How Disruption Proofing and Sustainability are Shaping Denim Sourcing Strategies
Denim companies have a lot of factors to consider when sourcing today, but one of the most impactful choices is where to manufacture garments.
Sourcing map planning must weigh price, speed and capabilities. Diversification has been a discussion point for years, but in the current climate, it is even more prudent, according to the speakers on Rivet’s recent “Denim Sourcing: Diversifying Mill and Brand Strategies” webinar.
More from Sourcing Journal
US Fashion Manufacturing Hubs Share Success of Worker-owned Models
Fluctuating Freight Rates, 3PLs and Nearshoring Dominate 2023's Logistics Conversation
“It really doesn’t matter if you’re a brand or a garment or textile manufacturer, or any one of the hundreds of other businesses engaged in the apparel supply chain, we should all endeavor to have a reasonable level of diversification, both in our operations and in our supply chains, to provide the tools to navigate in what is an increasingly unpredictable and interconnected world,” said Mark Rose, senior vice president, global sourcing and production at American Eagle Outfitters.
For each of its main product categories, American Eagle aims to have two or more “high performing” suppliers that operate in at least two of its manufacturing countries. In addition to country-level diversification, AEO also spreads its manufacturing to different cities within a country. “It’s not so difficult to identify how many and where, the hard part is the work to develop what’s underneath: resilient relationships with strong manufacturers, who are led by progressive management teams who regularly invest in capabilities and capacities,” Rose said.
Based in Pakistan, Artistic Milliners’ diversification journey began about 10 years ago with a laundry facility in Dubai, which became a spot for North American-based brands to visit and develop collections. Once Covid hit and travel became more difficult, the mill sought out a Western Hemisphere location and acquired the Los Angeles laundry that became its new venture, Star Fades International. “L.A. is the mecca of fashion, and California as a whole is a place of creation…so we wanted to tap that potential,” said Murtaza Ahmed, CEO of Artistic Milliners and founder of Star Fades International.
This Los Angeles move enables Artistic Milliners to serve more high-fashion denim clients than it would in Pakistan, expanding its collaborations to the “full pyramid” of the industry. It has also made development more “democratic” and accessible; Star Fades International has been the first production partner for several emerging labels.
Nearshoring has also changed how Artistic Milliners collaborates with clients. The manufacturer has begun interacting with merchants, and retail partners are leveraging Artistic Milliners’ whole footprint to meet their different lead time, cost and margin needs. For instance, a high-end capsule might be produced in Los Angeles, while a quick turn order might go to the mill’s Mexico partners.
Star Fades International provides a localized spot for brand-side teams to view product, including denim from other mills in Mexico. “We’ve taken away all the barriers of secrecy, competition on purpose, because we want it to be a meeting point,” said Ahmed.
Per Ahmed, Los Angeles is more “cost-prohibitive” for larger brands. Rose noted that although there are benefits to nearshoring—particularly amid unpredictable and costly transportation trends—the pros often do not outweigh the challenges. However, the group has had success producing some products closer to home. For the Todd Snyder and Unsubscribed brands, made in L.A. is affordable and adds a “cachet” to knits, wovens and denim. Meanwhile, nearshoring for American Eagle and Offline has been focused on manufacturing less complex cut-and-sew items in Central America.
Fiber focus
Just as the manufacturing map is evolving, so too is material sourcing. One of the major changes in recent years is the accelerating adoption of sustainable fibers.
Like many of its peers, AEO has ambitious sustainability targets. “The only way to achieve these goals is by having sustainability inform more and more of both our product and sourcing decisions, and especially to inform our fiber and fabric development efforts, where some of the biggest opportunities to make sustainability gains exist,” said Rose.
AEO first determines whether new sustainable fibers are “commercially viable,” and then it tests to see if they can meet performance and aesthetic requirements before scaling them.
Per Rose, choosing raw material sourcing locations and having traceability and transparency about where they come from is critical to meet sustainability and regulatory demands, such as the Uyghur Forced Labor Prevention Act (UFLPA). To that end, the company seeks out fiber, yarn and fabric suppliers in the same country as its partner factories. “It helps simplify traceability and it also reduces transportation costs and supports faster, more responsive supply chains,” said Rose.
From materials to manufactured goods, supply chains are about relationships, and from Ahmed’s point of view, partnerships have been “extremely fair.” He said that with the growing regulatory demands, price cannot be the leading factor for sourcing anymore. Additionally, partly due to the investment required for sustainability at the manufacturing level, these partnerships might evolve. “Relationships will have to be much more strategic and perhaps even financial going forward,” said Ahmed.
Watch the webinar to learn:
What stands out about the Los Angeles manufacturing scene
The cost considerations related to nearshoring, sustainable fibers and more
Why demand is going to be the driving force for scaling up alternative fibers
What is changing about brands’ traceability expectations
How American Eagle Outfitters Inc.’s Real Good sustainability program is encouraging continued improvement at its supplier partners
Click here to view the discussion on-demand.
