Latest / The Interline Podcast / Why Supply Chains Matter More Than Ever
Transcript
- Speaker 2: believe innovation and sustainability originate in the supply chain. If you get your suppliers to do things in ways which they're engaged with, you will get miracles executed. You can make the most innovative, amazing product as long as you have them engaged and as partners. Speaker 1: Hey, welcome back to the Interline Podcast. When you think about the most innovative products, your mind probably goes to their design elements or something that seems like it came straight out of R &D fully formed. It probably doesn't go to the supply chain for those products because generally speaking, we give pretty short shrift to the importance of upstream actors in not just executing on breakthroughs, but influencing them to begin with. With so much emphasis being placed in 2026 on unison innovation, profitability, risk exposure, traceability and disclosure, all things that are heavily reliant on upstream infrastructure and partnerships, the supply chain probably should be a much bigger fixture in your thinking. So today I'm talking to someone who spent basically their entire career doing that kind of thinking, Kate Padgett-Koe. Kate is currently the chief supply chain officer at Squat Wolf. and she's also a supply chain advisor to other brands, something that draws on her past experience as a top flight sourcing executive. I wanted to talk to Kate not just because I think the industry, and I include us at the Interline in that, under recognizes the importance of upstream technology, but because this year feels very much like a deepening of the realization that what comes out at the end of the supply chain requires us to properly understand and really engage with what happens inside it. Okay, Kate Pedriko, welcome to the Interline Podcast. Speaker 2: Thank you for having me. Speaker 1: Not at all. Before we get underway, I wanted to ask you a little bit about what your day-to-day looks like at the moment, what you're working on, and also a little bit about the history that led you there, because you have a multifaceted role at the minute and you've definitely had a multifaceted history, even if a lot of it is very focused on supply chain. So bring me and the listeners up to speed. Speaker 2: Sure. So currently I'm working as Chief Supply Chain Officer for Squat Wolf and a strategic advisor. My day-to-day is I'm working with the brand on their vision and how to execute that through product in the supply chain. And it's, you know, it's a relatively hands-on day-to-day work right now. I'm involved in more of the looking into the future and how we can execute new concepts, new materials, new ways of working and new innovations, particularly for the brand. In addition, I work with other brands. I am a board member with the World Collective, so a lot around sustainability and again, materials and innovations. I advise other manufacturers and brands, so pretty... busy and active and enjoying it. Speaker 1: Excellent. And squat wolf, just for any listeners who are not familiar with them, are a gym wear and active wear band, correct? Speaker 2: It's the first to buy a Middle East native activewear brand. Speaker 1: Very interesting space, but one that is pretty, pretty heavily defined by product innovation, as you put it. So good role to be in. Okay. So let's get straight to maybe the biggest question of all of this. So as somebody who's dedicated their career to, to them, why are supply chains so important? And maybe more pertinently, given everything that's happening around us, as we record the show, which is definitely not taking place at a time of peak kind of. Global upstream stability, why do they matter so much now? Speaker 2: a really, really good question. I think I am very aware that people are not that aware of supply chains until they can't get something or things go wrong. ⁓ I, I actually trained as a designer. I, when I graduated, I had a hand knitwear company, designer knitwear company selling all over the world. expensive, beautifully designed, hand knitted sweaters from the UK. My first experience of supply chain was Gulf War, couldn't get the cotton to fulfill my orders. That's when I really got to see, wow, the impact of materials and labor is so huge to anything. I moved to Asia quite young and I've been involved in the supply chain. think why I got so interested is I really, I'm, very adventurous by nature. like to go to new places and meet people and work with them. So for me, that was always kind of the draw. And I love to solve problems. find supply chains really interesting because it actually touches many levels of people and their lives. And to answer your Other question, why are they so important now, especially in a time of instability? At any time where there's a lot of compromised people in the world, it's so easy for them to be taken advantage of or situations to be, you know, kind of exploited. I'm a big, you know, I have a big commitment that people buy product, which is made well by people who are treated well. And right now we see kind of a whole transformation in what is happening, whether that, you you could say that's a good transformation or not so good, but it's really changing the way that we have sourced for a big period of time. Speaker 1: