The keynote by Taskin Unver, Head of Space Systems Supply Chain and Quality Management at Airbus Defence and Space, was a sobering topic, although their challenges are the polar opposite of what the apparel industry faces. Space has a small supply base for many customers. There may only be one or two suppliers globally who are able to make certain components. Space is currently very popular. So, these suppliers have their pick of who to supply to. For apparel, there are more suppliers than there are buyers. Creating a situation that is ripe for financial pressure and risk.
Taskin went on to say that profitability is won and lost in the supply chain. Today, across industries, prices can’t be secured for the timeline of the contract. But for space, on-time delivery is more key than price. If you miss that window to send a rover to Mars, you have to wait for two years until another opportunity comes again. While timelines in apparel aren’t quite so critical, we do see the same issues on price arising with natural fibres like wool and cotton. Putting more pressure on those at the bottom of the supply chain. Airbus does not have the luxury of letting a supplier sink financially, because they won’t get the component elsewhere. Apparel has a history of moving to the cheapest provider if they so wish.
The rest of the morning was allocated for workshops; the two I attended were around geopolitical tensions and operating resilient supply chains beyond peak globalisation. Two key problems arose from these discussions with numerous different industries. First, carriers avoiding the Suez Canal had a large impact on the ability of their customers having access to stock. One logistics supplier warned that bringing the Suez back into play would create as many disruptions as avoiding it did in the first place.
Citing the biggest disruption to global trade on the back of US tariffs were not the tariffs themselves, but that the required containers were not in the right places. As such many critical infrastructure providers have gone from just-in-time to just-in-case scenario. A Scottish energy network provider detailed how they went from holding a million pounds worth of cables and transformers, to over £10 million due to the logistical and supply chain problems that meant they ran the risk of not being able to bring a community’s electricity back online within the contracted timeframe. We saw only a few weeks ago how this played out in Spain and Portugal.
The afternoon focused on who owned what risk, and how to work with your supply chain to plan for black swan events. Regional planning was a key topic, with the power outage at Heathrow airport in London a few months back, being cited a lesson in lack of testing. While energy providers had planned, and tested, for multiple transformer outages at once, which led to them being able to restore power to Heathrow within 4 hours. The remaining 14-hour outage was due to Heathrow not having tested their systems to ensure their plan would work. With the key take away being that supply chain mapping is an investment in proactive risk assessment and mitigation.
A key theme that was apparent across numerous panels is that it is no longer acceptable to send a supplier manual and request an audit alone. Tailored risk assessments and mitigation strategies are required, recognising that small suppliers are not able to manage the same risk mitigation procedures as the larger ones. Questionnaires should be tailored for each business, and each region. And the mitigation plans from those should be directing contracts, codes of conduct, and any relevant manuals. And it is important to ensure workers get a say in these. We are seeing more pushback on health and safety tech platforms if they are viewed as an invasion of privacy, like the cameras to monitor driver fatigue.
Today we have more risks to contend with than at any other point in the post-industrial age. Collaboration over competition is the way to secure our supply chains. A business or brand is part of a global network, with the security of businesses that you may not even know about being just as important as the ones you do. The shocking news that Stoll is shutting its doors will have an impact later down the line on price and availability of knitwear products given that manufacturers may have decided that there is less business risk in replacing machines over repairing them.
