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Sourcing Trends for 2022

For the second year running our predictions did not foresee the impact that the Pandemic has had on the global sourcing landscape.

Sourcing Trends for 2022 have echoes of last year, although the length of the Pandemic has accelerated certain offshore manufacturing strategies.

Introduction

For the second year running our predictions did not foresee the impact that the Pandemic has had on the global sourcing landscape. Vaccinations have left a significant dent in Covid’s armour but that has not stopped different waves of infection (and variants) from spreading across continents as markets lurched between lockdowns. With Omicron, the virus is currently breaking record daily infections in numerous countries (the US and continental Europe) and now, worryingly, has Asia in its sights.

The net outcome has been continued disruption across both sourcing and sales markets throughout 2021. The broader impact on tightening supply capability (containers and commodities) was overlayed by structural shifts in demand which has sustained higher prices across multiple markets. Travel is still largely restricted between the West and East. So, in short, it’s been a year of challenges; adaptability and resilience have come to the fore. Those with visibility in their sourcing markets have benefited.

So, what does this mean for 2022? What will be the legacy of Covid-19 on sourcing markets? What technological trends will come to the fore? Will freight rates still be a hot topic? Are the ‘bears’ stalking the commodity ‘bulls’? We have again dusted off our crystal ball to see what sourcing trends we think will be a feature of 2022 (Spoiler Alert – ET2C is not able to predict the future).

Sourcing Trends – Predictions

1. Endemic

Omicron appears to be a way out of this Pandemic given all signs and data are pointing to less severe disease whilst its infectiousness will push other current variants aside. The speed at which this happens will largely be dependent on Covid strategies in different countries and vaccination rates. For example, the data in the UK is starting to point to this endemic phase with high levels of vaccination and natural immunity, whereas Hong Kong has relatively low vaccination rates and natural immunity.

vaccine china omicron

Prediction: Although there are certainly positives on the horizon, the different Covid strategies between markets is likely to lead to continued disruption within supply chains. This is particularly true of Asian markets which have pursued the ‘Covid Zero’ approach. The result is that near sourcing options (like Turkey for Europe) will continue to gain market share as part of a global sourcing strategy.

2. Travel

There is no doubt that some markets (notwithstanding a further mutant variant emerging) will loosen border restrictions into 2022. Certain markets already have and depending on where you are from, there is increasing ease of travel. However, for those countries, which continue to pursue a much tougher stance against the virus, restrictions will remain in place. Certainly, differences between Governments’ approach to vaccinations, policies in place and State affordability will all be factors.

empty airport

Prediction: Expect not to be able to broadly visit your Asian sourcing markets until the autumn (Q3) at the earliest. Those markets pursuing a Covid Zero strategy will be closed for the longest period. Make sure you have sufficient resource in place to therefore manage your suppliers.

3. Near Sourcing

The Pandemic, as a supply chain shock, highlighted the need for companies to de-risk their sourcing markets and build in greater resilience. This trend has only been accelerated by the Pandemic and disruptions of 2021 (high freight rates in particular).

Prediction: Companies will continue to embed greater resilience within their supply chains and look to remove dependency on any one market where it makes sense to do so. Remember, this will bring additional complexity (language, culture, regulations, legal etc.) as you move into new markets and making sure you have the capability and reach to manage suppliers will be important.

4. Prices

2021 saw sustained freight rates and high commodity prices which ultimately resulted in inflation shipping to the West as part of the landed cost. Supply constraints with containers and shippers restricting space on vessels allowed freight rates to surge 500% from a year earlier. Similarly, commodity prices were hit by increased demand (structural shifts) and broadly a lack of investment in mining assets.

prices rising sourcing trends ET2C Int.

Prediction: With continued disruption and supply not meeting demand, we anticipate freight rates to remain high although pull back from the dizzy heights of 2021. For commodity prices, particularly with metals, we anticipate sustained high prices for 2022 due to increased demand/supply imbalances.

5. Carbon Neutrality & Carbon Zero

On the back of Cop26, there is renewed focus on carbon neutrality in the lead up to Carbon Zero targets for business by 2050. Understanding the carbon emissions across your company and supply chain (Scope 1, 2 & 3) as a starting point will allow you to identify what needs to be addressed as a starting point. It requires all stakeholders within the business and supply chain to engage in the discussions but with the targets in place, this all needs to start now.

Prediction: Carbon emissions data will start becoming a key metric in buying decisions and having suppliers who can engage at this level and think strategically will be increasingly important. Often carbon neutrality is linked with other sustainable initiatives (for example water usage in a plant) and it all forms part of the broader sustainability piece.

6. Circular Manufacturing

As part of reducing environmental impact, closed loop recycling is increasingly of interest to certain sectors. This uses materials already used to make new products thereby reducing the waste and requirement to manufacture virgin material. Already being used by Ikea for furniture and the fashion sector is engaged with the initiative as well.

fashion design catwalk sustainable materials

Prediction: This will become more prevalent in the fashion sector as the sector looks to reduce the amount of waste it produces, raw materials consumed, water usage and carbon footprint.

7. Metaverse

We are entering a virtual era and with the company previously known as Facebook, now Meta, pushing into this arena the development of digital worlds is moving at pace.

Prediction: Will we be able to start sourcing in a digital world? Just as visiting the shops virtually, will it ultimately be possible to visit factories virtually to purchase products? Perhaps unlikely in 2022 but do at least expect discussions around this for business and supplier meetings.

8. China to top the medal table at Beijing 2022

With the Beijing Winter Olympics starting in February, we will be back to watching a lot of people in lycra perform death-defying acts in search of the elusive gold medals (bobsled and ski jump in particular!). China to top the medals table and Jamaica to compete and win (if they can crowdfund a much-needed sled) the bobsled.

HAPPY NEW YEAR of the Tiger

The modus operandi of disruption over the past year, whether it was traveling, supply chains, schools etc. should hopefully begin to ameliorate over the coming year. That is not to say that there will not be similar types of disruption and challenges thrown our way. Of note, though the Lunar new year welcomes the year of the Water Tiger, and that generally means a year of extremes. Let’s hope that they are positive ones!

At ET2C, we are always looking to the future to ensure that we are providing our clients with the most relevant services and products. Please contact us at contact@et2cint.com.

