Here, FOURSOURCE share their first exclusive piece with WhichPLM, focusing on the digitization of supply-chains and what we should be looking for in a sourcing partner. FOURSOURCE is an innovative and unique online platform that creates partnerships between manufacturers and brands, and supports the marketing, promotion, and sales of manufacturers to buyers and brands.
The global sourcing market for ready-made garments has a value of 800 billion USD per year. Thousands of original brands, private labels and other buyers purchase from thousands of ready-made garment manufacturers. Due to political, price, quality, speed, or compliance pressures the average market change is 20% per year. Hence, the search for the right partners is a daily sourcing challenge – not all parties match each other and it’s hard to compare capabilities and demands across the globe.
Despite the fact that the digitalization of the fashion & apparel value chain is advancing with great strides, most sourcing options are still analogue. Even the most advanced players in the industry still depend on personal networks, recommendations and intermediates with local expertise. Common digital “solutions” in use are search machines like Google or marketplaces like Alibaba, who rather serve as the digital yellow pages of the industry, delivering a long list of search results. Though the difficulty is not to find sourcing partners, but to rank them by relevance of the searching company and to get a complete and standardized overview. Having said that, none of these solutions delivers buying-behaviour-specific results at low costs and time efforts.
We know that there are already digital solutions and algorithms around that match partners based on individual hard and soft criteria. Let’s take Parship – a German online dating platform – as an example: their algorithm includes 30 personality characteristics and recommends potential partners matching a searcher’s profile. So, why don’t we take a similar approach to solve some of the major challenges in apparel sourcing?
On top of this, could we implement the technology, tools and learnings that have taken place towards the end-consumer market to make sourcing and daily cooperation with market players globally easier, more efficient, less costly and less risky? How would that possibly look? Let’s take targeted B2C communication or search & filter options as an example. Both are very much focused on creating relevance and convenience for the buyer, giving a standardized, complete overview and making decision making as efficient as possible. Why should B2B sourcing be any different?
The strong fragmentation and individualization of the industry has been the biggest challenge so far. Brands, with their different product offerings, order sizes, compliance regulations, country preferences, lead time expectations and, of course, quality expectations, are facing a non-standardized and mostly in-transparent supply-side. Some manufacturers match and some not at all. The search and identification of a relevant partner is a hassle: 1 new supplier is needed, up to 100 are on the buyer’s long-list, around 30 manufacturers provide the needed information in time, 10 are being visited and 1 receives a test order. Further, with today’s speed, sourcing data develops and changes every day and can be totally different for the next search. Through digitization this manual work-flow will become much more efficient and cheaper. Most importantly, the necessary sourcing data needs to be constantly updated and accessible anytime, anywhere across the entire organization.
Sourcing partners should be able to build a close relationship without monthly face-to-face meetings but rather by sharing their company updates, product requirements and developments in an intuitive and easy way. Manufacturers should be able to reduce their marketing and sales efforts with targeted approaches and to create trust by significance. The case study of an export association shows how this can be done. The Tirupur Export Association (TEA), a leading association of more than 1,000 high quality garment manufacturers in the Indian region of Tirupur, has realized this stride and aims to be the first fully digitized production cluster for circular-knit-garments worldwide. To accomplish their goal of double revenue, the TEA aims to position themselves as the innovative and modern global market player. By digitization and taking advantage of today’s technology they want to get closer to European brands and to connect with their employees.
TEA chose to work with our platform to support this journey. The FOURSOURCE platform matches the right partnerships between manufacturers and brands using comprehensive profiles that consider hard and soft factors such as detailed sourcing criteria as well as quality or brand positioning. It also helps buyers to leverage the full potential of their existing sourcing network. The platform uses a matching algorithm that shows which partners best correspond and automatically ranks search results by relevance. Detailed filter options allow fine-tuning of any search. Product images, company news and business opportunities can be viewed and shared. Members can securely connect with each other and follow their updates and marketplace feeds.
So, will technology replace traditional sourcing? Should we invest heavily in technology and artificial intelligence, yet not pay equal attention to the most important interaction of the business that we have: the actual interaction between two people, respectively organisations. We believe that technology, in the end, will always be good guidance but cannot replace the interaction with a person, visiting of a production site, touching and seeing physical products and understanding the mentality of a sourcing partner. The technology and information tools at hand should help us to make our jobs easier, more efficient and to take our sourcing decisions with intelligence. Notice the word “help”, ultimately, it is up to the skilled craftsman to utilize the tools, in the right way, to end up with the best finished product for each sourcing cycle.