The building of trust, meaningful relationships between manufacturers and customers in the global apparel industry has played a vital role in the continuing success of the sector. The actions taken by some brands and retailers in the face of the Covid-19 pandemic has, however, shattered the trust.
Clothing retailers and brands around the world face dwindling consumer numbers, store closures and mounting stock inventory. The unprecedented conditions following the outbreak of the pandemic have revealed a significant divide between those companies that are prepared to work closely with their supply partners to mitigate the effects of the downturn in trade for all parties and those whose immediate reaction is to cancel orders, seemingly regardless of the impact that this course of action will have upon their supply chain partners.
The cancellation, the scaling back of, or delay to current production orders with suppliers has been further compounded by many companies withholding payment for goods that have been shipped or insisting upon longer payment terms with their manufacturers than were originally agreed when orders were placed. These actions have placed many garment manufacturers worldwide in a precarious financial situation.
The importance of trust in establishing meaningful relationships between those of us involved in the apparel manufacturing industry and our customers is paramount as I view it is as the single most important factor in building any successful business or relationship. A customer that trusts their supplier should listen to that company's issues and, likewise, a business that trusts their customers will strive to do their very best, even in the toughest of trading conditions. It is this apparent abuse of the element of trust by certain brands and retailers since the Covid-19 pandemic reared its ugly head that galls me the most.
Over recent years, the apparel manufacturing industry has forged relationships with the leading clothing brands and retailers around the globe. Due to the very nature of the business, where speed to market is a major contributing factor to the success of an apparel line in-store, many manufacturers have foregone the traditional payment methods that take time and hinder the speed of the production process.
Gone is the heavy reliance on payment in advance or letters of credit (basically a guarantee from a bank that a particular seller will receive a payment due from a particular buyer) between manufacturers and their customers; instead orders are often processed by many manufacturers (sometimes even without an official purchase order) at the bequest of a customer, because that customer has earned the trust of their supplier over the years.
The manufacturer will undertake to procure the necessary fabrics and sundries for the production of the required goods and will complete the production to the required standards demanded by the buyer, all at his own expense. The manufacturer will then ship the ordered product and await payment from their customer, bearing the expense of overheads, workers' salaries, business rates and amenity charges in the knowledge that payment will be forthcoming.
This was a simple system, commonplace in the apparel industry and one founded on the strength of the relationship and the trust emanating from, quite often, many years of working together.
The Covid-19 pandemic has, unfortunately, laid bare the fragility of these relationships. We have shared success together but, in this time of crisis, it appears that manufacturers are being left to fend for themselves.
Once the cloud of the COVID-19 pandemic has been lifted, we will have to see what long-term damage has been inflicted to these customer/ supplier relationships but one thing is for sure, the wounds will take time to heal and manufacturers will be wary in the business that they develop in the future with their clients.
One of the most precious things in the world of business is trust. It can take years to earn and only a matter of seconds to lose. The ever-evolving events of the last few weeks have damaged the trust that existed between apparel brands and retailers and their manufacturers. Together the apparel community can overcome these difficult times but it will require understanding, the rebuilding of relationships and support from all sides for many months to come.
To restore some semblance of a trusted working relationship, customers that value their relationship with their manufacturing partners need to acknowledge the predicament facing garment factories in the supply chain. By entering into discourse and planning the months ahead from a production and compensation viewpoint, customers will be able to preserve their relationships with their supply chain partners, allowing them to survive financially during this crisis and earning their respect as a worthy business partner.
Apparel manufacturers around the globe are fully aware of the devastating effects that Covid-19 has had across all areas of life. They also should be cooperative to support their customers during these difficult times. Even if quantities are reduced in the future orders, it is the responsibility of all apparel manufacturers to support and work with their customers to ensure that business can move forward when this crisis is finally averted.
Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).