The Australian fashion industry has changed drastically over the past two decades due to reduction in tariff levels and increase in costs of domestic production. Crippling overheads have led to many big name Australian labels like Collette Dinnigan, Lisa Ho and Alannah Hill to cave in. In an effort to mitigate the issues faced by Australia’s fashion industry, Dorry Kordahi, Managing Director of DKM Blue, decided to leverage his business in China to create a manufacturing plant which will focus solely on smaller orders – as little as 50 units at a time.
‘I bucked the trend early in my career and have had my own very successful, centralised sourcing and quality control office in Shanghai for thirteen years. This makes DKM Blue more efficient and cost-effective than most of our competitors,” says Kordahi.
“However, we still face the problem that Australian companies are often dwarfed by the volume of business placed by the American and European giants. To give you an example, Zara manufactures some 450 million garments a year in China. That is over 1.2 million a day!’.
Kordahi purchased Ambassador Clothing – which owns retail labels Zambelli and Nic Green – last year, after the Australian brands were forced to shut down their 15 retail stores due to excessive costs in Australia.
DKM Blue’s new initiative will mean that they can provide a niche service to the Zambelli and Nic Green labels and keep relevant in today’s fast-changing market without having to hold excessive stock levels which China demands.
They can also offer their corporate customers flexible options for their styling requirements specifically when combined with the volume capabilities they already have in place with strategic manufacturing partners both in China and Vietnam. This will enable clients to order between 50 to 500 items and then re-order when they require – allowing the chain of supply and demand to be more cost-effective.
“Running any business well these days is about keeping costs, particularly asset costs such as inventory, as low as possible. At the moment, companies may be holding an inventory of more than a thousand units, but in all the wrong sizes. They may have $50,000 tied up and will be facing the reality of having to spend twice that to balance their stock inventory,” says Kordahi.
“With my new system we can reduce that cost by about 80 percent. I think anyone in business would agree that is a very significant saving.”
“I have always maintained it is much better to work smarter, not harder. By applying this logic on behalf of my customers, I am making their investment work smarter not harder. Ultimately this will make what has fast become a moribund local industry a much livelier and effective place.”