How to Find Opportunities in a Volatile Supply Chain
Transcription
How to Find Opportunities in a Volatile Supply Chain
Supply Chain Opportunities WELCOME TO OUTDOOR UNIVERSITY® How to Find Opportunities in a Volatile Supply Chain Supply Chain Opportunities Presenter Alex Boian Director of Trade Policy Supply Chain Opportunities This Session Will Cover • Near term trends in footwear foot ear sourcing, so rcing factors in volatility of supply chains and forecast • Near term trends in apparel sourcing, factors in volatility of supply chains and forecast • U.S. federal trade p policy y and how p preference programs, trade agreements and other tools can help mitigate volatility and save you money Supply Chain Opportunities David Hampson Global Manufacturing Director Rofu ((H.K.)) Limited • • • • • • Extensive experience in footwear manufacturing World Bank – footwear expert for Eastern Europe and former Soviet Republics Manufacturing Director for Empresas ADOC in El Salvador Manufacturing g Director for Dr. Martens Group Sourcing Director for The Browning Group Global Manufacturing Director for Rofu Limited – Keen, Chrome – overseeing China China, Dominican Republic and Portland Portland, OR [email protected] or 852 -2892 2325 -16 Supply Chain Opportunities T.S. S C Cheah ea Vice President, Asia Sourcing Outdoor Coalition – TNF / Jansport / Lucy • • Extensive experience in apparel manufacturing and industrial engineering VF Asia Sourcing for 21 years – – – – – QA for 3.5 years VF Indonesia Set up VF Bangladesh office VF Hong Kong - QA & Technical Department & Regional Offices VF Asia Sourcing – 2005 to present [email protected] or 852 -2318 1268 Outdoor Americas Asia Sourcingg Apparels & Equipment TS Cheah 22 Mar 2011 Supply Chain Opportunities The VF Vision Statement S VF will grow by building leading lifestyle brands that excite y consumers around the world 8 Supply Chain Opportunities Outdoor Apparel & Equipment Topics: 11. 2. 3 3. 4. 9 Market Challenge Market Challenge Raw Material Costs Update Sourcing Base Sourcing Base Sourcing Solutions Supply Chain Opportunities Market Challenge 2011 Outdoor Americas Asia Sourcing Team Supply Chain Opportunities Key Factors Oil is around USD100/barrel in Mar 2011 Currency – USD still weak as compare to Asian Currency Wages increased W i d in i Asian A i Countries; C ti China Chi 15-20%, Vietnam 20%, Bangladesh 15%, Thailand 8%, Indonesia 15% Raw Material 2011 compare with 2010 Cotton +80%, Polyester +27%, Nylon +27%, Copper +29%, Down +30 11 Supply Chain Opportunities Key K y Factors Competition from other brands for sewing capacity – P t Patagonia, i Marmot, M t Nike, Nik Adidas, Adid P Puma Lack of Inventory - Overbuy from different buyers Impact of 2011 Japan Earthquake and Tsunami remains unknown Inflation 2010 – China 3.5%, Vietnam 8.4%, Bangladesh 8.5%, Indonesia 5%, Thailand 3%, Inflation 2011 Jan/Feb – China 4.9%, Vietnam 12.1%, Bangladesh 9 9.04%, 04% Indonesia 6 6.84%, 84% Thailand 2.9% 2 9% Supply Chain Opportunities 2010 GDP G byy Countryy 5,745.13 6000 Billion n US$ 5000 Bangladesh China Indonesia Thailand Vietnam 4000 3000 2000 1000 312.605 0 105.402 101.987 695.059 ** International Monetary Fund, World Economic Outlook Database, October 2010 ** Next update will be in April 2011. Supply Chain Opportunities Inflation Rate by Sourcing Country 25.0 20.0 15.0 10.0 5.0 0.0 -5.0 Bangladesh China Indonesia Thailand Vietnam 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Bangladesh 7.706 9.111 8.9 5.426 8.504 China 1 467 1.467 4 767 4.767 59 5.9 -0.693 0 693 3 524 3.524 Indonesia 13.104 6.034 9.777 4.814 5.066 Thailand 4.642 2.242 5.468 -0.846 3.047 Vietnam 7.5 8.349 23.115 6.717 8.4 Supply Chain Opportunities Exchange g rate [1] Exchange Rates For Major Sourcing Countries For The Year 2011 (Denominated in Local Currency : US$1) Country Bangladesh Cambodia China India Indonesia Japan Korea Taiwan Th il d Thailand Vietnam Currency BDT KHR CNY INR IDR JPY KRW TWD THB VND December 2010 71.91 4,111.42 6.68 46.12 9,140.77 83.93 1,162.25 30.49 30 26 30.26 19,675.00 January 2011 71.90 4,099.41 6.59 45.47 9,099.18 81.38 1,136.36 29.18 30 19 30.19 19,612.90 February 2011 72.14 4,083.15 6.61 46.48 9,149.13 82.09 1,121.58 29.05 31 14 31.14 19,623.00 March 2011 72.31 4,073.65 6.58 45.51 8,841.73 81.77 1,126.51 29.76 30 8 30.85 20,456.10 [Note 1] Positive percentage represents depreciation of local currency against US dollars. N Negative ti percentage t represents t appreciation i ti off local l l currency against i t US d dollars. ll Change Since December 2010 + / (-) % (Note 1) 0.56% -0.92% -1.50% -1.32% -3.27% -2.57% -3.08% -2.39% 19 % 1.95% 3.97% Supply Chain Opportunities Exchange x g rate [2] [ ] Bangladesh BDT : USD 72.40 72 30 72.30 72.20 72.10 72.00 71.90 71 80 71.80 71.70 71.60 December 2010 January 2011 February 2011 March 2011 Cambodia KHR : USD 4,120.00 4,110.00 4,100.00 4 090 00 4,090.00 4,080.00 4,070.00 4,060.00 4,050.00 December 2010 January 2011 February 2011 March 2011 Supply Chain Opportunities Exchange g rate [3] China CNY : USD 6.70 6.68 6.66 6.64 6.62 6.60 6.58 6.56 6.54 6.52 December 2010 January 2011 February 2011 March 2011 Indonesia IDR : USD 9,200.00 9,100.00 9,000.00 8 