15 June 2000
Can relations between suppliers and retailers in the UK textile industry recover, asks David Arminas?
Britain's textile industry has been thrown a lifeline in the shape of the Department of Trade and Industry's (DTI) recovery plan to improve relations within the industry.
But will the government's response to an industry on its knees rescue it, when suppliers and retailers are in open conflict? Can it bring them together in a sprit of co-operation so that the industry can benefit?
Suppliers argue that there needs to be a sea change in the attitude of large retailers in dealings with UK companies if desperate situations such as that between Marks & Spencer and its former supplier William Baird, which it dropped last October, are to be avoided.
Baird claims that M&S failed to respect the spirit of the, admittedly unwritten, contract and that it didn't give the clothing manufacturer enough time to adjust to the loss of business and stay afloat. The GMB union is now calling for the Office of Fair Trading to investigate M&S's decision to drop Baird, claiming that the retailer had abrogated its social responsibility to Baird employees.
The sorry tale of M&S and Baird is held up as an example of how not to end a relationship. This one is likely to end in court, where Baird is seeking damages of £53.6 million.
There is a great deal of advice available on how to conduct a partnership so that there is an amicable split. Contracts should be performance-based, supply chain managers skilled in diplomacy, information shared and business goals clear.
"The worst way to split is to make it a total surprise for the supplier," said Neill Irwin, director of Partnership Sourcing, a body set up by the DTI and the Confederation of British Industry. "A good way is to realise that a relationship is coming to an end."
He added that disaster planning in which both companies look together at market conditions and how they will cope after the relationship ends is extremely useful.
The key to ending a relationship without harming a supplier's business is not to rely too heavily on one customer, said Richard Horrocks, dean of the faculty of technology and professor of textiles at the Bolton Institute.
Some suppliers have tended to rely on one company for up to 90 per cent of their business. As the buyer usually dictates the designs as well, suppliers have lost the need to have marketing and design departments, explained Horrocks, who was also the educational representative on the DTI's recovery plan group.
"The textile and clothing supply chain has lost its head and suppliers have lost entrepreneurial flair."
The industry is at panic stations, as the likes of M&S have been involved in crisis management without thinking of a long-term survival plan that included suppliers, he added.The end of the line?
As retailers abandon British clothing manufacturers in favour of firms in eastern Europe and Asia, they should consider whether they will ever be able to do business again with the UK companies, said Jim Marler, managing director of Procurement and Partnering Services, a division of consultancy JR Knowles.
And that is the challenge for the clothing industry. The end of one relationship is really about starting a new one. The M&S-Baird battle should be about a new beginning so that the two can work together in the future.
It is not a simply a case of supplier Davids against retailing Goliaths or good guys versus bad. How much are suppliers themselves to blame for the dire straits they find themselves in?
"The same business principles apply to small and medium-sized companies," said Irwin. "Somebody has to plan for the future. They must ask themselves whether they want to be so reliant on one customer."
Ken Watson, director of the British Apparel and Textile Federation's training and education programme, acknowledges an "underlying current of confrontation" between suppliers and buyers. Industry leaders must think of a long-term strategy while they battle it out with shareholders in a short-term crisis, he said.
Suppliers feel that industry-led groups, such as the forum announced earlier this month, must be forward-looking think-tanks in order to improve relations for a rejuvenated textile industry. "I'm looking forward to joining the forum and addressing the key issues," said Nissim Chilton, owner of textile supplier Chilton Scotland.
But the forum initiative is only the beginning. The real work will be done by suppliers and buyers in true partnership alliances.