Cels Milestone: A Sourcing Guide

For Cels Enterprises Inc., sourcing is a global pursuit.

Over the years, the company has established an international network of factories in China, as well as Brazil, Chile, Holland, India, Eastern Europe, Mexico and Portugal — a strategy that has helped the firm adjust as sourcing costs have spiked in China.

“We pursue value so we go where we can find it,” said VP of sourcing Christine Sung. “Our sourcing strategy is really global. China is not the only place to make shoes.”

Sung has seen footwear production change quite a bit. When she started at Cels in 1984, the firm produced most of its shoes in Taiwan, and had just begun experimenting with factories in mainland China. Now, Sung travels the globe in search of facilities that can add value to the company’s products. “We source in so many places because it gives us a chance to react to changes that take place in the market very quickly,” she said. “And every place we look there is opportunity.”

But China remains Cels’ biggest producer, with about 65 percent of its merchandise made there. And sourcing costs in the country have risen 8 percent to 12 percent over the past year, even as the company has tried to mitigate the increases.

“China is changing every year,” said Sung. “We have experienced [rising costs] before, but not to this scale, and we don’t think it will get better.”

That new reality is forcing the firm to look closer at its operations to exploit any efficiencies. For example, Sung said Cels spends more time planning production runs and coordinating logistics, and is timing its orders to get the best price.

Still, she said, the company is looking at the big picture. “I don’t negotiate on price alone because that is just one part of value,” said Sung. “Workmanship is important. Where the factory gets the components and materials is also important. Sometimes you can save 50 cents on a shoe, but in the long run, it will cost you more because the value isn’t there.”

To that end, Cels is working to educate factory owners at its research-and-development facility in Foshan, China, where it lets them work with new technologies and machinery that can speed up the process and reduce waste.

Sung said China will most likely retain its title as the world’s largest shoe producer for the near future, and U.S. firms will need to adjust. “When I go there, I spend as much time as I can at the factories to understand what problems they face … and explain to them our challenges so they can help us,” she said. “And that helps us both.”

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