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Global Supply Chains in 2022

Industry Insights / admin / Global Supply Chain

Five key trends impacting global supply chains in 2022

Global supply chains have been the subject of many articles, column inches and broadcast journalists’ notes over the past year, and with good reason. As we start 2022, is this disruption coming to an end – we look at five key trends for the year ahead.

Overview

Global supply chains have been significantly disrupted throughout 2021 primarily due to imbalances in supply and demand. The media spotlight has emphasised how supply chains nowadays are interwoven webs that span out across borders and oceans. Globalisation and efficiencies within the shipping industry (containerisation) have enabled supply chains to scale creating significant benefits for consumers.

As companies look to build resiliency and ‘flex’ into their supply chains in 2022– potentially identifying new suppliers in new markets – the level of sophistication is likely to increase, albeit there should be a greater capability to address the disruptions this past year has presented.

statista supply chain disruption

For any company, the situation caused by the global pandemic has revealed weak points but also opportunities. Having a good understanding of the current scenario and identifying the factors that will impact the global supply chain in 2022 will present a strategic advantage for any business aiming to build greater resiliency.

Global Supply Chains: What to Expect in 2022

1. Logistics Capability

With the factory shutdown in China back in February/March 2020, there has been a myriad of factors that have created disruption to logistics capability including repeated market global lockdowns (Hong Kong has just taken measures in its 5th wave), bottlenecks on supply routes, container shortages and consequential factors like freight rates and delivery times.

The recent sharp drop in the delivery times index reflects surging demand and/or widespread supply constraints. In such situations, as buyers need to closely manage stock levels, it is usual for suppliers to have greater negotiating power. Also, and importantly, such delays can have a significant impact on working capital availability potentially constraining cashflows.

supply chain turmoil

Many reports forecast that container capacity will continue to be constrained over the coming months which will lead to a shortage of imported products. However, there is an expectation that the situation will ameliorate into Q2 after the usually Chinese New Year rush – notwithstanding a lot of companies have already ‘stocked up’ to address the lead times. Anyway, assuming that these disruptions recede and that access to sea and airfreight reverts back to pre-pandemic levels, it will likely take some time before the market normalizes.

To build resiliency, companies should look to re-design alternative supply chain flows and focus on strategic sourcing.

2. Production Lead Times

Production lead times have already been pushed out in 2021. Certainly, in China, there has been disruption caused by an electricity shortage on the back of some lofty environmental commitments. A bull market in commodity prices has left some suppliers struggling to access the necessary raw materials on time. And this is all overlaid by the disruption in logistics that will inevitably push out delivery times should raw materials need to be moved both in the market or externally.
According to Deloitte, some industries (like semiconductors/chips) will continue to face shortages next year (Supply of raw material not meeting current demand of strategic materials) although this should be less severe than the past 12 months in particular.

Supply delays

3. Doubling down on Technology Investment

The pandemic, by ‘pressure testing’ global supply chains, has helped highlight weaknesses. One of these is certainly the lack of visibility, as there are many stakeholders and participants within the extended network. To overcome this issue, companies will increase their investment in technology to enhance critical supply chain planning capabilities by adopting more advanced digital enablers. In particular, they will invest more into advanced technologies – such as cognitive planning and AI-driven predictive analytics – to significantly improve visibility and consequentially become more responsive to major disruptions.

4. Commodities

The global economic recovery, accommodative monetary policies, bad weather, structural shifts in the energy sector and supply chain disruptions have propelled commodity prices higher to make commodities the top-performing asset class in markets this year. In particular, in 2021, some commodity prices rose to or exceeded levels not seen since the heights of 2011. For example, natural gas and coal prices have reached record highs.

In addition, the events of this year have highlighted how changing weather patterns due to climate change are a growing risk to energy markets, affecting both demand and supply.

In 2022, commodity prices are likely to stabilize and potentially soften on the back weakening demand. The market still has the potential for more supply and demand elasticity fueled by rapid technological advances and demographic shifts.

This transparency will need to also cover the pricing and costing. Organizations will likely increase spending on analytics tools and software packages to increase the visibility across bills of materials and the respective price drivers. This will drive greater supplier consolidation and ESG segmentation, helping in reducing the variation in quality and pricing for the same type of product/service across geographies.

5. Workforce and labor

The multiple disruptions caused by the pandemic have significantly affected also the employment sector, facing uncertainties and severe labor market shortages, which have further complicated the post-COVID-19 recovery scenario for many industries. The Omicron variant continues to create challenges in markets when it comes to workforces and access to additional labour. Movement across borders is severely impacted particularly in Asia. And with the Lunar New Year approaching, there is uncertainty about labour availability should workers be able to travel home; will they be able to then return?

global supply chain 2022

Summary

Global supply chains are changing and evolving at a faster pace than pre-Pandemic. This is partly driven by necessity but also the times have accelerated plans and spending that were waiting on the sidelines. Modern operations are increasingly focused on technology and innovation and this will help companies manage increasingly complex supply chains. Disruptions, although to start ameliorating, will undoubtedly continue into 2022. This time, though, it is fair to say that companies are better prepared and with the right capabilities in place, will manage appropriately.

At ET2C, we are already working with our clients across multiple markets as their partner of choice and are well placed to help manage more complex supply chains. With a team on the ground, we make sure we provide the visibility required to our clients. For more information, please contact us at contact@et2cint.com.

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Quality Control & Digitization

Industry Insights / admin / quality assurance, Quality Control

Quality Control & Digitization ET2C Int. QC

Quality control has always been an important part of any sourcing function. However, technology has evolved, and it is now possible to conduct inspections more efficiently and at the same time to collate data.

Overview

Quality control used to be the reserve of the ‘Policeman’; the ability to check in on factories on the basis that they were surely doing something incorrectly that would be detrimental to the quality output. As China opened up back in the early noughties, this was very much the case as offshore manufacturing (aside from Taiwan/Japan) was largely in its infancy. The anxious wait to check the QC report to see that the red coat was in fact both red and a coat. Of course, there are instances where this approach is still valid today and, in fact, recommended but often this is where the supplier relationship is fractured or there is a clear risk that needs to be addressed.