Yep. Yeah. And I want to get into the specifics of how the composition of the sourcing base and the way that we frame sourcing is changing. But I think you said an important thing there, which is people sort of give short shrift to the importance and the impact of supply chains. And I think kind of anchored to that is the idea that a lot of people that I talk to, even in roles that I would expect to have extremely granular understanding of what happens upstream. There are people that who treat the supply chain as kind of a black box. The idea that you have manufacturing capacity, can turn, material supply, you can turn, and those things will happen. And as long as they happen on time and to cost, that's what matters. And that's, that's kind of the extent of it. And getting into what you're talking about, fair current, fair and equitable compensation alongside all of that demands that you have a different framing for your supply chain. demands that you see it as something that you need full visibility into and as much control over as possible. Have you seen that framing changing in the way that you advise brands, the brands that you advise and the brands that you deal with, where people are willing to engage with the supply chain less as like a black box monolith and more as something that they need more granular control and visibility in? Speaker 2: Yes and no. I like your analogy of the black box. think having worked in this area for some time, it's kind of the dirty side of things or it's seen as that. Right? It's like, ⁓ my God, I don't want to touch that. Things can go wrong there so easily. And when they go wrong, they can go very badly wrong. There's also a lot of kind of power and life in sourcing supply chain. You can do things really well and things can, you know, if, for me, it's all about integrity. It's all about if you do things the way you say you're going to do them and you do them in that way and you operate with integrity with your suppliers, things will happen well. And if they're not working, you see it very clearly and you can get to see where, you know, kind of where things aren't working and you can get to work on that. But it takes some commitment, it takes a lot of focus, and it takes being able to build very strong, trusting relationships, both upstream and downstream. Speaker 1: And I want to get into the relationship side of stuff in a minute as well. Tied to that sort of framing of the supply chain as a black box, which I can't take any credit for. Somebody somewhere else said that and I've picked up on it. But there's another kind of framing device or argument maybe that I hear sometimes, which is that pursuing supply chain excellence makes companies into more efficient versions of themselves, but it also shifts their emphasis away from creativity and innovation and into execution. to an extent where innovation then suffers. Now, maybe the biggest best known example of this from a completely different sector is Apple, right? You have a company that was once known for pioneering new categories under a leader who placed a lot of emphasis on design and creativity and innovation. And that company is now known for being one of the biggest companies in the world by market cap, which is clearly a very good thing, but also being a much more kind of staid. and predictable and less disruptive version of his former self under a new leader who's kind of pejoratively known as Mr. Supply Chain. There's a tension there that I think you also see in fashion and in footwear brands where brands get very good at operations and at ringing maximum value and profitability out of existing categories and products and supply chain excellence is a big piece of that. But they then fall into a kind of iteration trap, where you just, they're riffing on existing styles and newness isn't there and innovation suffers. I luxury is maybe the only segment that's immune to it, but I'm keen to get your take on that. Do you, do you think there is a real tension there? Do you think it's hard to balance optimizing the supply chain, optimizing upstream with products and business model innovation? Or do you think that's a fake tension? Do those two things not actually exist in opposition to one another? Speaker 2: think that there are examples of that for sure. But I would question whether it's coming from supply chain or it's coming from shareholder requirement or coming from that level. at one point when Apple were considered the most innovative company, we knew I would have that their supply chain also worked. I think a lot of this is, you know, it's very easy to take focus away from innovation and great product, but that isn't a supply chain issue. What I would say is a good balance and I'm literally grabbing this out of the air as we speak, is you have your supply chain running really well and you have a place in that which allows for innovation. And the other probably bit controversial thing I'll say, controversial when you're talking about supply chains, not that controversial, is I really believe innovation and sustainability originate in the supply chain. If you get your suppliers to do things in ways which they're engaged with, you will get miracles executed. You can make the most innovative, amazing product as long as you have them engaged and as partners. If