The recession forced executives to reexamine their supply chains and find new efficiencies. Now, according to speakers at last week’s WWD Global Sourcing & Supply Chain Forum, getting back up to speed during economic recovery will mean recognizing where sourcing is headed.
Cutbacks in inventories and the culling of suppliers that brands and retailers engaged in to survive the downturn present a challenge to growth, said Michael McBreen, president of the global operations group for Wolverine World Wide Inc.
“A year ago, much of our conversation was, ‘How do I slow down my supply chain? How do I cancel orders without paying fees and penalties?’” McBreen said. “Today, we’re scrambling for capacity. As an industry, we’ve really set up a classic bullwhip effect.”
Companies such as Wolverine, which has a multibrand portfolio that sells in 180 countries, have relied heavily on Asian sourcing for decades. However, Asia, and China in particular, are quickly developing into powerhouse consumer markets. That transition has significant ramifications for sourcing.
“[Asia is] important to our brands, but more important to our sourcing strategies,” McBreen said.
Commodity inflation is a likely result of an economic recovery and a surging Asian consumer population, he said. Fewer factories are in business than two years ago, Asia has seen labor shortages and suppliers still face barriers to obtaining capital.
“In a world where the source countries are seeing GDP growth at a rapid rate, and the mature countries are having slow to no growth, the pinch point becomes clear,” McBreen said.
The experience between consumers and brands has also changed thanks in large part to technological advancement.
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