This approach has evolved over time. A collaboration is more apt to describe how quality control should sit between all stakeholders. It should be an open and fluid dialogue between the supplier and the buyer that is underpinned by trust. This means that where there are issues, they can be identified on the production line, allowing corrective measures to be implemented, rather than simply checking incorrect goods that are sitting waiting to be shipped. For example, identifying that one supplier has a high occurrence of loose threads allows this information to be relayed to the floor manager who can conduct additional training for the stitching workers. It also allows ‘quality’ to be part of an evolution of continuous improvement (in line with LEAN manufacturing principles or “Kaizen”).

factory audit check qc

Technology has a role to play as well. The ability to conduct inspections efficiently, with greater engagement between all stakeholders whilst collating data that gives direction on where any corrective measures should be focused is now possible.

Introducing Qarma

To help us continue to deliver our quality solutions to our clients, we have now partnered with Qarma going into 2022. Our aim is to empower our teams and suppliers to not just perform standardized and faster inspections via their Inspection App (the inspectors will conduct the inspections solely using their phones) but also to provide a more engaged and immersive quality experience.

QARMA QC quality control factory audit check ET2C Int.

Gone will be the two-dimensional quality control reports (and all the paper!), and in their place will ultimately be online reports and discussions. Rather than a static report, we are moving to a dynamic quality discussion to make sure that ‘quality’ continues to evolve. We are able to identify issues as early as possible and as close to the product as possible through real-time reporting and greater visibility.

Key Benefits

Some of the key benefits are set out below:

GPS Location – Every quality report can come with an exact location for each inspection
‘Fresh’ Pictures – All photos are taken and registered through Qarma with a time and GPS stamp
Barcode & QR scan – Inspectors can scan codes to start inspection and verify order
Video Capture – A picture tells a thousand words; a video tells a million (and all high resolution).
Image Annotation – Draw, write and enhance pictures with details
Multi-Language – our inspectors can explain in their own local language, which can be instantly translated across 18 different languages
Online Access – Clients can request online access and add comments and questions prior to finalizing the QC Report
Data Collation – We will automatically collate all the Quality data for your factories so that we can identify any corrective measures that need to be implemented

Quality Control 20.22

The tool will be adopted across our sourcing jurisdictions into Q1 2022 so our clients will begin seeing changes to our quality reports and the information flow. We are excited about this journey, and we just wanted to give you a heads up of what is in store for the New Year. Should you have any questions, or want to collaborate with us on Quality going forward, please contact us at contact@et2cint.com

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Sourcing Furniture from Turkey

Industry Insights / admin / Furniture, sourcing, Turkey

Sourcing Furniture from Turkey ET2C Int.

Sourcing Furniture from Turkey is an alternate option for those companies currently purchasing from the more common Asian supply base.

Overview

Sourcing furniture from Turkey is an untapped opportunity for many businesses. Furniture plays a vital role in our lives as it essentially turns a house into a home giving us a space for comfort and relaxation. Varying in shapes and sizes, furniture takes up most spaces in our homes, helping us have a healthier and more organized lifestyle. These days, people tend to spend a lot of time and money to find furniture that adds charm, class, style, and function to their homes or offices, which leads to furniture becoming a huge sector; globally in dollar terms it was $547 Billion in 2020 and is and is expected to grow a further 44% by 2027 to $789 Billion.
When looking for overseas manufacturers of furniture, the two most common countries would be China and Vietnam. Both have the raw material and the labour pool to produce furniture across a wide range of styles and with different materials. It is no surprise, therefore, that they take the number one and two spots on the list of the largest furniture manufacturers/exporters globally (China and Vietnam respectively).

furniture factory manufacture Turkey Sourcing Procurement ET2C Int.

Covid has significantly disrupted both these Asian markets due to the related shortages of containers and the subsequent upward pressures on freight rates. This has been no more profoundly felt than in the furniture sector when buyers are often trying to cram as many bulky items as possible into containers. When you are only able to get 40 items in a container (compared with 10,000 pieces), the cost implications of the high freight costs will have a tangible impact on your landed price. The result is that buyers are scouring other markets for furniture opportunities particularly where there are freight savings from ‘near-sourcing’ countries.

Lucky Number 13

Casting one’s eye down the list of furniture manufacturers/exporters, Turkey makes the cut at 13th. Is sourcing furniture from Turkey a viable option for you? There are many reasons and we have set some of these out below:

1. Heritage

The Turks have been producing furniture for centuries. There are examples of furniture that date back to the Hittites in the Anatolian region. As with many ancient civilisations, the skills and workmanship were passed from generation to generation via family-owned workshops. These workshops, which are still active today, have been producing hand-carved furniture the same way for generations. This expertise was built upon in the dawn of industrialization as mid to large scale production capabilities were developed. These large-scale factories enabled automated mass production of standardized products with the majority of output destined for export.

Handcrafting wood turkey sourcing supplier manufacture factory ET2C int.

2. Raw Material

Turkey has access to a range of raw materials that either grow domestically or are produced locally (such as steel etc). Particularly with regards to wood, there is a broad abundance of local wood that can be used in furniture production providing a range of different physical characteristics. The total land area of Turkey is more than 80 million hectares, with forests making up 27.2 percent (21,2 million hectares) of that. With 9,000 herbaceous and woody plant species, Turkey possesses one of the world’s most diverse floras. This gives the country easy access to many trees for roundwood production such as Calabrian pine, Crimean pine, Scots pine, beech, fir, spruce, cedar, and oak.

Forests Turkey Raw Material wood sourcing ET2C Int.

3. Established Industry

Turkey’s milling and wood manufacturing industry is qualified to supply wood products to overseas markets, especially those countries that do not have an advanced wood fabricating segment. Besides, Turkey is in a favourable position to provide semi-processed wooden items and furniture to the EU owing to its flexibility, comparatively lower labour costs and design capability.

Furniture Factory Turkey Sourcing Procurement ET2C Int.

4. Export Track Record

Turkey exports to over 170 countries and the biggest importers of Turkish furniture are Germany, Saudi Arabia, USA, France, UK, Israel, the Netherlands, Qatar, Romania, United Arab Emirates, the Czech Republic, Italy, and Azerbaijan. Moreover, many of the manufacturers have reinvested in their capabilities during the pandemic.

5. Not Asia

In order to build ‘flex’ into any supply chain it is important to identify suppliers in different markets. With Turkey sitting on the edge of Europe, it is perfectly positioned as a near sourcing option when it comes to furniture.