your work is transactional and you're squeezing the last cent and everything is built on transactional relationships rather than partnerships, it's very different. Speaker 1: I would, yeah, and I don't see that as necessarily that controversial because you do have a lot of brands who will say they are design led. Fine. Right. You know, it's not incorrect to say that the seeds of creativity do take place in creative design. Those seeds only get nurtured and make it to market to the point where people can see them manifest as product innovation if they're producible, if they can be made, if they can be made in a way that is. that has great product outcomes at the end of it that is not just newness. And the only way to do that is by working with the people who are making it. Well, yeah, not fully, I'm on board with that. think, I think that's a good argument. Now you mentioned earlier kind of building the relationship building part of supply chains and you hinted at it again there, which is, know, you can have a transactional relationship or you can have a productive mutually beneficial collaborative one. There's a lot of attention at the moment being played to supply chain diversification. specifically as a response to risk. I'm, I'm sympathetic to that in the sense that risk exposure upstream can be extremely high depending on where you source and produce and whether the partnerships you have are with companies in regions that are prone to environmental disruption, geopolitical upheaval and so on. But I also struggle with it because it seems like essentially resetting the clock every time and potentially moving away from some of those well-oiled collaborative relationships and having to restart due diligence, system sharing, and so on every time. Now, I you're on record as saying that the first 90 days of any supply chain partnership are the most pivotal ones. Tell me why that's the case. Why do the first three months matter so much? And tell me whether you see having to repeat that 90 days over and over and over again as a lever to escape risk is worth it. It seems to me like there's this tension, this balance between escaping risk but also creating a fundamentally different type of risk by just running away all the time. Speaker 2: ⁓ Well, first of all, let's address the 90 days. The first 90 days, it's like a new relationship, right? Whether it's a friendship, a job, a romantic relationship, the first 90 days is when you do what? Get to know somebody, get to know how it's going to work, understand each other, lay whatever ground rules. So deepening that relationship over the first 90 days is critical. But I would say that only after that is when you actually get the benefit of any relationship, just as any relationship in life, right? So I do adhere to the last statement you made, which was, starting the 90 days all over again, just another risk. A bit more ⁓ kind of relevance to this question. It's also very much down to the type of business you're working with. So if you're working with a large brand or retailer where you have multi-country sourcing, you can build your supply chain in a very dynamic and long-term way. And you have partners that probably can activate things. If you're a smaller company, There's a lot of, there's number of different constraints on you. You may not be the size when you can suddenly, you know, shift all your production out of China or out of Turkey or out of Portugal. So the risk is something you have to live with. And as we experienced during the COVID pandemic, you never know what's coming. know, just money, if you still believe if you have good relationships, those relationships will carry a greater relevance during that time and they will probably go the extra mile in finding the difficulty. Speaker 1: Yeah. So on the flip side of diversification is the opposite. It's brands that are looking to deepen their existing supply chain relationships. In your experience, what are brands actually looking for from the upstream partners they want to grow their attachment for? What's the decision-making matrix that a brand, Squat Wolf, any of the other ones that you're dealing with or have dealt with in the past, what factors are they weighing into whether to deepen a relationship with a supplier or whether to move on? Because we don't talk about this nearly enough, from the other side, what are suppliers looking for in the long term from their kind of milestone customers and ongoing key accounts that make those key accounts worth maintaining and growing over time? Speaker 2: I'll answer the second question first. Suppliers, theirs is very easy. They're looking for growth. They're looking for an opportunity to be able to grow over time. they, of course, when you're running factories, you need consistent work so that your labor force is, you know, the only way they're going to be profitable. They're going to be able to keep. their business growing is by having really great partners who also have a growth trajectory and it aligns with what their direction is. For brands, it depends on who the brand is. If you were to say Shein, it's very different from if you were talking about Patagonia or any large strategic European customer, right? It's very different. If I look at Squat Wolf, it's a little bit different because I worked a lot on