Winter 2020 - Inside Outdoor Magazine

Inside Outdoor | WINTER 2020 23 away from China – at least for U.S.-based companies. Yet despite these pressures and challenges, when CPOs were asked to name the top areas to adjust their companies apparel sourcing in order to cope with overall macrotrends, well more than 50 percent of respondents put “sustainability and transparency” in the top three, making it the most popu- lar response. Overall, the priorities CPOs cited most often when address- ing macrotrends were internal process improvements. More than 40 percent of respondents named each the digiti- zation of sourcing processes, consoli- dation of supplier base and end-to-end process effi- ciency as the top three priorities in which action was needed in their companies. The good news is CPOs see no conflict between the imperatives to improve the efficiency of end-to-end product development and sourcing processes and the drive for sustain- ability and transparency, said McK- insey analysts. It’s even possible, the study suggests, that as shifts are made to update internal processes, form new partnerships, move to new countries or build more customer-cen- tric agile product development, sus- tainability initiatives can be embedded into those changes. In other words, when it comes to moving sustainability and transparency strategies forward, overall disruption and drastic changes might be better than the status quo. See Change Looking at where things stand now in terms of sustainable materials, some shake-up is in order. A McKinsey anal- ysis of products launched at 235 online shops in the first half of 2019 by mass- market apparel brands and retailer in France, Germany, the United Kingdom and the U.S. found that only 1 percent of new products launched during this period were tagged “sustainable” in online shops. On the brighter side, that was a fivefold increase from the same scanning in 2017 – granted on very small numbers. Even so, support for sustainable materials is growing among CPOs, or at least there is an understanding of what markets are demanding. McK- insey’s respondents admit to feeling pressure from their customers to be greener and be much more transparent about it. And among them, 55 percent said their companies wanted at least half of their products to be made with sustainable materials by 2025. Eight in 10 CPOs surveyed have ambitious plans to step up transparency by 2025, while six in 10 plan to go further and share information about their suppliers at the point of purchase, no doubt a tough proposition. Even better news, larger compa- nies (with at least $1 billion in sourcing value) “will drive the industry shift,” says McKinsey. Four out of five of these companies plan to source at least half of their assortment from products made with sustainable ma- terials, while two out of five plan to source more than 75 percent of their assortment from such products. If nothing else, it appears we are beyond the “capsule collections or sub-lines” phase and on to broad use of sustain- able materials. Source: Retail Systems Research (Percent of respondents) What percentage of your sourcing volume will come from nearshoring in 2018 and 2025? Source: McKinsey & Co; Sourcing Journal 0-5% 33 3 18 15 15 22 5 18 4 14 3 4 21 24 56 63 53 35 35 47 24 29 18 24 18 48 48 38 30 23 18 18 8 45 42 41 25 25 20 20 13 >5-10% >10-20% >20-30% >30-40% >40-50% >50% 2018 2025 What are the top 3 areas to adjust apparel sourcing within your company to cope with overall macrotrends? Source: McKinsey, survey of apparel company chief purchasing officer Better inventory management across the enterprise Improving in-store customer interaction (marketing, promotions) Enabling whole new ways of interaction with customers o utside the store Systematically optimized operating costs in the supply chain Increasing promotion effectiveness 68% 73% 62% 71% 55% 66% 72% 57% 59% Sustainability and transparency All respondents Europe North America Digitization of sourcing processes and related areas Consolidation of supplier base End-to-end process efficiency Cross-functional collaboration in own organization Advanced analytics (intelligent sourcing) Supplier partnership programs Shift of sourcing countries Development, retention, and attraction of talent in sourcing