Being Global Yet Nimble
A key shift in supply chain strategy has been to look for suppliers who can offer innovation and agility as well as stability.
For mills, this means balancing the ability to provide highly customized products with the capacity to produce consistent quantities of yarn while maintaining quality standards.
But can a large mill also offer highly customized products? Looking at PT. Gokak, it can.
This Indonesia-based mill is able to meet the growing demand for materials that are both high quality and sustainable, in part by being very selective about the raw materials it uses.
“Since we buy a specific growth of USA cotton, we get good consistency in the cotton quality and supply. This helps us to reduce production losses, said Mahaveer Kolhipuri, President Director. It also enhances supply chain transparency the US Cotton Trust Protocol.
Shift in exports; An innovative new yarn concept
Concerns about having sufficient inventory for the holiday season are becoming increasingly worrisome due to ongoing logistics issues.
LOGISTICS
- Carriers are facing growing congestion in the major European ports of Hamburg and Rotterdam.
- Container prices were stable this week, however importers and exporters often continue to pay thousands above spot rates in premiums now necessary to secure space on some lanes, according to Freightos.
- The disruption in ocean shipping is making carriers miss their North Europe berthing windows, creating handling difficulties at terminals and resulting in shipping lines omitting key ports, per JOC.
- US imports from Asia during Jan-May hit a record high. Heading into peak season, shippers fear that logistics issues are likely to worsen in the coming months.
- Some carriers have already announced large transpacific peak season surcharges for mid-July, according to Freightos data.
- Asia-US air cargo rates declined by about 5% since last week on a relative lull in demand, though prices are still two to three times their typical level this time of year.
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TECHNOLOGY
Neiman Marcus (USA) is embarking on a three-year intensive digital investment strategy with the purchase of Stylyze ML, a machine learning platform. This closely follows LVMH (France) announcement that it is teaming up with Google Cloud to go deeper on data-driven tech solutions.
- Neiman’s goal is to provide a more differentiated and personalized experience for luxury shoppers.
SUSTAINABILITY
Ralph Lauren (USA) is tying environmental and social goals to its executive compensation starting in 2022. Companies like Nike and Apple are also doing this.
Boohoo (UK) has been accused of failing to significantly improve working conditions in its supply chain, an issue which management has not yet resolved.
- Boohoo last year put in place the Agenda for Change program to improve standards in the factories it works with.
- The company’s remuneration scheme, under which 15 key managers are set to share a £150 million bonus, is also under attack with 29% of shareholders failing to back the plan at the recent annual general meeting.
MATERIALS
The price of cardboard boxes and packaging is heading higher after one of the world’s biggest producers, DS Smith, said it was confident of being able to fully pass on its sharply rising raw material costs.
- It expects to raise prices by about 5% to 10% this year.
- E-commerce could be particularly hard hit.
Rising cotton, wool and crude oil prices were not reflected in yarn prices in China. Polyamide FDY, polyester yarn and cotton yarn prices remained flat week-on-week.
Boohoo (UK) will grow its own sustainable cotton in Pakistan as concerns about the mass production of the raw material in Xinjiang continue to plague brands.
- Its first crop will yield about 2,000 tons
- The company says this will guarantee complete traceability.
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