Milestone: Source Work

Milestone: Source Work
BBC executive Tracey McLeod makes a factory visit in China.

When it comes to the footwear business, Bob Campbell is a pragmatist.

Beyond the glamour of brand names, trend-right styling and a savvy retail strategy there is a truism, he said: If the shoes aren’t made and shipped, nobody gets paid. “Designs are wonderful and distribution is wonderful, but sourcing is the most important [part of the business],” he said. “It’s great to design shoes and go out and sell them, but if you can’t ship them, what good is it? If you can’t ship the shoe, you’ve got nothing.”

That’s why the BBC International chairman and CEO has made sourcing and finding potential manufacturing partners a priority since founding the company in 1975.

Recent changes in China and across Asia, however, have kicked the company’s efforts into high gear, as it seeks out factories that can deliver quality product reliably and on time.

In the past year alone, Campbell said, his sourcing costs have spiked about 15 percent. And with so many Chinese workers leaving the footwear industry for more lucrative opportunities, the country’s future is less than certain.

“The changes have been dramatic,” Campbell said. “I’ve been in China since 1978. I saw them go from the primitive type of shoemaking in old government-owned factories, to the Taiwanese joint ventures, to the most modern and sophisticated [facilities]. Everything has changed.”

The situation has created a new urgency for Campbell to find factories within the interior of China, as well as in other countries, adding to his firm’s current base of 80 facilities in China, Vietnam, Cambodia and Indonesia.

Campbell said he is enthusiastic about what he has seen from Ethiopia, for one. “We are in the process of investigating and testing there,” he said. “We will be placing our first order soon. My attitude is, it won’t be a big order. It will be, ‘When you can ship it, you let me know.’ We’re not going to sell [the product] in advance. With the tanneries they have available and the World Bank behind them, it’s a good opportunity.”

Moving to a new location isn’t always a cure-all, however, Campbell said. Rarely do new factories offer the same efficiency as the more proven ones. And even at established facilities, turnover is often very high, causing a considerable drain on shoemaking expertise.

“We have one factory in Vietnam that has about 12,000 people, and they’ll change over 10,000 people in one year,” Campbell said. “When you hire a new stitching person, their per-hour and per-day [output] is probably half that of the person who left.”

That has made having a diversified sourcing base even more critical, Campbell said. In fact, he has made it a standing order among his sales force to continually seek out new facilities while out in the market. “I constantly tell our people, ‘When you’re in an area where we do business and you hear of a factory, go and see what they’re making, see if they’re qualified,'” he said. “It’s important.”

Campbell also makes visiting new factories his own personal mission. Earlier this month, he embarked on a trip to India, China and Europe, and a fair amount of his time was spent scoping out potential sourcing spots. “I will visit at least 10 factories,” he said, adding that most are unfamiliar. “I don’t need to see our good factories that we’ve been doing business with for a long time. I need to see new ones.”

This close attention to activity in the sourcing sector has helped BBC differentiate itself from its competitors, because Campbell has developed a factory base that can produce virtually any type of shoe, and deliver on time — key to the company’s private-label business. “We do injection [molding], we do cold cement, we do vulcanized,” said Campbell. “We do every kind of construction for children’s footwear that there is, [and] we’re very good at what we do. [Customers] choose us because we communicate well and deliver what they want.”

Still, there will be no rest for Campbell and his sourcing team, as competition for factory space at the better facilities continues to increase. “It’s much more difficult today than it used to be,” Campbell said. “It was pretty easy 10 years ago. Today, it’s much more competitive.”

Beyond the many U.S.-based brands vying for production facilities, Campbell said another growing challenge is Chinese brands that manufacture and sell domestically. “They want to make the shoes there and sell them there, and the factories can make more money doing it that way,” he said.

Nonetheless, China remains the most efficient and cheapest place to make shoes, according to Campbell, although he will continue to actively explore any new opportunity that emerges, or that he can uncover.

“We’re open to anything that will help our customer,” he said. “Where we can better service our customer with quality [goods], we’re going to do it.”

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