How to successfully negotiate sample/bulk delays in a volatile supply chain
A fashion buyer’s performance metrics lay in two halves: How well the product sells in the market place and whether they managed to fulfill their margins and reach target price points. Success that becomes further from grasp as the world spirals into unforeseeable global events; the shutdown of the world’s largest container port in Shanghai, war & natural gas shortages. This enduring pressure, coupled with the unpredictability of external circumstances, makes stable, truthful and transparent negotiating relationships between fashion buyers and suppliers more important than ever!
Through speaking with our fashion buyer customers still thriving in today’s volatile world, we outlined common denominators that directly contribute to their success.
#1 Expect the unexpected through careful supplier selections
When you want to successfully negotiate with your suppliers, the first and foremost task is to know the exact costs the supplier will encounter on his side to fulfill your demands. Only then will you be able to know how much leeway you actually have – and at which point it might be wiser to start looking somewhere else. But while the notion “sell minus buy equals margin” is at the heart of each negotiation, only focusing on price margins is far from enough when selecting an ideal and reliable supplier.
There are dozens of hidden costs that you need to be aware of once things might go sideways – and they will occasionally. This is why you want to select a supplier with a proven track record of delivering on time, excellent quality controls and transparent communication skills. One that will let you know early on about the tiniest of details that could eventually disrupt productions.
#2 Contract with suppliers that match your philosophy and ambitions
Everyone knows that choosing suppliers is a price-sensitive matter. But above all, you need to find the right suppliers that you fully entrust with executing and delivering on your corporate values. The ones that are aligned with your social, ethical & quality standards and that are devoted to build transparent and trusted relationships with their workforce, their own “Tier-Two” suppliers and with you as a client.
Spend time to discover your supplier’s goals before and during your negotiations to optimize the mutual gains of your potential agreement. When they don’t provide leeway for bargaining on the initial price, you might still explore similar expectations for delay warranties or discounts for bulk orders – that potentially yield even greater benefit for both sides in the long-run.
Finding suppliers that have the full ability to understand and adapt your artwork visions and turn your ideas into beautiful pieces of garment is another success criteria for a strong supplier partnership. Focus on the ones who rely on the same digital skills and pattern making standards that you currently do – or are planning to in the future. To avoid future product delays, you might want to check early on if the supplier on the other side of the table is as invested as you in integrating the right technological toolkits to improve your common workflows. Be it a mutual understanding on how using PLM systems can improve your partnership, or be it the usage of 3D CAD to reduce physical material and sample rounds throughout the process.
#3 Be assertive, but in a collaborative way
Trusted communication is the foundation of any new supplier relationship – which is why you should always treat suppliers as partners at eye level. While delays are stressful and quickly affect your performance and lead times, no supplier fails to deliver on purpose. If a supplier can’t meet your deadline, find out why: Did they prioritize other orders? Were the sketches more complex to materialize than expected? Were there material- or staff shortages? Or were there simply unforeseen delays in transportation? – To work around any of these problems, you should always voice your demands by staying attentive and responsive to the issue at hand. How you handle these situations often determines the terms and rates of your future collaboration.
This is why you already need to be an active listener in the negotiation process. If a supplier can’t match your price expectations, find out why: Do they need certain MOQs? Is there specific machinery or handiwork involved? And can you assist anywhere or find a middle ground to meet? – Making your life better is often about making their lives better first. If you find ways for them to cut time and money with their own vendors, it will eventually cut time and money for your orders and strengthen your mutual relationship. So understand their business model to create strong and efficient contractual agreements with your suppliers that lower costs and improve standards for everyone involved.
How a PLM system can prevent delays and support strong supplier relationships
PLM improves your operative structure and analytical calculations
Within a PLM system, you can intuitively estimate the costs, margins and MOQs (Minimum Order Quantities) for all your present and future collections. Through data automation and easy drag-and-drops, you have full control and access over all product information, such as BoMs (Bills of Materials) or full Tech Packs. That way, you come fully prepared to the negotiation table and can eventually prepare an efficient supplier handover.
PLM facilitates a centralized supplier communication
With a PLM system, you can centralize your supplier communication in one place – your so-called single-source-of-truth. As modern PLM solutions come with a cloud-based structure, you can instantly see all the latest product-related changes, as well as the full history backlog of all communication. This strengthens the bond with your suppliers, as your collaboration can go beyond a signed piece of paper and overloaded mail exchanges – by being intuitively facilitated in one platform.
PLM creates transparent work flows and efficiency to avoid delays
When working in a PLM environment, you have a full and transparent overview over the status quo of all product-related process steps. That way, you know early on when things go sideways and can collaboratively initiate counteractions right on the spot to avoid delays (or atleast prepare early on for their impact). This makes a PLM platform the ideal tool for sufficiently managing supplier negotiations and strong and lasting collaborations.
It’s time to move from volatile to truly sustainable supply chains
By pursuing these steps and turning to the right software solutions for help, you can lay the core foundation for long-term, stable supplier relationships. But to become truly sustainable, your entire supply chain must follow suit. All the way from product conception to market entry, you’ll need to be able to deliver on your brand promises. This is why accurately outlined product details and tech packs, fully aligned internal and external teams and sufficiently nurtured data streams across the entire organization need to become top priorities for managing a successful fashion brand.
If you want to dive deeper into the importance of supplier relationships and the use of technology for transparent and sustainable supply chains, tune in for our on-demand Webinar:
Protecting your Supply Chain – for the Future.
The webinar features an exclusive interview with sustainability expert Anne Blirup from Sustainawear and you can access it here.