Exclusive: Africa is the new China

Infor Fashion Industry Strategy Director Bob McKee predicts central Africa will be the next focus for low cost global sourcing

Exclusive: Africa is the new China
<b>Exclusive:</b> Africa is the new China

By Anna Game-Lopata | September 11, 2012

Infor Fashion Industry Strategy Director Bob McKee predicts central Africa will be the next focus for low cost global sourcing.

Visiting Australia today, McKee tells SupplyChain Review, since the price of labour has started to rise in the industry mainstay for sourcing,
China, apparel organisations have started to "flee" to countries such as Cambodia, Vietnam, the Philippines and Bangladesh.

McKee, who has more than 40 years' experience
in the apparel and footwear industry, has hands-on experience sourcing products around the globe and was one of the first US executives to start sourcing in China in the early 1980s.

He predicts the movement to countries such as flood-prone Bangladesh in south east Asia, which has recently suffered
6-month strikes,
reflect just short term measures to finding alternatives to China.

"In the longer term the industry will eventually start moving into central Africa," he says. "It’s the only place left that needs what the fashion industry brings to an early economy."

McKee says the apparel and footwear industry is not traditionally a high-skill sector in relation to economic performance.

Rather, it is generator of early economic development in highly agricultural areas with a large population and a relatively poor, underemployed workforce.

"The only place you’re going to find that today is central Africa," McKee says.

McKee says there is still a decade or so left to go in the 30-year dominance of China as a low cost manufacturer for the apparel and footwear industry.

"But the difficult transition has begun, and all you have to do is look at which part of the world companies move their asset or component-intensive
operations for the
clue as to the next big movement."

"Rather than seeing a wholesale shift as in the past, were going to see companies hedging their bets. There will be some near-sourcing, some opportunistic sourcing and a continued reliance on tried and true sourcing from Chinese organisations," he says.

In addition McKee says the industry is undergoing a paradigm supply chain shift to manage costs.

He says leading companies are producing smaller more frequent product batches or test products and distributing them to key locations to ensure they meet with consumer demand.

"This trend is replacing the traditional approach of cutting costs by mass producing large volumes and pushing the large batches down the supply chain," McKee says.

McKee says the new approach is more efficient because it places the manufacturing component of the supply chain in sync with logistics.

For example US apparel company TAL Group uses a vendor managed inventory program where product is continuously supplied by a boat
on the water.

"Cell phone information comes from the client base and the next batch of inventory is put on the next boat based on that demand," Mckee says.

"Instead than storing inventory in a warehouse somewhere it’s always in transit
on a boat."

adds his objective is to make distribution centres
and warehouses obsolete.

"My aim has always been to store as little as possible. Whatever I have in storage isn’t contributing to profitability. Stored inventory doesn’t any good. If you don’t have it on the shop floor it’s a liability," he says.

McKee says this kind of thinking represents the current major shift in the apparel supply chain.

"Full container loads are being replaced by less than container loads or parcel shipment," he says.

In addition leading companies, such as Chinese footwear manufacturer Dell Footwear, sell direct to retail stores.

"As the shoes sell down, the information goes directly from the store to the regional management who send orders to manufacturing. The product is built and shipped directly to stores," Mckee says.

"That’s a pretty neat supply chain."

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