the supply chain from my own experience and what I believed would work. Of course, the founders and the team have been very instrumental in that as time has gone on, but they also were, you know, generous with their trust that I could build something. So my view was, We need to be able to provide flexibility, lower MOQs in some areas, good pricing, and very importantly, to deliver premium product in a timely manner, know, product which we really want to have, and that they can scale over time. know, trustworthy relationships, suppliers that are going to go the extra mile, that we can actually sleep at night. and not worry about any compliance or delivery issues. Speaker 1: Okay. That's broadly in line with what I would expect and that's a very helpful perspective. I recently interviewed a guy called Simon Platts, you may or may not know about the, oh, there you go. Fantastic. About the viability of domestic sourcing and production. We kind of zeroed in on here on the UK because he and I are both based here. But by extension, the same question applies to EU markets, US markets and so on. Anywhere you have a heavy consumption market, but not a lot of manufacturing left. is a location where you might be asking questions about the plausibility and the desirability of reshoring or nearshoring. Despite all of that though, offshore bulk production still seems to be the norm. I think you've said that there's no kind of right single solution when it comes to this. Do you believe the future then is a blend? Is it a blend of proximity and remote sourcing? Is that blend going to evolve over time? Give me your take on that. Speaker 2: I. I think that we've lost a lot of manufacturing in places like the UK and other parts of Europe, which is a shame in many ways. I just wonder, and the same with the US, how easy is it to go back and build those supply chains? I'd be all up for that. I think that would be fantastic. Other customers willing to pay the price. I do really stick with There's no one solution. And I could see myself having a brand where you did everything from the UK and you had it fully sourced and you showed your people that were making your product. Absolutely amazing, right? And then on the other hand, you can do the absolute opposite, which is you're buying from Bangladesh, nothing wrong with the product, but it's at a very different cost range and volume size. I think it's all down to the intention of the brand and what they want to accomplish from that. if it's, you know, it's, and if the CO is very important, then that's how you would build accordingly. Speaker 1: Yeah. And I think, you know, to your point earlier, I've had conversations with, um, with brand leaders in the last, in this season in particular about this. And as a domestic supplier, as a domestic producer, you don't have the thing that you just described before is essential, which is a reliable forward, predictable order book for these kinds of things, because it's not the norm. And what that means is that for brands, it becomes precarious. to start to think about doing those kinds of made in the UK collections, for instance, or made in France, if you're there, made in the US, because you just, you don't have the predictability and the reliability that that sourcing base really exists and that it's stable enough without your kind of, without you propping it up over time. It's, it's like, it's a chicken and egg sort of situation where you, you could see domestic production scaling back up, but it requires both state level sponsorship and. real commitment from brands who I don't think it's a slam dunk that they want to make that commitment. I think it's, I think it's understandable that they wouldn't, but for certain collections, for certain kind of areas of the business, you know, particular product categories or something, maybe it does. do have enjoyed the way New Balance have gone about this, where they have, you can get the same shoe made in the U S or made in the UK. It's not, not available across the range. It's a quite a small subcategory, a few, a few items and the price is significantly higher. Speaker 2: A few items. Speaker 1: for the made in the UK version. It might not be double, but it's close to it. And presumably that's a loss leader for them. Presumably it's something that is not, it's not going to drive a huge amount of business, but I do think it's a good kind of forward looking consumer facing example of the fact that if you want the same thing and you just want to change where the labor happens, there is a significant shift in the product position that has to come from that. Speaker 2: Yeah, for sure. I would say it's less about the brand, well, less about the brand deciding, I was going to say, but it's also the customer. What is the customer willing to pay? And we all know that there's all this data on, ⁓ this generation wants more sustainable product and will pay more, but the reality is somewhat different, right? And I would I mean, I have no issue buying things made in China, made in Bangladesh. It doesn't bother me. As long as the product is of a quality, I want to buy and wear. And I don't know. I'm not really clear. I don't have a full perspective on that right now. In the past I would have. know some people are kind of anti-China or whatever, but I think also