When you're talking about the fashion situation you've got two components that make it high in cost,” says textile, clothing and footwear (TCF) consultant, Philip Levy.
“One is the fabric they use and the second one is the small runs, whether they do them based in Australia or they do them in a country like China or India.”
Mid-2011, there are other factors that are raising the blood pressure of the operators of local labels as well.
“Cotton prices have gone through the roof and China is suffering what I call a prosperity problem where people are asking now for 10 or 15 per cent wage increases a year and some are getting it and some are not,” Levy says.
All of which means manufacturing costs are going up at a time when fashion retailers are yet to steer a path through the rampant discounting stalking the nation's shopping malls.
Levy says there are a number of points along the supply chain where his Australian fashion clients are making cost savings.
“In many instances they will look at a garment, if it's a long-running garment, and they'll re-engineer it and take maybe a couple of operations out of the garment which to the naked eye you won't notice but it may reduce manufacturing costs by five or 10 per cent.
“Good, smart operators who work with smart manufacturers overseas in China will look at these garments and see how they can not 'cheapen' them but lower the cost of manufacturing simply by making the garment another way. If you're smart and do that, you can keep doing it until you exhaust the factor of making it any other different way. Then you've just got to put the price up.”
Designer Alison Cotton of womenswear label Joveeba is looking to save shipping and travel costs as well as time by consolidating her manufacturing business as much as possible.
“We're actually going through a bit of a change at the moment and revising all the factories we're working with, who's working and who's not and trying to place some of our production with different people now,” Cotton says. “I'm going to Hong Kong ... for a couple of weeks and one of the main reasons is to go and see some of these new factories that we've come across and replace a few of the things that we're doing in India. The more I can do out of one place out of Asia that's closer to Sydney, the better.”
The move to consolidate Joveeba's production comes two years after Cotton first branched into Indian manufacturing. While Joveeba also manufactures in China and in Australia, Cotton says the incentive to move into India was to make use of its reputation for “amazing” embellished detail. An Indian trade fair's offer to pay for her flights, accommodation and business needs whilst in India helped push her along.
“I thought this is all coming together, this is the perfect opportunity to do something I've been thinking about for some time. The email came through and then literally two weeks later I was on the plane to India.”
For those who are considering getting out of China to save costs, looking to emerging manufacturing markets like Sri Lanka or India, Cotton says there are some benefits.
“India does seem to have a greater variety in terms of those special hand treatments and that sort of thing,” she explains.
But anyone expecting dramatically different manufacturing prices may wish to heed Cotton's warnings. “They've had the same issues that China have had with silk and cotton going through the roof. All of our cotton prices have tripled and gone up hugely. Same with some of our leather skins, the dyeing and the tanning and stuff like that; that has increased maybe 20 per cent.”
Flight costs to India are “at least double” those to China, business visas are “$400 to $500” a pop and couriers and transport firms have a tendency to get lost when transporting samples and the like back and forth, she says. “A lot of the couriers get lost and they just give up and go home!”
It means those costs a designer thinks they're shaving from their supply chain can be added back on in other ways.
“Freight is a huge one, just on a day to day basis in terms of sending patterns and samples and that kind of thing. There's a lot of services that go over there... but it's very expensive. A tiny, half a kilo package is at least $100. When you're sampling a range and going back and forth it's really easy to rack up thousands and thousands in freight bills. I didn't anticipate that kind of cost.”
International transport and logistics firm Logwin has a different point of view. The company works in all of the primary textile manufacturing markets including China, India, Indonesia, Vietnam, the Philippines, Cambodia, Korea and Japan. Logwin says markets beyond China can be a competitive and viable alternative for labels looking for cost effective logistics solutions.
The company uses India as an example. “Competition and demand for logistics in India is tremendous due to the constant growth of fashion designer manufacturing units,” a Logwin spokesperson told Ragtrader.
“Since manufacturing of fabrics and garments is still with small and medium enterprises and focuses around small scale cottage industries which are labour-intensive units, the cost of production is much lower and small quantities can be procured.”
Beyond market specific advice, Logwin offers some general thoughts on how to keep logistics costs down.
“General recommendations would be proper planning of production and monitoring to enable the most cost effective method of shipping and perhaps consolidation, as well as consideration of flat-packed versus hanging garments to potentially reduce overall cost per unit and achieve faster speed to market.
“It's often required to use the desired outcome as a starting point and work backwards. This is possible if all parties are aware of and work towards the same goal. Strong supplier relationships as well as close communication and consultation with the logistics service provider are important to help achieve this.”
For any fashion business considering making supplier changes, Philip Levy has a guide on how long it should take before a business can expect those changes to pay off.
“It might take them one season, it might take them two seasons, of that nature,” he says.
If making use of an agent to source alternative supply chain solutions, Levy says the standard fee to expect by a genuine operator is five to 7.5 per cent of the value of an order.
“If you want these people to assist in fabric sourcing, it could be as high as 10 per cent,” Levy says.
Despite the availability of agents to help fashion businesses set up the best supply chain, Levy says they can only improve a logistics chain so much. “There is really no substitute for your doing it yourself and feeling comfortable 101 per cent that the people you have chosen are the right ones.”