02
The underlying cost of the supply chain
While the supply chain strategies listed are important, and what I believe to be the most prominent used in the industry, they are not perfect and do have their own set of trade offs. This can be from cost, speed, or optimization. There will never be a perfect strategy, and understanding how brands and suppliers go about the hardships is important
Throughout this, I had one guiding question
Why is it so Important for Brands and Suppliers to make trade-offs in the Industry?
That led me to figure out these trade offs I see, the value they bring, and why they are necessary
Short Term vs Long Term Decisions
A company that wants to help its supplier relations, for example, Levi's, with their strategy of helping its suppliers, can face massive risks as a result. It can cost a brand money they don't have, and in Levi's case, they furloughed 4500 of their employees. The best move for long term success may not always be the best for the short term stability of a brand.
This strategy requires the right leadership and foundation to even pull off these decisions, as having the foresight to know what's going to pay off is important
Diversification's Impact on Relationships
Spreading production across multiple countries to reduce tariffs amid geopolitical tensions is helpful. You must also consider that you are shuffling your sourcing partners, and giving the idea that your decisions are purely transactional.
Another risk comes from attempting to move countries to avoid tariffs, only to choose on that still gets tariffed later on. The geopolitical landscape has made it so our supply chain is increasingly unpredictable.
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The Hardships of Sustainability
Sustainability is the future of the industry, although getting there is costs. Brands have to overhaul their pre existing supply chains because they just were not built for it. This can be costly, slow down production time, and even create more waste in the process. Becoming sustainable also generally increases prices, which falls back on the consumer.
We are describing a goal in which we don't have a clear path on how to even attain it, with brands such as The North Face struggling to hit simple goals
Is it Worth Getting ahead?
In regards to sustainability regulation, the question if you should get ahead of change is important. I believe that you should also be proactive with a business, although that's not always the best outcome.
Brands that prioritize sustainability before regulations are made eat costs that their competitors do not. While the brands that wait can fall behind when legislation is passed. Its uncomfortable either way.