One of the most frustrating aspects of this business for both customers and embroidery shops is the dreaded backorder situation. The clothing supplier is out of one particular size or color of an item and it usually then goes on back order until it is available. If we are lucky the out of stock item(s) will be available within a short time, it not, it could be months before it is available.
Thread Logic, like most apparel decorators, does not carry any inventory. We only purchase goods that our customers order from us. The costs to carry any inventory are just too high in this tight margin business.
Backorder situations are happening more and more these days because manufacturers and suppliers are unable to meet the demand of retailers and embroidery shops like Thread Logic. So why do we find ourselves in this situation?
When the recent world-wide economic troubles hit, many suppliers cut back on inventory and orders, and their foreign manufacturers did the same. Now that marketplace demand has returned, some suppliers are having difficulty restocking inventory in a timely fashion because the system they’ve relied upon for so long has broken down.
A number of factors has created a shortage of available inventory for apparel suppliers. A worldwide cotton shortage (as previously discussed in this blog) caused a spike in cotton prices. Shipping companies’ mothballed vessels and containers used for cargo transport in response to lower demand during the recent recession; now they’re not available while demand has picked up again.
However, those situations are temporary. The cotton shortage will fix itself and shipping problem is slowly being rectified.
But the biggest factor in inventory issues comes from China. Chinese factories that shut their doors during the recession haven’t reopened. The employees who once provided a trained and cheap source of labor no longer want those lower-paying jobs, thanks to China’s economic stimulus plan, which has provided better-paying alternatives.
In the past, thousands upon thousands of employees would make their annual pilgrimage after the Chinese New Year from their rural homes in the west into China’s coastal cities for factory work. After learning that many factories had closed, many no longer make the trip. And why should they, now that there are suddenly better jobs? China’s economic stimulus plan created thousands of new jobs that many say are higher paying, more stable and closer to home.
What is the solution? How is this going to play out? I asked one of my suppliers those questions and it sounds like they are looking at manufacturing opportunities in South America, Africa and the Middle East where there are opportunities to find a less expensive and willing labor force.
In the meantime, there are a number of things we can do make sure out customers get the embroidered apparel they seek.
It all starts by working with the best suppliers; those who are working hard to stay on top of the situation and effectively manage their inventories.
Second, we constantly monitor the inventory levels of the items we offer for sale on our website. If we see any issues with a particular item, we pull it off the website until the inventory is restored.
And finally, because we have relationships with a number of suppliers, sometimes we can find very similar items from other suppliers who have a supply on hand.
The bad news is this situation is tough on customers and embroidery shops alike. The good news is this situation would not exist if not for demand for these products getting stronger and that can only mean good things for our businesses and economy.