Business Challenges (Brand & Retail)
When price pressure is high, inaccuracy and inconsistency in product costing creates problems with profitability. Brands which over price their products may lose market share. Conversely, brands that under cost when negotiating with suppliers may find costs increase when production begins - suppliers may subsequently be unable to “make to cost” and then try to protect their margin by paying low wages and imposing excessive overtime on their workforce, thereby infringing on Social Compliance standards.
As high-street customers become more sophisticated in their choice of product, simply “branding” products may no longer be enough to ensure brand loyalty. The optimum balance of design, perceived value and product cost must be developed at the earliest possible stage in the product development cycle.
Business today is extremely competitive. Timely supply of rapidly changing styles in lower production quantities with smaller profit margins means manufacturers must reduce internal cost and increase productivity.
A large supply chain can create quality issues as manufacturing methods vary within different countries and different factories. The costs of inconsistent quality of conformance can be huge as orders are rejected and in-store deadlines missed.
When the supply chain is challenged with low margins and short lead times the result is all too often low wages and excessive overtime, resulting in Social Compliance standards being, at best, compromised, or worse still, abandoned altogether. Standards of Social Compliance must be supported and maintained if a credible, long term and ethical business relationship is to be established.