Guest perspective from industry leaders
By Edward Hertzman

The newest line item in every profit-and-loss statement isn’t labor. It isn’t freight. It isn’t surcharges. It’s risk.

Perhaps it’s time we start accounting for it that way. For years, supply chain disruptions have been treated as anomalies, unexpected hits to margin, neatly explained away in quarterly earnings calls. “If not for X, we would have hit our numbers.” But what if X is no longer the exception? What if it is the model?

Consider the past several years: tariffs, pandemic shutdowns, port congestion, labor shortages, geopolitical instability. Now Iran.

At some point, the pattern becomes clear. Disruption is no longer episodic. It is structural. Which means the real anomaly isn’t disruption, it’s stability.

That suggests a fundamental shift may be needed not just operationally, but financially.

Perhaps companies need to recalibrate how they build their P&L statements. Not as if disruption is an unforeseen shock, but as a recurring cost of doing business. A line item under cost of goods sold: risk and disruption.

An expense that can be anticipated, modeled and absorbed, not explained away after the fact.

Because a clean quarter, no delays, no cost spikes, no bottlenecks should no longer be assumed. It should be considered an unexpected bonus.

The latest conflict, centered around Iran, is once again tightening energy markets, shifting shipping routes and driving up costs. For retailers, the effect is cumulative: oil, raw materials and transportation all rising together.

At the same time, time itself is becoming less reliable. Transit schedules slip. Capacity tightens. For companies built on just-in-time inventory, the consequences are immediate: stockouts. For years, the industry optimized for efficiency. It worked in a more stable world. But efficiency without margin is fragility.

The question is no longer how to avoid disruption, it’s how to plan for it.

Because in today’s environment, resilience not perfection is what wins.

The views expressed are those of the author and do not necessarily reflect the official position of the International Apparel Federation.

Het bericht The Newest Line Item: Risk verscheen eerst op IAF.

As frequent visitors of the ITMF and IAF annual conferences have come to expect, industry experts will share the cutting edge of the developments that currently define the textile-apparel industrial complex. The unique collaboration of the textile industry federation ITMF and the apparel industry federation IAF allows the organizers to give a full supply chain picture. At a time when collaboration across the entire chain is indispensable to meet the many challenges, this is a great asset.

Collaboration is also a central theme of a session featuring Inditex, Epic Group and International Finance Corporation (IFC, part of the World Bank Group). The speakers will focus on decarbonization and show how a collaborative approach across the supply chain can achieve the real progress that our industry needs.

The apparel and textile industries are rapidly becoming more regulated, heightening the pressure to create real and significant environmental and social improvements. In a unique, global regulation session, representatives of the American Apparel & Footwear Association (AAFA), the China National Textile & Apparel Council (CNTAC), the European Textile & Apparel Industry Federation (EURATEX), and the Japan Textile Federation (JTF), will explain the shape that regulation will take in their countries and regions in the coming years.

These topics and several more about fibers, digitalization, AI, etc. will be discussed in the ancient city of Samarkand, Uzbekistan, a country with a rapidly growing textile and apparel industry, attracting interests from across the world. This convention will be a unique industrial gathering of leaders from across the entire textile and apparel supply chain, from all parts of the world.

For more information, please go to:

www.itmf-iaf-conference-2024-samarkand.org

Het bericht IAF & ITMF Convention in Samarkand, Uzbekistan verscheen eerst op IAF.

Het bericht Yusuf Amdani verscheen eerst op IAF.

Sustainability and transparency within the apparel industry have come under the spotlight in recent years due to rising external pressure from consumers and governments, according to a joint survey by Serai and KPMG. The survey finds two-thirds (66%) of apparel industry insiders see supply chain transparency as an “extremely important” issue and 80% aim to implement transparency solutions by 2027. However, less than 20% of the respondents currently have a comprehensive overview of all stakeholders in their supply chain (visibility) and just 15% are able to fully trace all the materials and components used in a product from their origins through each step of processing and manufacturing (traceability).

Moving the needle – Threading a sustainable future for apparel is an in-depth study into how the apparel industry is responding to calls for adoption of sustainable practices. The study draws on the findings of a global survey of over 200 senior executives in the apparel industry conducted in August 2021. 

Supply chain transparency is a cornerstone of the apparel industry’s efforts to become more sustainable. 

According to the report, three key factors are fuelling the need to uphold transparency.

Corporate reputation: About 52% of suppliers and 59% of retailers/brands considered enhancing their corporate reputation as the main reason to boost their supply chain transparency.