last year, with all the disclosure of where luxury goods are made, it's changed people's perception. Speaker 1: Well, up to the minute, as we record this, news from last week, I think it was at Prado, the kind of investigation into their supply chain led them to part ways with hundreds of suppliers that represent a significant fraction of their sourcing base. I don't think it's as binary the way that people used to feel about it, which is that made in China is inherently poor quality or is inherently ⁓ kind of exploitative. Or at the very least that there's a false equivalence between the idea that doing it domestically is better somehow. Cause it doesn't seem to be the case. And I drive a Chinese car. Would that have been the case a decade ago? No. the landscape has definitely changed there. And I think that pulls some of the rug out from under the argument for domestic production, which is that what are the advantages? If the advantage is ethical and environmental in nature and you can substantiate it, great. If it's ethical, environmental in nature and you just assumed, you know, people will just kind of say, well, it must be better in that regard if it's made in the UK than if it's made in China. I just don't think that necessarily holds water. Speaker 2: No, I fully agree on that. And I've seen some very unsavory conditions in what you would consider on short markets. I've seen, you know, and I've also seen, if you go to China now, if you go and shop in first, second tier cities, what you see in from local fashion there is mind blowing for the cost. The quality for the cost is unbelievable. Yeah. Speaker 1: Which is true across a whole bunch of consumer product categories, not just fashion. So, okay, cool. The other area, coincidentally, while we're talking about China would be innovation and technology. So when we define technology at the Interline, we take it to mean software, hardware, material science, and process innovation. That's like our catchall definition. It's a very broad canvas, but those things all have something in common, which is they're cool to talk about in theory, but it's in the process of actual industrialization or operationalization, if that's a word, that they can actually start to deliver value. Now we talk to brands a lot about this and that usually means deploying software. It's a fairly predictable arc for software maturity and diffusion and adoption and uptake and so on. We don't get the opportunity nearly as often to ask about what it looks like to successfully roll out one or more of those pieces in the supply chain. Like actually where the rubber hits the road, where products are being made. How are you seeing that? How are you seeing the supply chain attitudes towards technology changing over time? Speaker 2: I think one of the things, and it may be a bit of an old subject, a lot of different things applied by lot of different brands is a challenge. Whether it's certifications, PLM systems, whatever it is. haven't seen, I mean, I've seen quite a bit of automation, but that's not coming from... that is not coming from brands, but it's coming more from innovative suppliers. Speaker 1: So you have, you kind of have, you have suppliers who are optimizing and employing technology for their own benefit, for their own bottom lines, for their own efficiency, because they, they have direct observability into the shop floor and they can say, as an operation can become better, more efficient if we, if we implement technology within our walls. Then you have what I would probably describe as like the shotgun sort of approach from brands where every brand is trying something different. Everybody is putting different asks upstream using different systems. And it's up to the suppliers to determine which of those are kind of ready for industrialization and which of those to embrace. And it's up to them to actually put some of these things into practice. Because if you're sharing live data as a brand with your suppliers using one BLM system, great. As a supplier, if you have four or five brand clients and each of them has a different approach to how they communicate. live product data and technical specifications. And each of them has a different supplier portal or live access to their PLM or what have you. don't know. It feels like technology is something that you would look at as a supplier in a positive light within your own walls where you control it. It's something you might also see a little bit as a burden when it's coming from outside from your customers. Speaker 2: I mean, think there's definite better ways to manage all of this. And particularly, you I think you probably know in China, there's so many of the Western and especially Google-based apps, which are just not easy to access. then, you know, we kind of, it's a little bit of a... expectation that they should do everything we tell them instead of actually how can we work together to make this more efficient for you too. And I think suppliers play a role in that also. They can come up with great ways to work together which are technology driven. Speaker 1: Yep. Okay. I think that, I think that's the right way to frame it. I think I like that. So you talk about getting supply chains future ready, that being kind of an operative principle. If I had to pin you down to a couple