Are your factories letting you down?

In the fashion industry, no matter what stage your brand is in, the relationships you build with your manufacturers are crucial to your success. Weaknesses in your supply chain or deficiencies in the manufacture of your products can not only cost money, they can also cost your reputation and significantly impact the manner in which your brand is perceived.

That’s why we’ve developed some practical tips and flags on the things you should be thinking about, to help best secure your supply chain, safeguard the development of a quality product, and maintain these crucial relationships.

1. Get it in writing! Clarity is key

The most important place to start is getting your manufacturing agreements in writing, drafted by a lawyer who really understands your business and industry. A well-drafted manufacturing agreement will outline the obligations of your manufacturer, and ensure you maintain ownership over the intellectual property comprised in your products. It will also outline the additional controls that need to be consistently built into the manufacturing process to ensure quality considerations are maintained, and ultimately your brand is being applied to a product that aligns with its commercial price point and values.

This is an important “Step 1” given clarity is crucial to the success of any relationship. However, we would also recommend that the below considerations each be incorporated into your agreement, either immediately or over time.

2. Dealing with parallel importation

If you have both local and international suppliers, an important consideration as you continue to grow is how you’ll manage parallel importation. Using overseas manufacturers for your ventures abroad can save you a lot of money. However, it may also create problems if i.e. your Chinese manufacturer begins selling your products on eBay to Australians: this might actually undercut opportunities in your own local market.

To avoid this, your manufacturing agreement should clearly stipulate limited approval around the development of products and application of your brand. It should also clearly stipulate that any goods produced cannot be exported back to your home country or other countries where they would compete with your own goods in that particular marketplace, unless approved or facilitated by you.

3. Managing excess product, defective products, or samples

Many brand owners preclude their products from being advertised and offered for sale through unauthorised or approved channels, ultimately ensuring brand exclusivity and maintenance of reputation. This is an important control that influences price point. An extension of this position is including clauses in your contracts that control what happens to excess product, defective products or samples, to ensure only high-quality product makes its way onto the market and facilitates the growth of your reputation.

For example, some brands include “more or less” clauses allowing 5-10% over shipment which you will pay for, and clauses requiring the factory to destroy anything in excess. You may also request certain procedures for defective products and old samples (i.e. major labels like LVMH will destroy any defective products). However, if you are concerned about wastage and the environmental impact of doing this, you may also choose to adopt other measures like modifying and selling/donating the products without your brand name attached.

4. Engaging sub-contractors

If you want total control and visibility over your supply chain and those that are granted access to the details of your product and brand (including specifications and formulation details) you may wish to include restrictions on whether your factories are allowed to engage sub-contractors, or stipulations around how and when sub-contractors can be engaged. This may relate to your engagement as a whole, or alternatively in relation to the manufacture of certain products with a specific formulation, such as shoes or accessories which supplement an apparel range and require a differing manufacture process given differences in make-up.

For large companies, this is especially important, since the modern slavery reporting requirements now at play in the UK, and soon to be introduced in Australia, will require you to report ethical work practices all along your supply chain, including sub-contractors.

5. Brand at large by putting your logo on absolutely everything

Trade marks are crucial to achieving brand protection and also offer a clear avenue for control and enforcement, particularly when things go south. As a clear identifier of the brand owner and genuine products produced under the brand, their power in controlling production and associated relationships should not be discounted.

For this reason, it’s common for major fashion brands to supplement legal controls with practical measures, and one way you can make your intellectual property protection work harder is by customising accessories and individual elements – labels, buttons, zips, and such – with the brand logo. While you may need to order these separately and supply them to your factory in order to achieve the outcome, adopting this process ensures that other factories are unable to legitimately copy the key identifiers of your brand, and all associated manufacturing agreements may reference and leverage the brand’s registered trade mark rights in the process.

Some brands will even take this a step further by including detailed guidelines or rules around application of the trade mark, to aid the detection of counterfeit or “fake” knock-off products, whereby the trade mark has not be applied in accordance with the stipulated rules. This information can then be supplied to Australian Customs & Border Protection Service (and reflective international organisations) to aid the identification and seizure of infringing products at the border, ultimately ensuring they do not make their way onto the marketplace.

For more information on how contractual and intellectual property considerations can be utilised to benefit your business and the manufacture of products sold under your brand, please contact us.