Summary

Supply chains and sourcing strategies have been largely turned on their head over the course of this Pandemic. Buyers are looking for other opportunities outside of the more traditional sourcing jurisdictions, like China. Sourcing furniture from Turkey will only enhance your sourcing strategy and breadth of the sourcing market. This is especially important if you are a European business.
As ET2C, we are well placed to provide you with the best furniture products Turkey has to offer. For all enquiries, please contact us at contact@et2cint.com.

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Ethical Sourcing: A Conscious and Responsible Buying Approach

Industry Insights / admin / ethical sourcing, sourcing, Sustainability

Ethical Sourcing ET2C Int. sourcing procurement

Ethical sourcing is increasingly important to a range of stakeholders. Whether the consumer, the retailer, the importer, the manufacturer or even the investors, ethical sourcing aligns with ESG principles and is part of a product’s ‘story’.

Ethical sourcing is a sustainable and responsible approach to supply chain management and sourcing. It is defined by the Chartered Institute of Purchasing & Supply (CIPS),  as “the process of ensuring the products being sourced are obtained in a responsible and sustainable way, that the workers involved in making them are safe and treated fairly and that environmental and social impacts are taken into consideration during the sourcing process.”.

Factory workers China sourcing

Why is Ethics Important in Sourcing and Procurement?

Over the past two decades, the consumer has become more aware of the impact a particular product has on the environment or the factory workers being used to produce it. This has driven additional visibility up supply chains to the point where some retailers even provide complete transparency of all their suppliers for their customers to check as they see fit. This is all part of ethical sourcing, and the ability to provide this level of information is just one example of the sourcing process respecting all ethical and environmental standards expected of retailers and brands.

At the same time, companies have taken on greater responsibility when it comes to ethics and how they source products. This requires a much greater understanding of which manufacturer a company decides to partner with, what their beliefs are and what their environmental footprint is like. Some companies are even certifying as a B-Corp – their purpose is to build a more inclusive and sustainable economy – which includes elements of ethical sourcing.

Ultimately, ethical sourcing will help remove abusive practices. There is no reason why slavery or child labour should be tolerated in this modern world. The more this can be enforced by the companies doing the sourcing, the less the commercial benefit for those profiteering from these abhorrent practices.

Therefore, it is paramount that buyers selecting and managing suppliers look out for signs of such activities in their supply chains.

policy contract sourcing procurement

The Ethical Trading Initiative (“ETI”) is internationally recognized as a ‘Base Code when it comes to labour practices. The ETI Base Code is structured on existing conventions of the International Labour Organisation, and has nine clauses that define ethical practices:

Employment is freely chosen
Freedom of association and the right of collective bargaining are respected
Working conditions are safe and hygienic
Child labour shall not be used
Local living wages are paid at national legal standards
Working hours are not excessive, complying with national law
No discrimination is practiced
Work performed must be based on a recognised employment relationship established through national law and practice
No harsh or inhumane treatment is allowed

The Benefits of Ethical Sourcing

Commonly, companies often commit to ethical and sustainable practices for obvious reasons such as risk mitigation or improving brand image to grow sales. However, there are even more benefits for companies that opt for ethical sourcing and do it properly.

1. Employee Engagement

Many studies have shown that companies with solid Corporate Social Responsibility programs not only boost a strong public image but also engage more people from inside the organisation by enhancing higher employee morale and creating a culture of loyalty.

As a consequence, a reputation for sustainability and ethics often makes an organisation a more attractive proposition as a prospective employer than those who have less of a purpose.

2. Customer Satisfaction and Market Shares Increase

Now more than ever, customers expect companies to be more ethical and sustainable in their business practices and actively value brands that are doing so. A few companies have in fact increased their market share by committing to ethical sourcing practices (please note that it is important to genuinely commit to such practices rather than simply go through it as an exercise in ‘green-washing’).

Several ethically sourced products made from organic, renewable, or recycled materials have an extremely loyal customer base (AllBirds for example). Aligning your products and services with customers who value sustainable business practices can increase your company’s market share.

apparel fashion factory ethical sourcing

In fact, according to the data from the OpenText survey (September 2021), nine in ten global consumers want to buy products sourced in a responsible and sustainable way and 83% would pay more for goods that are ethically produced. Interestingly, consumer demand for ethically sourced products has increased during the global pandemic. The survey shows that nearly 20 per cent of the respondents said that this has only mattered to them within the last year, which indicates that the Covid pandemic, and some of the product shortages we have faced, has made consumers re-evaluate their stance on ethical sourcing.

3. Margin Growth

Although products that are sustainable and ethically sourced generally have a higher cost, there is evidence that ethical sourcing processes both can reduce costs over the long term and also support higher sales prices in store. In 2015, The World Economic Forum estimated that sustainable and ethical sourcing processes reduce supply chain costs from 9%-16%. In addition, they can increase revenue by up to 20% for responsible products, and increase brand value by 15%-30%.

Some examples are the use of energy-saving light sources, the improvement of insulation, the elimination of wasteful steps and processes within production, to name a few. Or, in addition, the use of environmentally friendly materials.

4. Brand Boost and Accountability Enhancement

One of the benefits of ethical sourcing is improving the reputation of the brands your business produces.
The reason behind the brand boost is that by adopting ethical processes, transparency and accountability become major components of your supply chain. As stated above, this can be compelling from a consumer perspective, but it is important that it is a genuine position to drive real benefits. A measure of this is how well employees engage in the companies’ beliefs.

5. Make a Difference

It sometimes just feels good to do good! At whatever level, positively impacting a manufacturer, a worker or an employee feels like the right thing to do. Make that difference!

Summary

At ET2C, we are already working with our clients on ethical sourcing and best practices when it comes to managing their supplier base. With a team on the ground, we make sure we provide the visibility required to our clients. For more information, please contact us at contact@et2cint.com.

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Multifunctional Furniture: The New Trend to Optimize your Space

Industry Insights / admin / design, Furniture, sourcing, Trends

Multifunctional Furniture ET2C Int. Furniture Sourcing Procurement

Multifunctional Furniture has become an increasingly important trend as people look to maximize the use of space within their homes.