of things, two, three today, that it would take to achieve that status, thinking about who our listeners are, what would you say constitutes readiness? If I want to build a future ready supply chain, what are the non-negotiables? Speaker 2: ⁓ Shared alignment and vision with your key brand partners so that you're building whatever geographical or product driven, materials driven environment for them to scale and to build their own businesses. To look into any future market requirements such as DPP, sustainability requirements, any of those things to have that. kind of not coming like, ⁓ my God, but really to have done the work ahead of time. I think the leadership team being much less passive and willing to do what the brand asks of them, but for them to be coming with innovation, strategic approaches, new materials, and looking for how they can partner on a much, in other dimensions than just being passive and looking for POs and styles to develop. Speaker 1: Yep, I think that's right. And I think so from a supplier's point of view, there is an argument for investing in technology, not just for your own efficiency, but from a competitive perspective as well. Speaker 2: Yeah. Yeah. And in China now with this robots everywhere, it's only a matter of time. And you you referenced your Chinese car. It's only a matter of time before, before a lot of that becomes integrated. ⁓ and the supply chain becomes really technology driven. Speaker 1: Well, I think, I think, and again, this is probably my controversial take. I think over time, the importance of being a brand diminishes when the process innovation, the technological innovation is all coming from upstream instead of, instead of in brand HQ. When to me, my, perennial question, biggest question, dogging fashion over the next 10 year period is. If there's a lot of automation happening in design or a lot of kind of generative, the explosion of generative AI and inspiration, and then you have huge manufacturing bases like China that are dramatically further ahead than consumption markets when it comes to the adoption of technology and heavy machinery and places like that. What are you doing in the middle? You're curating a creative output and mapping that to a partner who's then going to figure out the... mechanics of delivering on it in an innovative way, the brand in the middle gets squeezed. And that for me, I don't have an answer to what happens there, but it feels like it's a very different script from the idea that all the cool stuff happens at brand HQ and you then look over the parapet and say, which of these islands can I send this order to and get it back quickly at cost and so on. It's a very different attitude to actually be on the parapet. is where a lot of the cool stuff is actually happening. It's almost a reverse of the sourcing kind of paradigm that we've had for the past few decades. Yeah, I would agree. And I'm on record with this one as saying, Shein and Timu are unsavory business models built on top of really good process and technical foundations. And you can take the same foundations and put a more savory business model on top of it. that feels inevitable. That's a good optimistic outlook. Finally, because we've kind of looked at this obliquely, we haven't tackled it head on, what's your outlook on the near term impact of tariffs and other kind of geopolitical disruption to a lot of this? Cause that feels like the one thing that could potentially undermine some of what we've just talked about. Are we staying in an era that's defined by just a fundamental inability to guess what's around the corner, or do you think some measure of supply chain upstream stability is going to return? Yeah, I think that's a good point to, to, to end on for us. Cause it brings together a couple of things that we've, that we've talked about, is the importance of understanding the supply chain in more detail. It touches on all the externalities that are going to affect that. think, guess the key takeaway for me, for anybody listening to this is that whatever horizon you look forward at, you need to have a pretty robust, upstream infrastructure to be able to cope with it. because the shape of that disruption is unknowable, but it seems inevitable that it's coming. Well, that keeps me in a job for the time being anyway, and probably you as well. Kate, thank you so much for your time today. Thank you so much. appreciated this conversation. hope to have you back at some point in the future. Best of luck with all of the work you're doing with Squat Wolf and other brands. right. Thank you. And that's the end of my chat with Kate. Hopefully it's left you inspired to look in a bit more detail upstream, or it's given you some validation if that's already a cornerstone of the way you work. We'll be going all the way back downstream in the coming weeks and then probably back up again. we like to try and cover the whole product journey here. Finally, I want to leave you with a reminder to get in touch with me via LinkedIn. We will have a dedicated podcast mailbox incoming. It's not ready just yet. If you want to ask any technology focused or tech adjacent questions and we're going to start airing them and trying to answer them as part of future episodes. For now though, thanks for listening and I'll talk to you again soon.