Iris Publishers_Journal of Textile Science & Fashion Technology

Who Moved My Fabrics? Supplier Management Strategies for Small Fashion Buyers

Abstract

 Small medium enterprises represent the largest share of revenues in the apparel and fashion business, compared to larger integrated companies. Small companies however often have to rely on larger suppliers in order to efficiently produce their products. These larger suppliers however will often prioritize companies that place larger orders. In the impossibility to deliver larger orders, how can these buyers make sure that a producer complies with their requests? In this paper we try to answer this question by applying concepts from the marketing channels literature to the specific context of fashion buying. We conclude that despite that the peculiarities of the fashion business do not foster the formation of long-term commitment, dependent companies can develop sources of power based on knowledge and reputation, but also based on applying non-mediated ways to manage the buyer-seller relationship. Examples of possible power sources for a buyer are: establishing a strong brand that a business partner will use in promoting its proposition, forcing suppliers to make transaction specific investments (which are not redeploy able), specializing in new products and technologies that a supplier will want to understand and use, developing knowledge that can be exchanged in the form of specialized personnel, investing in standardization of communication before the relationship starts in order to reduce administrative costs for both parties. Power sources are most effective when non-mediated, i.e. informal and based on reciprocity; ‘hard’ contracts with punishments (coercive power sources) in case of non-compliance will diminish the willingness to collaborate.
Keywords: Marketing channels; Power; Dependency; Fashion buying; Sourcing

Introduction

 The fashion and apparel industry are among others characterized by the presence of a high number of relatively small enterprises (or SMEs). Moreover, in the fashion and apparel business high upfront investments are often necessary in order to start producing, or even planning. Bearing in mind market uncertainty and the high level of innovation for apparel products [1], building up long-term buyer-supplier relationships can be a great advantage for buyers as well as for sellers. More in general even in cases of asymmetric dependency, partnering in the supply chain can lead to a competitive advantage [2]. Developing long-term business relationships can lead to improved performance, greater cost efficiency and business development [3,4].
On the other hand, though, due to the restrictions in their size and (physical and knowledge) resources, (fashion) SMEs are generally not very powerful in negotiations and have to accept command or control impositions in a business relationship [5].
Possible recurrent questions are: should a buyer settle for the requirements and conditions of the supplier? Or, are there ways for a SME buyer to satisfy the supplier even if order volumes are lower?
The aim of this paper is to further explore these kinds of questions in the context of the apparel business, as well as to add to the marketing channels literature by providing a further understanding the conditions under which a more dependent business partner should develop and eventually use sources of power in order to offset its dependency from a supplier, or the other way around.
Following we elaborate on the literature on power and dependency in business to business relationships by integrating that with primary data gathered through extensive interviews: three interviews with (ex) product developers or sourcing managers: Mrs. Gerven, Mrs. Niekerk, Mrs. Schaap, Mrs. Bakker, Mr. De Vries, Mrs. Beulens, and two representatives from the Dutch Apparel Federation: Mr. Criettee and Mr. Tap. Next three in-depth case studies of smaller (under 200 employees) rather fashionable apparel brands have been considered using observational data collection strategies. Next to that we elaborate on the field experience of one of the authors. The reason for this approach is that we do not only aim at confirming or disconfirming hypotheses drawn from institutional or behavioral marketing approaches, but also aim at generating concrete managerial implications that are relevant for the fashion business.
In the following we first briefly elaborate on the reasons why developing long-term agreements in the fashion business is often difficult. After that we analyze different dependency situations and their determinants, to then turn to an overview of possible power sources that can be used by dependent businesses in order to offset that dependency.


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