After decades of rampant globalisation which decimated the local manufacturing sectors in many countries, including Australia, the chief executive of Levi’s Chip Bergh has declared globalisation “dead”.
In a report in the www.telegraph.co.uk, Bergh cited months of supply chain chaos and rising freight costs as well as geopolitical forces, as drivers that are pressuring the company to adapt rapidly to secure its future.
Bergh told The Telegraph, “I think globalisation is dead, and this trend where this [apparel] industry has habitually chased the lowest-cost-manufacturing base around the world over the last couple of centuries, I think it’s coming to an end.”
The original Levi Strauss was a Bavarian immigrant who moved to California and went into business in 1853. In the early 2000s Levi’s moved production from America to the Far East but Bergh recently told the World Retail Congress in Rome: “The name of the game today from a business standpoint is supply chain resilience and agility.
“When you are missing sales because a ship is parked outside and can’t get to the port and unload containers, and you’re leaving money on the table because the consumer can’t buy the product, that’s a big business issue.”
He said that rising cost pressures and inflation were driven by the pandemic, supply chain bottlenecks and shortages of labour in some parts of the world.
“We’ve now realised that [goods] being produced in the lowest-cost countries and putting product on a boat and shipping it to the other side of the world and not getting it to the shelves on time has a cost to it. We’re going to see more manufacturing shifting closer to market because of the importance of that agility and responsiveness and having confidence that the product is going to be on the shelf in store when you need it to be.”
Digitalise or die
According to Bergh companies that failed to adopt “digitisation” as part of their modus operandi post-pandemic would “die”.
“If you are not a tech company today, you are going to be dead in 10 years time. We are an apparel company, but we are quickly becoming a tech company. The rapid move to digitisation is more than e-commerce and building out those digital capabilities for the consumer.
“There’s so much of our business that can be digitised - everything from how we design products to how we manage getting products to store,” he said.