Business

The removal of textile import quotas at the end of 2004 gave us an opportunity to examine our relationships with factories and transform our supply chain into one that consistently reflects our values and business needs.

In January 2005, we held a Global Vendor Summit at our headquarters office in San Francisco, marking the first step in our efforts to create deeper relationships with our suppliers. More than 120 people from our top garment manufacturers and textile mills came together to talk with us about how we can work together to address issues in the supply chain.

One of the goals for the summit was to develop a clearer understanding of what our garment manufacturers do best, as capabilities vary widely. For some garments, quality is the key consideration. For others, cost or speed-to-market may be more important. Different factories have different competencies and strengths, and we need to distribute our production accordingly. Asking a factory best at delivering small, high-quality orders to deliver a large order in a short period of time may lead to challenges in meeting deadlines and place unintended burdens on factory workers. Ultimately, we need to ensure that the strengths of our suppliers are aligned with the needs of our brands.

Challenges remain in helping factories meet our standards for quality and compliance with our Code of Vendor Conduct. Most garment manufacturers produce for multiple clients, which means that we often know little about a specific factory's workload beyond the orders we've placed there. For competitive reasons, garment manufacturers may take on more work than they can handle, which not only jeopardizes deadlines but can also subject workers to excessive overtime hours.

Developing closer relationships with factories and building trust to address these issues takes time and coordination. We're confident that this investment -- combined with