Overview

Multifunctional furniture has the ability to enhance our homes. The ‘winds are changing’ and more and more people are mindful of their living space and choosing functionality over size. With increased property prices and cities being overpopulated, optimizing your space seems to be the best solution for those who are conscious of their budget and space, and want the furniture to last longer. It is also part of the current surge in downsizing that is the driving force behind a range of creative and elegant furniture solutions.

multifunctional furniture space room sourcing ET2C Int. Procurement

Multifunctional Furniture is particularly useful when you need to decorate smaller apartments and living spaces or simply adapt a trendy and interesting solution to your space. It is also a good way to make a bold statement about your personality and enable your lifestyle with furniture that adapts to your way of life.

Multifunctional Furniture

What is Multifunctional Furniture and what are its advantages? The right piece of Furniture can:

Help keep your belongings tidy;
Optimize living space;
Make the best use of small apartment; and
Feature interesting and trendy design.

Multifunctional Furniture can be a part of any room’s interior, including the kitchen, bedroom, study, kids bedroom, Living room and even terrace or balcony.

Below are a couple of ideas for different living zones and spaces.

1. Furniture for Kids’ Room

Having their ‘own corner’ is extremely important for children of all ages. And regardless of how big or small the room is, everyone realizes that a child should have as much space as possible to play in, learn and discover. Below are some great solutions for Children of all ages.

Childbed with storage unit;
Drawers under the bed and wall shelves can help to organize clothes, toys and books. This design will grow together with a child and will be a great fit in the room of a toddler right through to a teenager.

Child bed with storage unit furniture sourcing procurement

Childbed with slide and playground;
Nothing presents a better example of combining functionality and fun when it comes to young children. The bed can be combined with a slide, ladder, exercise wall or even treehouse.

Childbed with slide and playground furniture sourcing procurement

Craft paper folding bench
This unique and sustainable collapsible design allows up to 10 people to be seated. When folded together, it can be stored under the table or used as a side table. A perfect piece of furniture for an unexpected children party. And it is also available as a stool option.

Craft paper folding bench furniture sourcing procurement

Nesting Children’s Furniture
The nesting children’s furniture looks like a gradient side table when stacked together neatly. When pulled apart, they form two sets of desks for different age groups. Each desk component is equipped with storage compartments as well.

Craft paper folding bench furniture sourcing procurement

2. Space-saving Pet Furniture

Over the past year, lots of office workers spent significantly more time at home due to the Pandemic with extended lockdowns and working hours’ adjustments. For many of them, this meant spending more time with their pets. Below are some of the solutions that allow furniture to be shared with your pets:

Rocking-2-gether chair
This chair is a combination of a rocking chair and a pet house. A great spot for relaxing on the chair along with a furry friend absorbing some afternoon sun.

Rocking-2-gether chair design furniture trends

Cat litter box/planter
Some litter boxes are designed to look like a house plant to cleverly become part of the home décor. With a two-piece bottom and a cut-out, a cat can easily take care of its business. The Litter box can also be hidden inside the side table or storage unit.

Cat litter boxplanter furniture sourcing procurement cat design

Cat hammock
It is easy to share a table for a morning coffee or late evening snack together with your cat by fixing a cozy hammock right under the coffee table. It can also be placed on any chair or even inside the ottoman to get an extra secure spot for your pet.

Cat hammock furniture design pet sourcing procurement

Bookshelf Window Perch
For those small pets, a Bookshelf with step pads and perch will easily blend into the study or living room’s décor. Storage units can be used to declutter your home, and give a pet some exercise as well as help with fighting anxiety and boredom by giving free access to the window when an owner is not around.

multifunctional design

3. Table solutions

Table-mirror transformer
A table is an essential part of any space, that allows you to dine, do some office work, practice a hobby or to just read the paper. A table that serves as a mirror when on the wall, and as a dining table or work surface when down is a great example of Multifunctional Furniture.

Table-mirror transformer furniture trends sourcing

Foldable dining table
From a slim side table to a full dining table in a couple of minutes – these multi-use furniture pieces can seat up the whole family when fully unfolded.

Foldable dining table sourcing procurement furniture

Extendable kitchen trolley
Handy for storing extra dishes, using as a breakfast bar or adding a bit more workspace when preparing meals. This trolley can be easily moved away when not required allowing more mobility in the kitchen.

Extendable kitchen trolley

Stacking table
Stacking units come apart easily to be used as separate coffee tables. When put back together it can be used as a book/storage shelf.

Stacking table

Multifunctional Furniture – Develop Your Concept

We at ET2C work with a range of factories from China, Vietnam, India and Turkey in order to support and develop new Multifunctional Furniture concepts. Aluminium, steel, wood and even cardboard can be a material for inspiration. Reach out if you are looking for some unique pieces of furniture that can help to optimize home space and organically fit into all kinds of homes. For more information, please contact us at contact@et2cint.com.

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COP26: a Focus on Decarbonization & Supply Chains

Industry Insights / admin / COP26, Industry, Sustainability

COP26 a Focus on Decarbonization Supply Chains ET2C Int.

COP26 presented an opportunity for World Leaders, the business community and other stakeholders to come together and agree tangible outputs to attempt to reverse climate change.

Overview

COP26 brought a melee of Politicians, CEOs, UN Ambassadors, Environmentalists and protesters together in the Scottish city of Glasgow to discuss how we can possibly reverse the damage already done to our planet. With an immediate purpose of moving towards carbon neutrality (“net zero”) by the middle of the century, countries were tasked to present ambitious targets for reducing emissions. And this all with the aim of keeping the 1.5 degrees rise in global temperatures within reach. This would only be possible with a broad commitment to accelerate the phase-out of coal burning, dramatically reduce deforestation, speed up the transition into electric vehicles and encourage investment in renewables.

At the outset, amidst a palpable wave of optimism, the pledges and commitments came thick and fast as the event opened with World leaders attending and setting out their aspirations. Even with some noticeable absentees, there did appear to be a road map to making a real difference. But as the curtain came down on the event, there was the inevitable watering-down in the language of some of the agreements leaving some activists pointing to a lack of enforcement or mandatory provisions being included. So after all the talking, what were the wins and losses of COP26?

COP26 ET2C Int. — Fig 1. Scorecard, Bloomberg, 13th November

There were some clear ‘wins’ albeit not as clear cut as some people would have liked. The rhetoric during the event was heavily laden with the need for ‘now’ and ‘protecting future generations. It will have to be seen if there is now sufficient momentum and financial clout to make a tangible difference to the climate precipice that we all find ourselves on.