900 00 8,900.00 8,800.00 8,700.00 8,600.00 December 2010 January 2011 February 2011 March 2011 Supply Chain Opportunities Exchange Ex ha g rate rat [4] Thailand THB : USD 31.40 31.20 31.00 30.80 30.60 30.40 30.20 30.00 29.80 29.60 December 2010 January 2011 February 2011 March 2011 Vietnam VDN : USD 21,000.00 20,500.00 20,000.00 19,500.00 19,000.00 December 2010 January 2011 February 2011 March 2011 Supply Chain Opportunities Oil Price Update p Monthly trend Historical trend Future prices Supply Chain Opportunities Raw Material Prices Watch – Copper R pp Average monthly prices : 20 Supply Chain Opportunities Raw Material Prices Watch – Cotton 21 February 2011 Cotton prices reached the historical level of 200 cents per pound in the last week in New York before Friday retreating. Global cotton production is expected to rebound in the coming season, Cotton Outlook said, but demand from China would remain extremely strong, due to the low level in Chinese stocks. In the meantime, short supply fears could maintain cotton prices at extremely high levels. Also can see Cotton monthly report at below web site: http://www.cottoninc.com/MarketInformation/MonthlyEconomicLetter/ 21 Supply Chain Opportunities Raw Material Prices Watch – Polyester 22 February 2011 Polyester prices no more rose in the last seven days in China, reflecting a weaker demand than expected. Staple fiber and filament processors have accumulated stocks before the Spring Festival. Polyester price trends will now depend on the level in cotton prices. 22 Supply Chain Opportunities Raw Materiall Prices Watch W h – Nylon l 16 F February b 2011 Nylon/Polyamide prices began surging in China after heavy anti-dumping duties were imposed on caprolactam imports from the United States and Europe, therefore boosting raw material costs of fiber producers. A stronger demand for nylon 6 in the post-holiday t h lid period i d iin Chi China could ld result lt iin a new rise i iin prices. i 23 Supply Chain Opportunities Outdoor Americas Source Base Situated by Key Country Supply Chain Opportunities China China labor cost increased 15‐20% in 2010 and will further increase in coming years. Current C t salary l per month th is i USD300 ‐ 400/month. 400/ th Shortage of labors due to non‐migration of workers from villages. Currency appreciation by 2‐3% as anticipated. Population is 1.3 billion. Current 2011 sourcing g business volume is 27% of total Supply Chain Opportunities Indonesia Current salary is USD100‐130/month and expected 15% increase in year 2011. Sufficient labor force with population of 230 million people. Currency is kept at USD 1 to Rp 8800 to 9200. 9200 Current 2011 sourcing business volume is 14% of total Supply Chain Opportunities Vietnam 2010 average wage is USD170/month, which included a 20% increment in 2010. (USD140/month in 2009). Anticipate 20% / increase in 2011. Inflation average is over 10%, which is the key driving force of labor cost increase key driving force of labor cost increase. Inflation also causing labor unrest such as strike and high labor turnover. g Labor shortage is common in Industrial zones in HCMC where competition for labor is severe. Total population in Vietnam is 85 million. Current sourcing business volume is 30% of C t i b i l i 30% f total Supply Chain Opportunities Bangladesh Bangladesh average salary is USD60/month in 2010. A 10% increment is mandatory as government regulation Anticipate 15% increase in 2011 regulation. Anticipate 15% increase in 2011. Labor is stable but competition started in CTG as major sportswear footwear factories are entering g Bangladesh Currency in Bangladesh is stable. Population 159 million. Current sourcing business volume is 20% to total g Supply Chain Opportunities Solutions To Deal With Market Challenge Product & Production Engineering with supply chain partners(materials suppliers and garment vendors). Vertical Set‐Up from material to garment making. Trade Policy (FTA/GSP Form A, Chinese Domestic Sourcing). Migrate to Low Cost Country such as Indonesia, Indonesia Vietnam, Vietnam Cambodia, Bangladesh, and duty free country. Moving production facility to inland China for low labor wage and stable labor supply. supply Partnering with sourcing to expand capacity outside China by providing 5 years business plan. Material localization to improve costs and speed. speed Supply Chain Opportunities Outdoor d Americas A i Asia A i Sourcing i Team T Thank you! 30 Supply Chain Opportunities Behnaz Kibria Trade Counsel Committee on Ways and Means Means, U.S. House of Representatives • • • • • Born in Dhaka, Bangladesh, currently resides in Washington, D.C. B.A. from Wesleyan University and a J.D. from the George Washington University Law School Associate counsel at Hogan & Hartson, Hartson LLP in the District of Colombia, focusing on antidumping and countervailing duties cases Former Assistant General Counsel, U.S. Trade Representative T d Counsel Trade C l tto th the C Committee itt on W Ways and dM Means iin th the U United it d States House of Representatives [email protected] or 202.225.6649 Supply Chain Opportunities Quest o s Questions? Alex e Boian oa [email protected] 303.327.3509 Supply Chain Opportunities Th k You Thank Y