In Pursuit of Resilience: Why the World’s Best Brands Are Shifting Their Sourcing Strategies in an Unstable Global Market

What if I told you your production strategy might be putting your business at greater risk than you think?

For multiproduct brands - especially those who can’t rely on a vertical setup - the temptation to rely solely on a Far East allocation strategy driven by margin-hungry aspirations is not only shortsighted - it’s becoming recklessly dangerous. The days of putting all your eggs in one basket, particularly one that is thousands of kilometers away, are numbered. Here’s why diversifying your vendor portfolio to include a European component is not just a strategic advantage, but an essential for long-term sustainability.

Proximity is More Than Just a Convenience

We live in an age where immediacy and efficiency rule. And yet, despite all the controversy around globalization and just-in-time manufacturing, the proximity of European vendors to premium fabric mills is still an underappreciated advantage. In more operational terms, by allocating your production in Europe, you’re cutting down on transit times and avoiding the bottlenecks that can arise from cross-continental shipping of European fabric qualities. But it’s not just about convenience. It’s about the ability to get the very best, premium materials into your supply chain, seamlessly. With European vendors, you’re tapping into a history of craftsmanship and proximity that consumers associate will inevitably always associate with premium quality.

Mitigating Risk: An Insurance Policy for Your Supply Chain

The past 5 years have made evident how fragile global supply chains can be. Political instability, pandemics, natural disasters, trade wars - these are more than just hypothetical disruptions. They’re real, and they’re happening at an alarmingly accelerating pace. Relying exclusively on one region exposes you to unforeseen risks that can quickly spiral into costly delays. By introducing a mix of European and Far East vendors, you’re not just hedging against risk, you’re building a more resilient, adaptable business model. It’s no longer enough to just chase the lowest possible cost - the ability to pivot in response to external pressures is worth more than saving a few pennies on manufacturing costs.

Leveraging Cost Competitiveness Without Compromising Quality

Here’s the thing: the Far East still holds a critical edge when it comes to manufacturing cost competitiveness. That cannot be argued. But why not play to that advantage? By allocating your volume-driver styles to Far East vendors, you can keep costs low for your high-volume items without compromising your brand’s integrity. At the same time, the pinnacle styles (show-stopping pieces with lower order quantities) are better suited to European vendors who specialize in producing small-batch, high-quality designs. These vendors often accept lower Minimum Order Quantities, meaning that you can maintain the luxury positioning of your brand while still being mindful of waste. Overall, while you might land below target on the margin of those pinnacle pieces made in Europe, if you take into account the leverage created by the sales of the volume driver pieces of the collection, you can probably close the selling season on a positive.

A Simple Tip: Make Time for What Matters

A little tip from the trenches: if you’re going to rely on premium fabrics, like those beautiful Italian wools or iconic shirting fabrics, unless you can rely on Inditex numbers, you can’t expect these heritage mills to deliver according to a fast-fashion calendar. Developing a clear critical path that allocates enough time for fabric shipments ensures that these luxury materials can be delivered to your manufacturers without compromising your margins. This gives you the best of both worlds - access to premium materials and commitment to delivering within the requested ex-factory dates.

Let’s push the envelope a bit further: if your weighted margin is still falling short for the season, consider shifting some of those high-cost European fabrics to your Far East vendors. While it might seem counterintuitive, by leveraging more affordable manufacturing costs, you can balance the overall production costs with the premium materials you’ve sourced, ultimately increasing your weighted margin for the season. This tactic requires strategic planning, of course. It’s crucial to ensure that the fabrics reach your Far East vendors in time to not delay your ex-factory dates. But when executed properly, it’s a clever way to optimize costs and boost margins while maintaining the integrity of your high-end product lines.

The Bottom Line: The Future Is Hybrid

In today’s uncertain world, businesses can no longer afford to operate in silos. Diversification isn’t just about covering all your bases; it’s about future-proofing your supply chain. The brands that will thrive in the next decades are those that understand the value of a hybrid approach - combining the cost-effectiveness of the Far East with the agility and craftsmanship of European vendors. It’s not just about staying afloat; it’s about navigating turbulent waters with a strategy built for the long haul.

The future of production lies in balance. And the brands that get this will not only survive - they’ll set the standard for resilience in the new global market.