are concerned about profit. Period. Most generally do not look at profitability in the long run. If another customer comes along that will pay a few cents per item more, you go to the back of the queue.
An example. I used to work with a denim supplier for about three years. We probably placed a few hundred thousand dollars with this factory over a year.
The supplier mails and says they have a new customer who will pay more. Can we beat? If not they will not do our orders. Off to the nearest back up. What is worse, is about a year later they mail asking for business. When asked about the new customer, they told me that the customer only placed one order and left. They were even very open with the reason. The buyer was not happy with the quality. There were definitely thick skinned. Of course we did not give them any new orders. Once bitten twice shy, should be a mantra.
Next, a supplier attempting to change confirmed and non negotiable terms, long after these were agreed upon. Funnily enough, this happened to me today. A supplier who will probably read this, has attempted to send pre production samples, in incorrect fabric and with substitute trims, promising to rectify in bulk. This is too risky, as pre production samples need to be 100% representative of bulk. Period. As they say, it is easier to ask for forgiveness, than permission. The main problem here, is when the party you are trying to get forgiveness from, is also aware of this saying.
When the goods are inspected the inspection agency needs a garment that is signed off by the buyer as a representation of bulk. You cannot sign off on something, and then add a “but”. I am quite sure said supplier will read this post. However, rest assured, my advice is relevant for manufacturers as well as buyers. To my supplier. In reading, please be assured, I always attempt to keep business relationships for as long as possible. I hope this issue does not occur again, and we can have a long and fruitful relationship. Remember. It costs more to get a new customer, than to keep and old one. The same is true in reverse. It is easier and cheaper for me to keep an existing supplier, than to fly around, staying at hotels, to find new ones.