This past July, Tesla CEO Elon Musk declared that “supply chain hell” was officially upon us. After a two-month Covid lockdown hit Shanghai earlier this year, this August saw factories across China shuttered due to a lack of power. The culprit? An historic heatwave that resulted in serious drought, imperiling hydroelectric plants.
The good news is that the 100+ container ship backlogs that bedeviled major west coast ports for over a year have now dissipated. The bad news, however, is that the bottlenecks have simply moved to the nation’s railyards.
According to Edward Routh, founder of manufacturing platform Relloe, the widespread disruption caused by both Covid and China’s recent drought has finally highlighted the importance of consistent and reliable global supply chains. He cites a 2021 survey by Mckinsey which found that 71% of Chief Procurement Officers surveyed now plan to diversify their supply chains, citing a need for greater stability and flexibility amid volatile demand.
“New emerging trends and an evolving retail landscape is resulting in more businesses prioritizing diversification,” Routh observes. “Diversification amongst suppliers is now seen as a top risk for businesses in 2022. That’s why we are seeing companies like Honda and Apple move more of their manufacturing out of China, and into countries like Mexico, India and Vietnam.”
Relloe provides premium manufacturing and logistics services with transparent order management and end-to-end supply chain visibility for brands large and small. Routh says that managing the supply chain has become even more critical of late, as global logistics shift from the efficiency model that began in the 1980s with just-in-time inventory, to a new one emphasizing resilience and reliability. A major part of this shift, he says, is diversifying manufacturing sites.
“There are numerous benefits associated with supply chain diversification, ranging from reduced risk exposure and greater resilience, to duty advantages and radically shorter shipping times,” says Routh, who has been helping clients adapt to the new paradigm. “The supply chain woes have inordinately hurt smaller businesses, who don’t have the ability to stock more inventory or move up their shipments earlier in the year as large retailers have been doing.”
Relloe bills itself as a “full service manufacturing and logistics solution” that guides businesses through the entire manufacturing process with full transparency. Specializing in apparel and footwear, Routh says that his company has been able to help its clients avoid the worst of the logistical issues that have plagued these industries. The platform has thrived by focusing on quality, delivery, transparency, and communication rather than price alone.
“Often, too much weight is given to the ability of a supplier to deliver the first order at the right price,” Routh says. “However, equal — if not more — attention should be placed on the long term ability of the supplier to produce the product reliably and consistently.”
Unlike consultancies that bill by the hour, Relloe charges a small platform fee on each order. The quality of Relloe’s supply network, which has supplied major labels like Intermix and Ralph Lauren, has helped to build a platform that is both scalable and stable. Orders can be routed to factories in smaller countries like Mauritius and Sri Lanka when disruptions occur elsewhere. The company also recently began working with manufacturers in Peru, which Routh says has obvious advantages for the platform’s customers in North America.
But even during “supply chain hell,” logistics aren’t the only important issue for brands; another is sustainability. A global backlash has been brewing for some time against so-called “fast fashion,” due in no small part to this sector’s higher levels of waste and perceived labor abuses. And in June, the United States officially banned cotton imports from Xinjiang, China — a major global supplier — due to human rights concerns.
To help its clients stay on the right side of social issues, Relloe subscribes to several global initiatives and standards that address issues of importance to end customers, ranging from recycling to the use of harmful chemicals in apparel manufacturing. The company also has a rigorous onboarding process for its suppliers, conducting multiple interviews, inspections, and background checks with each new partner to ensure best practices and ethical behaviors.
“Today’s platforms must address every point of the manufacturing process, from sourcing the raw materials to getting goods to the point of sale,” Routh says. “Diversifying the supply chain and clearing up its many bottlenecks will take time, but even when we reach a new normal, manufacturing overseas will still be an incredibly complex process. We offer up our experience and expertise to make sure it’s ultimately a rewarding one for our clients.”