COP26 & Supply Chains

Globalisation has led to greater connectivity across the world, which has, in turn, lead to greater movement of people and goods across oceans and through the air. For supply chains, containerization enabled goods to move across oceans with greater ease and subsequently in greater volumes. All this has resulted in a significant carbon footprint. The fact is that 62% of carbon output is related to supply chains. And with 80% of goods being transported across maritime routes on container ships, there is a clear need for the shipping industry to move to carbon neutrality as part of this broader target of a net-zero by the middle of the century.

carbon pollution

As companies involved in sourcing, producing and the movement of products across borders, what does this all mean for our own businesses? There is no one solution and the answer is layered with complexity. Perhaps the simplest solution is to stop doing anything that has a carbon impact, which is not particularly practical and would not have a positive economic input. The challenge is that there is a reliance on the ‘collective.’ A company that is shipping from Asia relies on the carbon output of the factory and, even more relevant, the shipper and various modes of transport to get the goods to and from the Ports. These are not aspects that one can directly control.

The Collective

This though is the point. There needs to be a collective. As COP26 set out to achieve, Governments need to be investing in the technology for clean energy alongside incentives for private investment in renewables that make commercial sense for the future. There needs to be a genuine ‘Green Economy’ that works for all nations.

So, what can we do together to make this happen? Even though these may be small initiatives, the more companies that adopt them, the greater the impact and the more the landscape shifts in the right direction.

1. Product

Where possible, identify products that have a lower carbon footprint in terms of their use and the materials that they are made with.

2. Manufacturing

Think about your suppliers’ own carbon footprint and understand what that carbon output may be so that you can contribute to carbon offset schemes (tree planting etc.).

3. Green Shipping

Look to consolidate containers where you can maximize the space available. Also, engage with your carriers around their plans for ‘clean cargo technology.’ Hydrogen will power container ships of the future, which will have zero carbon output.

ship container cargo logistics sourcing

4. Go Electric

Where possible use electric vehicles within your supply chain, whether that is a provider or your own fleet.

5. Cut Travel

Covid has already halted widespread corporate travel, but as we emerge from this Pandemic it will be important to only travel when necessary. Look at alternative ways of managing overseas suppliers, whether via technology or local partners on the ground.

Summary

The UN general secretary has issued a red alert for Humanity. The need for action is now, and we all have a part to play. As the President of COP26 said in his closing remarks:

“We can now say with credibility that we have kept 1.5 degrees alive. But, its pulse is weak and it will only survive if we keep our promises and translate commitments into rapid action…
From here, we must now move forward together and deliver on the expectations set out in the Glasgow Climate Pact, and close the vast gap which remains. Because as Prime Minister Mia Mottley told us at the start of this conference, for Barbados and other small island states, ‘two degrees is a death sentence.’
It is up to all of us to sustain our lodestar of keeping 1.5 degrees within reach and to continue our efforts to get finance flowing and boost adaptation. After the collective dedication which has delivered the Glasgow Climate Pact, our work here cannot be wasted.” COP26 President, Alok Sharma.

At ET2C, we are looking at how we can reduce our own carbon footprint and are working with customers on a range of solutions. For more information, please contact us at contact@et2cint.com.

COP26: a Focus on Decarbonization & Supply Chains Read More »

Chinese New Year 2022 – How to Prepare for Factories closing

Industry Insights / admin / Chinese New Year, CNY, suppliers

Chinese New Year 2022 ET2C international sourcing suppliers

Chinese New Year is an annual event that has a permanent place in any Buyer’s diary. It is a holiday that sharpens focus for Buyers, who must plan around it to avoid delays and stock shortages.

Chinese New Year, also known as the Spring Festival, is the most important holiday in the Chinese Calendar. The festival celebrates the start of the Lunar Calendar, its date is not a fixed day but changes every year. For about 15 days, families come together to celebrate and spend time together from all over the country.

Chinese New Year for the Manufacturing Sector

A large proportion of factory workers are in fact migrant labourers. The number is not quite what it used to be when Guangzhou was the manufacturing hub of China. By the way, it is still significant with a large section of the 700 million people travelling back home over Chinese New Year involved in manufacturing.

While the official public holiday only lasts for seven days, the majority of factories are closed for extended periods, between two and four weeks, which is referred to as Chūnyùn (春运). This is, in fact, the largest human migration in the world.

train station crowd Shnaghai China people CNY

Chinese New Year for Buyers & importers

With factories closed and most of the country off work, the wheels of China’s manufacturing behemoth grind to a halt. Even after the holiday, it takes a few more weeks to get back up to full production capacity and output.

All elements of the Chinese supply chain take a while to get back online. From general employee churn (some do not return), extended holidays to getting sub-suppliers to full production capacity it can take in excess of one month for factories to be in full production mode (and who would not predict some additional disruption given the past 18 months!).

So, what should companies buying from China (keep in mind other Asian countries also celebrate the Lunar New Year, like Vietnam and Tet) do in the run-up to Chinese New Year to manage their suppliers and lead times?

Chinese New Year – Tips for Buyers

Considering lengthy factory closures, keep the following in mind as we end the Calendar Year:

1. Staff Turnover

This period of the year is considered the best time to switch jobs in China. Often, workers will move to other factories, which compounds the issue of getting the factory up and running after CNY. As a result, many factories will not be back to full production levels for over a month after the holiday.

China Suppliers manufacturer manufacturing procurement product chinese new year CNY

2. ‘Quality’ Around CNY

Before the holiday, factories rush to get orders out the door. The pressure is intense to meet deadlines and prevent delayed stock from sitting idle (does not help anyone get paid). Inevitably, under such conditions, the risk of quality defects will increase as factory managers have to find a range of creative ways to meet the ex-factory dates.

Similarly, after the holiday, there may be less experienced employees in the factory. This is because HR managers need to recruit new staff for those that did not return. Again, the risk of quality defects may rise, although with the right supplier and quality program in place, this can be avoided. For example, making sure more frequent product inspections are implemented around before and after the holiday will provide greater visibility and reassurance around product quality.

3. Shipping Costs

Freight rates have had a remarkable run in 2021, much to the detriment of importers and retailers, although they have softened into Q4. Chinese New Year always presents a ‘cliff-edge’ for companies looking to ship prior to the holiday and you can therefore anticipate a spike in rates.