Business opportunities: Now more than ever, suppliers are motivated to improve supply chain transparency as part of their business goals, as this may allow them to tap into business opportunities with brands and retailers that are positioning themselves as sustainable or complying with stricter regulations.

Profitability: Companies are looking to improve operational excellence to lower costs and preserve margins. Research indicates businesses with higher sustainability scores have a lower cost of capital. A sustainable apparel business can expect to have an average uplift in their net profit margin of 1-1.5% for brands and by 1.5-2.5% for suppliers.

Currently, the capacity of the apparel industry to ensure supply chain transparency remains low.

Vivek Ramachandran, Chief Executive Officer, Serai, says: “COP26 has reinforced the need for companies to find ways to reduce the environmental impact of their manufacturing. This can only be done through full visibility into their extended supply chains. Thankfully, the technology to help already exists. At Serai, we’ve built a plug-and-play platform that integrates with existing solutions. This means rollout is much quicker, the cost of adoption is much lower and more importantly, it provides a scalable platform that can easily be expanded across use cases to grow alongside the business.” The report finds that investment in transparency tools will be crucial for apparel companies if they do not want to risk losing a competitive advantage.

To download the report, visit here. We hope that this report provides you with valuable insights and we welcome the opportunity to discuss these findings further, reach out to events@seraitrade.com if you are interested in an exclusive briefing session.

Het bericht Serai: Moving the needle – Threading a Sustainable Future for Apparel verscheen eerst op IAF.

Due Diligence legislation will require European brands and retailers buying apparel to follow certain procedures to reduce negative effects of their direct and indirect actions on their supply chains, also outside of the EU. IAF has always considered the concept of due diligence to be good news for the global apparel industry, as it will lead to a better distribution of risks and responsibilities in the supply chain and because purchasing practices are an integral part of the concept. However, a lot can go wrong in the implementation, which, if not done well, can lead to an unbearable burden for SME brands and eventually also an additional burden for manufacturers. A strong lobby, involving many IAF’s European members and of course IAF’s European member EURATEX, is working on preventing this scenario.

Alongside the mandatory due diligence legislation, in numerous European countries, national legislation is already being developed that contains some part of the expected European due diligence legislation. In countries such as the Netherlands and Germany, governments are putting pressure on the European process by already installing legislation. In addition, the EU has just revised its non-financial reporting directive into a Corporate Sustainable Reporting Directive (CSRD) The CSRD will act as the reporting arm of forthcoming EU due diligence legislation. It will be applicable also to certain SMEs. It is clear therefore that the ball will keep rolling now and the industry will continue to move towards implementing a human rights due diligence approach.

Another important topic, especially in the wake of the COVID-19 pandemic, is social protection. As member of the International Working Group of the ILO Call to Action representing manufacturers, the IAF is closely involved with the Call to Action’s efforts to accelerate the development of adequate social protection programs in the eight priority countries in the Call to Action. We are now at the stage where the ‘tripartite’ stakeholders, including business (buying brands and retailers, manufacturers), unions and government have reached an agreement on a common approach. IAF will work with its members in the priority countries on the implementation that will follow and also communicate with all of our members to keep them informed of the developments on social protection.
Please contact the IAF Secretariat at crietee@iafnet.com, if you have questions about these important developments.

Het bericht Legislation, Regulation and Our Industry: Update verscheen eerst op IAF.

This union brings together the extensive experience that the Colombian Institute has in the Latin market and the investigative power and coverage in trend information offered by Fashion Snoops, a combination that will allow companies to update themselves in knowledge, make business decisions that have a positive impact in their sales, use the platform for open new markets and amplify their view of the Fashion System.

In this way, both organizations will seek to conquer other industries, different from fashion, obtaining new international scopes that will continue connecting knowledge to empower the Latin American Fashion System, a purpose that Inexmoda promotes in its daily work.

Het bericht Colombia and New York connect with the powerful alliance Inexmoda-Fashion Snoops verscheen eerst op IAF.

Now a days it is essential to keep up with the new technologies that surge in order to advance and grow in an ever-changing market. For this reason, the theme that will inspire the twenty-eighth edition of Colombiamoda is ‘The New Game’. An invitation for entrepreneurs to adopt new technologies and methods that facilitate the interpretation of a changing consumer and the prediction of the markets, favoring innovation and the evolution of each brand’s DNA.

We extend an invitation for you to join us for an event full of life, culture, fashion, and experience on July 25, 26, and 27, 2017. Go to our website, www.colombiamoda.com, and fill out the registration to get your badge. In case you cannot make it, you can stay up to date with Colombiamoda on our website as well. We sincerely hope to see you there!

Het bericht   Colombiamoda verscheen eerst op IAF.