Coronavirus is causing a lot of confusion for supply chains that can’t seem to get straight answers to critical questions, such as when their goods will be delivered.
For now, it seems to be a wait-and-see game for retailers that can’t yet tell how severely they’ll be affected by COVID-19.
And despite the downtrend in China sourcing over the past half decade, there’s little shirking the industry’s ongoing reliance on inputs from that country.
“We all have some element of reliance on China,” Under Armour chief supply chain officer Colin Browne said at the American Apparel & Footwear Association’s Executive Summit in Washington, D.C., Tuesday. “From the Under Armour perspective, we have about 15% — just below 15% — of our product out of China, so, yes, we have some implications with regard to tier 2.”
As of now, Browne said, the athleticwear purveyor is struggling to gain clarity with regard to what’s being delivered when.
It’s a similar story for PVH and likely for an overwhelming majority of apparel brands and retailers that manufacture in China.
“Asia does continue to be a critical market for supply as well as a growing market from a consumer perspective,” Sarah Clarke, EVP of PVH supply and CK operations, said. And the only way to begin weathering the storm, she added, is to work “very closely with your suppliers, either the cut and sew, the raw material or level three” to understand the impact.
But it’s the feeling of flying blind that has been the worst for stateside companies waiting to weigh the fallout from the fast-spreading virus. And many of those companies are navigating without the benefit of their on-the-ground counterparts.
“A lot of this has been happening with our Asia team actually sitting at home because they need to be safe and secure as well, so this adds an additional level of complexity because some of the factories do not have all their people back. … There are just so many moving pieces,” Browne said.
And amid the multitude of challenges, companies also have to take care not to exert the kind of pressure to produce and deliver that could land them in even hotter water. “I’ve spoken to all of our strategic vendors over the past couple months and have continued to kind of trade messages with them every day,” Browne added. “I’m really just trying to be supportive, not put too much pressure on them. … You also don’t want to try and push them to such a degree that we end up with overtime issues and other things that we really don’t want to ever get involved in.”
At PVH, a newly formed cross-functional team meets daily to hash out the knowns and mull strategic shifts, though, according to Clarke, “everyone’s clear there’s no one answer to this.”
“We’re just sharing as much information as and when we get it, what goods are coming in when, what are alternate options and how do you stay connected. … And people’s inventory levels play into this,” she said.
The only viable to-do at this stage, according to Intradeco Apparel director Gary Simmons, is for buyers and suppliers alike to be honest about what they don’t know — even if it means delivery dates or delays aren’t clearly defined. Because really, they can’t be quite yet considering the level of unknowns.
“It doesn’t mean you won’t tell people what’s going to happen, but as soon as it’s clear what’s going on, then you’ll communicate,” Simmons said. For Intradeco, the impacts of COVID-19 aren’t yet overly severe because of its reliance on a dual-sourcing strategy. “You dual source in China but also in India, so, accordingly, you just put more stress on your India supplier base and help manage some of that … because depending on who you talk to, it may be four or five weeks’ delay in traditional production.”
And that’s provided things don’t balloon from here in terms of the virus’s spread, containment and supply chain contingencies.
The latest numbers from the World Health Organization situation report for Tuesday show the COVID-19 case count has reached 90,870 globally. The United States is now reporting 64 cases, and in the past 24 hours, eight new countries — Andorra, Jordan, Latvia, Morocco, Portugal, Saudi Arabia, Senegal and Tunisia — reported their first cases of the coronavirus-related illness. Already high, the officially reported numbers likely don’t reflect the accurate count of people infected as testing has only just become available in certain places, the U.S. included.
Editor’s Note: This story was reported by FN sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.
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