4. Payments

Every year, Chinese factories push for payments early to pay their staff bonuses and collect as much cash prior to the holiday. Just be careful, particularly when paying deposits or advances for stock not yet shipped. This is the time of year in which most Chinese factories close down permanently.

5. Chinese New Year 2022

February 1st, 2022 is the first day of the “Year of the Tiger.” The official government holiday lasts from January 31st through February 6th. However, some factories will close earlier in January. So check now with your factory contacts to get their exact closure dates.

A New Year’s Bounce

No Buyer wants to have no stock. So how should companies approach Chinese New Year when it comes to manufacturing in China?

Clearly, planning is central to the solution. For any shipments targeted to land in April and May, you would typically start cutting purchase orders this month. However, due to all the Covid-related supply chain bottlenecks in 2021, many experienced buyers have already placed their orders this time around. Communication is a central part of being able to plan. Make sure you are aware of when your suppliers and their suppliers are shutting down this coming Chinese New Year.

Also, often the period immediately post Chinese New Year for factories can be slow both as factories ramp up capacity, but also a result of customers already being stocked up. If it works for your purchasing cycles, using this downtime to produce your products can present benefits (price and capacity available for you) as offseason orders.

Lastly, remember that the sourcing landscape extends beyond China. Although the Lunar New Year is celebrated in other Asian countries where you may have manufacturing partners (Vietnam, South Korea, Indonesia etc), the holidays generally tend to be less imposing. Also, look for Near Shore alternatives, like Turkey for Europe.

Summary

Make sure you communicate with your partners across Asia when it comes to the Lunar new year, particularly in China. If you need support in this area or just some help on the ground, we are here to help. Contact us at contact@et2c.com.

Chinese New Year 2022 – How to Prepare for Factories closing Read More »

China Sourcing: When the Lights Go Out

Industry Insights / admin / China Electricity, China Electricity Shortage, Electricity Shortage, sourcing

China Sourcing Electricity Shortage Procurement ET2C Int.

China sourcing has been the mainstay of offshore manufacturing for the past three decades but what happens when the lights go out?

Overview

China sourcing remains an integral part of most sourcing strategies. Of course, there will be companies that buy from specific offshore markets and in certain product categories that do not need to lean on China’s vast manufacturing base at all. However, China’s factories still cast a long shadow across Asia and beyond. Its scale alone allows it a seat at the ‘top table’. Even in a tumultuous year for supply chains already grappling with freight rate hikes, container shortages, raw material rises and long delays inbound into Ports, heightened demand has helped retain its global competitiveness (albeit China’s PMI has marginally decreased to sub 50 indicating a small contraction in manufacturing output). But then the lights went out…

China Sourcing – In the Dark

In a bold and largely unexpected statement via video link at the UN on the 22nd of September, President Xi Jinping announced that China would double down on its environmental targets.

“China will scale up its Intended Nationally Determined Contributions by adopting more vigorous policies and measures. We aim to have [carbon dioxide] emissions peak before 2030 and achieve carbon neutrality before 2060”. President Xi Jingping to the UN Nations, 22nd September 2021.

This was certainly commendable from an environmental perspective. China is the world’s largest sourcing of carbon dioxide, responsible for approximately 28% of global emissions. The issue was the potential impact on energy in China. There were already structural issues with mining coal within China (lack of investment, alternative power etc) and this new target would only limit electricity supply to China’s industrial lands. After the Golden Week Holiday, local governments began limiting the supply of electricity (and at short notice in some cases) to avoid missing environmental targets for reducing energy and emissions.

China Electricity Shortage power use ET2C Int. sourcing services

There is no doubt there has been disruption across many provinces and manufacturers, which has hindered their production capacity and extended lead times. It is largely dependent on the manufacturing type and the province as to how much electricity is rationed. For example, we have seen factories currently being limited to 3 days a week, which will serve to extend lead times; the less time for machines to operate, the less the factory output.

A Glimmer of Light

As Buyers were wiping beads of sweat from their brows, trying to understand what the implications would be for orders currently being produced – particularly those due to complete and ship in the melee pre–Chinese New Year – the Chinese authorities acted. They ordered coal miners to boost production to allow acute power shortages to be addressed. Of course, the bigger issue was the power supply to peoples’ homes, which was also in jeopardy going into the harsh Northern Chinese winter.

Another piece of good news came just after the recent COP26 climate talks, co-hosted by Italy and the UK, where China reaffirmed its goal of achieving a carbon peak before 2030 and carbon neutrality by 2060. Even if coal output rises in the short term to address a nationwide power shortage, the Chinese authorities have pointed out that this does not signal a return to reliance on coal-fired power.

coal extraction workers energy power china

In summary, we should see the power shortages ameliorate end of November into December from a manufacturing perspective.

China Sourcing in the Spotlight

So, what does this mean from a China Sourcing perspective? Has this forced companies to look outside of China, even in the short term? This latest round of disruption certainly serves as a reminder of the need for companies to build in ‘flex’ to their supply chains. Some key take-outs include:

1. China’s Manufacturing Base

Unlike many other manufacturing markets, there is an innate resilience within China’s manufacturing sector. The past thirty years have allowed factories to hone their skills and expertise, to the extent it is always a challenging market to compete against.

2. Plan B & Plan C

Building resilience means having a range of suppliers that can be ‘tapped into’, particularly factories that are in different countries. This helps to eliminate country risk – just as when China shut down in response to Corona back in March 2020. Look at near sourcing options and alternate markets in Asia that complement each other.

3. Plan & Build in Stock

The past 6 months have seen companies replenishing stock levels – part of the reason for the demand through 2021 as economies started opening post-Covid lockdowns. It is important that Buyers are looking to plan by potentially bringing orders forward and adding order replenishment stock. This will help mitigate the extended lead times for goods to get from Source to Shelf. A lack of stock is the worst possible outcome – do what you can to have stock to sell.

ET2C Int. coal carbon extrusion sourcing procurement raw materials energy power china

In short, having options will put you in good stead. The latest disruption for China sourcing is just one example in a long list over the past 18 months. Some US Companies that shifted production into Vietnam on the back of US tariffs on Chinese products found themselves recently unable to produce any products due to the lockdown. As Socrates pointed out, ‘You don’t know what you don’t know’ so plan accordingly.

