How Price Increases Affect the Way We Do Business

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• Have your current supplier's garment prices skyrocketed?
• Are you considering sourcing from other countries, such as Turkey, Serbia, Pakistan, or Egypt?
• Are you attempting to source from nearby countries rather than Asia?
• Have you started sourcing low-cost fabric and trim?
• Are you terminating contracts with some of your suppliers?
• Do you have the feeling that you are missing some items from your product line because you believe there isn't enough demand? Or is it too risky to try in this business environment?

Regardless of how you run your business: Specialty Store + wholesale, wholesale only, your own store + specialty stores, Online Store Only, or a combination of any of these...... Obviously, there are some things we can and cannot control. If wholesale is an important part of your business, this becomes even more crucial. To avoid missing out on the season, you should complete garment production within 6 weeks after collecting orders. This means that the production fabric must be ordered ahead of time, and the garment maker’s capacity is pre-programmed. Otherwise, -with last-minute bookings- the fabric lead time will quickly increase to 10-12 weeks, -even for 98/2 or rigid fabrics.

It is difficult to run a business when fabric lead times are 8-10 weeks, garment production is 6-8 weeks, and there is the possibility of a logistics-related disruption at any time. You'll need strong partnerships with your suppliers and timely strategic planning to get these things done smoothly.

As you may know, each production region is dominated by certain major brands. If you are a medium or small-size brand, you know who is going to get the larger capacity in the early part of the season. If you order late, you will face a very long deadline, -even a one-week delay- which will create a big difference.

To be aware of market conditions in advance, you must build your own ecosystem. This system will eliminate late fabric deadlines, production capacity shortages, price fluctuations, and logistics issues. Another critical point to emphasize here is the elimination of capacity booking competition when the market reopens. Keep in mind that when business returns to normal, everyone will be competing for capacity from the same suppliers. And it will all happen so fast. Those who act quickly and strategically will gain a significant advantage. Your timely strategic planning will ensure that your product flow remains uninterrupted.

You must maintain control of your supply chain in the face of potential changes in raw material, logistics, and labor prices. Investing in goods is bene?cial due to global inflation. You are aware of the most popular fabrics in your collection. Fabric pre-ordering is critical for keeping fabric prices stable and reducing lead times. There is no need to be concerned about the exact number of order quantities. Estimates will provide them with enough information to run their business in the future. The same thing is valid for garment makers as well.

It is basically critical to communicate with one another in advance, to provide reasonable prices & uninterrupted raw material supply, and to guarantee the continuation of the product flow.

Raw material bookings will be scheduled months in advance by all of the companies in your supply chain. They will be able to see how prices will appear for the upcoming season and whether a bottleneck will occur in the future. This will serve as your emergency siren. All you have to do now is act.

• Do regular costing exercises from other countries to control your general price level. (You would be surprised to see how big the price difference is for the same product). ?
• ?Looks like inflation will stay around for some time, better to invest in products. (Let’s be aware of exchange rates in different production countries).
• Logistics is more important than ever. It is critical to maintaining a consistent flow of products to the stores.
• Target to develop and deliver value-added products to your stores. Less product, more value-added.
• Buying at the last minute used to be advantageous. This method is no longer available. Raw material prices have risen, and lead times have become significantly longer. It is favorable to do micro-planning at the beginning of the year to avoid stress throughout the year.
• Sustainability is going at full speed. Ensure that your denim products are made from renewable resources and processed in eco-friendly methods to improve high recyclability at the end of the life cycle.

I would like to end this article with this simple question: What would be the FOB/LDP price for your current male or female 5-pocket denim pants if produced in Egypt, Bangladesh, China, and Turkey?

In my next article, I'll discuss the Chinese denim market.