SUPPLY CHAIN
SPEED TO MARKET IS CRITICAL FOR A FASHION RETAILER AND TRUWORTHS STRIVES TO CONSTANTLY SHORTEN LEAD TIMES ALONG ITS SUPPLY CHAIN, WHILE BALANCING LOCAL AND IMPORTED SOURCES OF MERCHANDISE SUPPLY.
Local manufacture is a critical component of the supply chain owing to its flexibility and speed to market advantage. Local supply offers shorter lead times than imported product as suppliers can respond quickly to replenishing popular selling styles during a season. Quick response and fast fashion models have been successfully developed with key suppliers, enabling Truworths to respond more rapidly to customer-buying patterns. Merchandise buyers can also make styling changes as late as four weeks prior to delivery, ensuring that the ranges reflect the latest fashion trends.
In recent years, Truworths has steadily increased its local supply capability, with 45% of apparel units currently being manufactured in South Africa. Truworths is committed to maintaining a high percentage of local production to leverage the fast fashion and quick response models. The recent broadening of the Truworths Africa Design Division capabilities, through the purchase and integration of Barrie Cline and the post reporting period-end purchase of the Bonwit design centre, has further enhanced this capability.
The enhanced collaboration with key local suppliers, investment in production facilities of certain local manufacturers and the extension of internal design centre capabilities has not only strengthened the Truworths supply chain, but has served to support employment and enhance critical skills development in South Africa’s clothing design and manufacturing industry. These developments tangibly illustrate Truworths’ commitment to the Department of Trade, Industry and Competition’s (DTIC’s) Masterplan for the Retail – Clothing, Textiles, Footwear and Leather (R-CTFL) value chain, a key government initiative to grow the country’s apparel manufacturing capabilities.
GLOBAL SUPPLY CHAIN PRESSURE
The global logistics supply chain remains under pressure. The continued shortage of containers in East Asia resulted in delays in goods leaving their ports of origin as well as being a major contributor to the significant increase in freight costs.
The supply chain challenges were further impacted by the tight COVID-19 lockdown restrictions imposed on several provinces in China between March and June 2022 that further delayed merchandise production.
The shipping delays out of East Asia impacted Truworths’ sales in some areas due to the late delivery of goods, particularly in the first half of the financial period. However, the merchandise team was proactive in increasing shipping lead times to mitigate the impact of the shipping delays and late delivery of orders.
Major congestion at the Cape Town harbour also led to delays in goods being delivered to the Truworths Distribution Centre. The congestion has at times forced ships to wait for extended periods before docking, while some vessels have been forced to bypass the Cape Town port and only dock on the return journey.
During the civil unrest in KwaZulu-Natal (KZN) and parts of
Gauteng in July 2021, Truworths’ third-party logistics
providers, responsible for delivering merchandise to stores
and
e-commerce customers, experienced major disruption
due to warehousing infrastructure damage and risks
relating to road transportation, primarily in KZN. Stores that
were not directly affected by the civil unrest were therefore
also adversely impacted.
The civil unrest also impacted some fabric and garment manufacturers whose premises were vandalised and looted, while at other factories that were not damaged, workers were not able to access their places of work, thereby resulting in reduced capacity.
Despite these challenges, which resulted in both delays and shortages of stock, particularly in the first half of the year, mitigating factors lessened the impact on the supply chain. The bulk of Truworths’ locally produced merchandise is supplied by manufacturers in the Western Cape, while imported merchandise generally lands at the Cape Town harbour. This limited the direct impact of the civil unrest on merchandise sourcing and procurement.
SUSTAINING THE LOCAL SUPPLIER BASE
The sustainability of the local apparel manufacturing sector remains under threat and is an area of key concern for Truworths.
Several factors have combined to compound the already fragile state of the sector. COVID-19 related capacity constraints have hampered output and efficiencies in local and international factories, while local manufacturers have been impacted by delays in the supply of raw material. Retailers reduced their order volumes in line with declining consumer demand locally during the pandemic and this negatively impacted cut-make-trim (CMT) suppliers, with some factories being forced to close.
Ongoing electricity load shedding results in loss of production capacity in CMT facilities which is also impacting on their sustainability.
In the current challenging economic environment where consumers are increasingly price sensitive, pressure is being placed on CMTs to reduce their prices and resultant profit margins, which is detrimental to their long-term sustainability.
An ongoing challenge for the local supply base is the inconsistent flow of the production cycle caused by high summer volumes and low winter demand, exacerbated by the fact that a material percentage of winter product can only be commercially sourced offshore. This results in insufficient capacity to generate high volumes in the peak summer season and carrying excess capacity in the lower-demand winter period.
As a signatory to the DTIC’s Masterplan for the R-CTFL value chain, Truworths is committed to ensuring the sustainability of its local supply base. The executive and merchandise teams have continued to work closely with suppliers, particularly the exclusive design centres and CMT partners, to provide funding and support to mitigate the financial challenges and to smooth seasonal peaks through early production planning. This has ensured the sustainability of many of these key partners, limited attrition in the supplier base and preserved employment, while capitalising on the fast fashion response capability of the local industry to react to consumer demands.