Summary

2021 continues to provide challenges for sourcing markets. China sourcing, even with power shortages over the short term, will remain important. However, make sure you are doing what you can to build flexibility (and resilience) into your supply chain.

At ET2C, we are well-positioned to provide our clients with support across a range of different sourcing markets. We are well placed, as your Sourcing Partner, to help you during these difficult times. For more information, please contact us at contact@et2cint.com.

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Consumer Trends: Consumerism on Trial

Industry Insights / admin / business, consumer trends, finance, Industry

Consumer Trends ET2C sourcing procurement

Consumer Trends are always in a state of evolution and no more so during the course of the Pandemic, which has forced through significant behavioural needs.

Evolving consumer trends

Consumer trends continue to evolve but what is the new normal? It has been two years since we have been surfing the waters of the pandemic, so what is now shaping consumer trends? All players have been tested equally and forced to adapt with both losers and winners emerging across different industries. The consumer products industry has largely been amongst the winners. Its growth has been nothing short of exhilarating: evolving, adapting and meeting an ever-growing array of human needs and desires.

product trends sourcing procurement supplier buyers ET2C Int.

How has this happened? Largely due to globalization of supply chains, aggressively developed, across every part of the value chain. Typically, this comes at a cost, increased margins and weighting of portfolios toward fast-growing categories and now, faced also, with the shocks on freight rates within the shipping sector which shakes the very foundation of globalization.

Consumer Trends – Product Sectors

Specifically, consumer product companies are looking to maximize profits in what is an interconnected, extremely competitive environment. Challenges for these organizations include meeting the high demands of customers, manoeuvring through a consolidating market and executing strategies to grow profitably.
Now more than ever, the past serves as no guide to the future. The landscape appears to have permanently shifted and there is no coming back to those pre-pandemic times. This is a period where ‘West meets East’, when Asia is becoming the main consumer market (by 2030, Asia as a consumer market is estimated to be larger than Europe and the US combined!).

The demands on value and innovation are in keen focus, the use of online channels (although we can see a comeback on in-store shopping) and volatility across supply chains have all led to the penetration of social media that has a major influence on consumers’ behaviour.

consumer trends image 1

The consumer products sector is leveraging technologies and in terms of trends it has been majorly led by it, mainly due to shifting demographics. Not only has it helped companies to enhance their service levels but they have completely revamped the customer experience. With a rapidly evolving technology, Consumer Packaged Goods (“CPGs”) have had no option but to ‘hop-in’ to stay afloat and survive. What has this meant for consumers?

Their purchasing behaviour is heavily impacted by it. Users take advantage of the information available to research products and to get inspiration from user-generated content as recommendations based on preferences.

Category Growth

The Pandemic has caused shifts in category demand over the past two years in relation to the impact of Covid-19 on a particular market. For example, the Health & Wellness category had a strong performance during the Pandemic, but has dropped towards the end of the year as people overall feel safer in line with vaccination programs and borders slowly opening. However, trends show that there is more to be done on Health and Wellness and consumers will continue to care about it deeply. Moreover, as economies emerge from their Covid hibernations, an uptick in experiences & entertainment, as well as clothing and fashion, can be expected towards this Holiday season and upcoming 2022.

That said, here top categories for consumer trends are:

1. Electronics and Technologies

Products that effortlessly facilitate day-to-day routines and help people connect will continue to be in demand. As a means to enhance customer experience:
a. Digital reality, enabling interaction and the power to explore, customize and access to details
b. Artificial intelligence allowing innovation and for the consumer to benefit from personalized products, recommendations and service.
c. Connection through ‘the cloud’ across all platforms, smoothly, is all about costumer engagement.
d. Blockchain as source for transparency across all purchasing process.

2. Health and Wellness

This category includes:
a. Here to stay, the COVID-19 products: masks and medical and non-medical items.
b. The “newly” awaken the consciousness of the consumer – where sustainability and environmental consciousness-related items are a ‘must’. In short, a green supply chain all around and a low-to-none carbon footprint.
c. Products that promote a cosy environment and enhance personal wellbeing.

3. Experiences & Entertainment

This category is focused on CPGs that sit within the travel sector, whether holidays or more day to day travelling. They need to focus on convenience, tourism, outdoor and leisure activities. All areas that have suffered most during the Pandemic, and perhaps those that have most to gain should Covid be consigned to the past.

4. Clothing & Accessories

Naturally seasonal, but likely to be up towards the end of the year as markets open up and people are not in lockdowns. Discretionary spending will move more to the Fashion sector as a means of expression that has for the past 20 months largely been unnecessary.

consumer trends image 2

Summary

At ET2C, we are constantly monitoring consumer trends to understand which products are relevant to your business, and how these align with multiple sourcing markets. Whether it be China, Vietnam, India or Turkey, we are on the ground to provide you with the best product offers for your organization. For more on how we can help you, please contact us at contact@et2cint.com.

Consumer Trends: Consumerism on Trial Read More »

Sourcing Trends – Predictions

3. Doubling down on Technology Investment

Why is Ethics Important in Sourcing and Procurement?

The Benefits of Ethical Sourcing

1. Employee Engagement

2. Customer Satisfaction and Market Shares Increase

3. Margin Growth

4. Brand Boost and Accountability Enhancement

5. Make a Difference

Summary

Overview

Multifunctional Furniture

1. Furniture for Kids’ Room

2. Space-saving Pet Furniture

3. Table solutions

Multifunctional Furniture – Develop Your Concept

Overview

COP26 & Supply Chains

The Collective

1. Product

2. Manufacturing

3. Green Shipping

4. Go Electric

5. Cut Travel

Summary

Chinese New Year for the Manufacturing Sector

Chinese New Year for Buyers & importers

Chinese New Year – Tips for Buyers

1. Staff Turnover

2. ‘Quality’ Around CNY

3. Shipping Costs

4. Payments

5. Chinese New Year 2022

A New Year’s Bounce

Summary

Overview

China Sourcing – In the Dark

A Glimmer of Light

China Sourcing in the Spotlight

1. China’s Manufacturing Base

2. Plan B & Plan C

3. Plan & Build in Stock

Summary

Evolving consumer trends

Consumer Trends – Product Sectors

Category Growth

1. Electronics and Technologies

2. Health and Wellness

3. Experiences & Entertainment

4. Clothing & Accessories

Summary

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