For Jane Coppen, M&Co’s head of sourcing and quality, close links with suppliers are crucial to dealing with global shifts in manufacturing.
Having true partnerships has always been important to us,” says Jane Coppen, head of sourcing and quality at value retailer M&Co. “We’re never going to be the manufacturer’s largest customer. We’ve never really had the clout to go in there and dictate. Instead, we’d like to think we’re their favourite customer. That’s something we always aspire to.”
Coppen’s approach is reflective of a growing focus among sourcing directors towards working more closely with suppliers and developing partnership-style relationships with a deeper understanding of each other’s businesses, as they attempt to trim supply chain costs that have been inflated by rising labour costs in China and price volatility around raw materials.
As we sit down at the chain’s London buying office, Coppen references one manufacturer, based in Hong Kong with factories in southern China, that M&Co has been working with for 38 years, watching as the business passed from father to son. “To gain efficiency it’s important to work well together. It’s all about really knowing your supplier and knowing what makes them tick. It’s important to visit the factory and see how things work on the shop floor,” she says.
Working in fashion was a career Coppen always aspired to, and aged 11 in the days before cheap, fast fashion became a fixture on the high street, she simply made her own clothes. Hardly surprising then that a long career in fashion has followed – she has worked in quality assurance, with a stint in buying, and subsequently spent a great deal of time in different sourcing roles.
Coppen declines to reveal turnover figures for M&Co, but does say it sources from 24 to 30 countries at any one time, with China its dominant manufacturing base, supplying 35% of its garments, with another 20% coming from Bangladesh, while India, Romania, Turkey, Vietnam and, most recently, Indonesia are also key supply bases.
The retailer hasn’t been immune to the consequences of rising wages in China. Labour costs represent around 25% of the cost to produce an M&Co garment, while the Chinese government’s introduction of social benefits has added around 30% to that cost. Together with volatile raw material prices, this was a “double whammy” according to Coppen. However, while many have arguably been over-reliant on Chinese imports, they have only ever accounted for 40% of M&Co’s production, even at its peak. “We’ve always made a bit more of an effort and sourced product in the right place, not [just based on price]. We’ve always been a little bit more rounded than that, and taken the effort to develop other markets,” says Coppen.
She points out that another issue is that, while M&Co is hardly a small retailer, with 300 locations across the UK selling womenswear, menswear and kidswear, production capacity can be hard to find when competing against high volume international retailers. “There are a lot of huge manufacturers in China and we are not the biggest player in the market. Instead, it’s always been important to us that we are a good fit with our suppliers, that we are meaningful to them and that they are meaningful to us,” she says.
Capacity has also been hit by the fact that increasingly affluent Chinese no longer want to work in the textiles industry, leading to an overall decrease in production. “Do you want to get into a button fight for that? No, we would rather have other sources and have a better spread,” says Coppen. High volume American brands making sudden changes to their sourcing also pose a threat. “If American retailers start pouring out of China and into Bangladesh, that’s something we need to be aware of. It did get a bit tricky in 2005, but again we have strong relationships with our suppliers there,” she says.
Department store chain House of Fraser has moved 20% of its production away from China and closer to Europe, and executive director for menswear, childrenswear and beauty Allan Winstanley agrees there have been issues around capacity in the country: “A couple of years ago the capacity in China shrunk dramatically because the West was placing large orders, and then domestic Chinese demand ate into what was left. I think everyone was scrabbling around for new sources and it gave us all a wake-up call.”
However, Paul Forester, IT director at womenswear chain Monsoon Accessorize, notes that China is making significant investments in new machinery to try to stem the flow: “They’re definitely looking at how they can steal a march on everybody else, and they know they have to because they’re being challenged by other countries, so they’re investing like no tomorrow to improve capacity and speed up production. It’ll be interesting to see how that pays off.”
M&Co has looked to other Asian countries where prices are more competitive, such as Bangladesh for jerseys and knitwear, and India for cotton products, as well as Vietnam, Sri Lanka and Indonesia. However, manufacturing in those countries can be fraught with challenges. In India, factories close during the cotton harvest when employees return to their villages to help with the picking, and in Bangladesh restrictive banking conditions and the rise of businesses operating via a letter of credit have to be overcome. “The product type in Bangladesh is quite limited and there is almost no design and development. However, if you’re prepared to put in the effort you can get high-quality garments at good prices,” says Coppen.
Vietnam has also become a key manufacturing base for M&Co, due to its excellent needle skills. “They’re very good at product development, and have a knack of turning your design brief into a very wearable garment from day one that looks right for our business and market,” she says.
But the most significant shift has been closer to home, to Turkey, Eastern Europe, and even the UK. “Primarily, it’s for the flexibility and speed to market. It’s certainly not for the price.”
Each country has its own specialities. The Chinese are known for their finer needle skills, while India is known for its handwork, and Turkey for its creativity. “Turkish manufacturers are very innovative and good at developing new fabrics, particularly on jerseys. They’ve got a lot of cotton on their doorstep, and are known for printing techniques, knitting techniques on wovens and denim, and are very good at washing,” says Coppen.
Eastern Europe was historically over-reliant on state-run factories, and the region is still less competitive as a result, according to Coppen. “Eastern Europe has got to catch up a bit. Places like Romania and Bulgaria have been good on needle skills and more complex garments, but they’ve got to modernise.”
With prices continuing to rise in the Far East, the UK is also back on the manufacturing agenda, with retailers such as George at Asda upping their production here. Similarly, M&Co has seen its UK manufacturing increase from 2% to 6% of overall production in just two years. Says Coppen: “The labour cost is restrictive in the UK, but we try to get around that by thinking carefully about the design. It’s never going to be 20% of our business, but there is a place for it.”
Mitigating risk is essential and Coppen advises having a network of suppliers across a number of countries: “It’s having a good mix across the board and ideally having at least two sources for a given product type in different regions.”
Looking to the future, Coppen expects to see greater changes in the locations fashion retailers are sourcing from, with production shared around more countries. “I think we’re seeing a decline in Chinese domination, and there will be bigger shifts to come for those that are heavily dependent on Chinese imports, with greater numbers heading to India, Bangladesh, Pakistan, Cambodia and Indonesia. You’ve got to spread the balance.”