Upstream Focus is Sourcing Journal’s series of conversations with suppliers, associations and sourcing professionals to get their insights on the state of sourcing, innovations in manufacturing and how to improve operations. In this Q&A, Saila Kim, executive vice president of corporate strategy and management department at South Korea-based manufacturer Sae-A Trading, shares how the company is leveraging technology to streamline processes and concerns for Haiti employees and operations amid violence.
Name: Saila Kim
Title: Executive vice president of corporate strategy and management department
Company: Sae-A Trading
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What’s the number one question you get from your clients now that was never really a consideration before?
The number one question we receive from clients now revolves around our future investments, industry forecasts and the working environment of our employees. Over the past few years, with severe climate change becoming a central concern, there has been a notable shift in both the retail and manufacturing industries toward ESG initiatives.
Previously, the primary focus was on the financial business aspect and improving margins. However, with growing awareness of environmental issues such as air pollution, non-degradable waste and erratic weather patterns, there has been a collective awakening to the urgency of addressing these challenges. Likewise, our clients are now actively developing their ESG strategies and seek our involvement in transitioning from traditional manufacturing practices to digitally modernized processes.
How do you evaluate potential brand and retail partners? What do you look for in a customer now, compared to a few years ago?
We prioritize two key factors: ethics and financial health.
Ethics have always been fundamental to Sae-A’s values, but their importance has heightened in recent years, particularly in the wake of the pandemic-induced disruptions. Companies that prioritize ethics demonstrate a commitment to responsible business practices, which is crucial in an environment where uncertainty and risk have increased. Ethical partners are more likely to uphold their commitments and take full responsibility in our business dealings, especially in a landscape where cancellations and conservative buying behaviors have become more prevalent.
Financially robust partners have greater capacity for investment and are more aligned with our focus on digitalization and ESG initiatives.
What is the main thing brands and retailers could do (or stop doing) right now that would immediately improve product development?
Embrace digitalization, particularly the utilization of 3D technology. 3D programs have advanced significantly, enabling brands to visualize not only the style but also the drape and texture of fabrics with accuracy. This technology can be initiated from the development stage through fit and technical design. Moreover, by using 3D programs and digitalization, we can significantly reduce fabric waste made from physical samples and minimize carbon emissions associated with logistics, thereby fulfilling our environmental responsibilities within the ESG framework.
How are you adapting your operations to support quick-turn, small run orders?
While our facilities have traditionally been optimized for long-run orders, we have recognized the need to pivot in response to evolving market demands. To accommodate quick-turn, small run orders, we have implemented several adaptations in our operations so they can easily transition between order types.
Additionally, by implementing manufacturing execution systems (MES), we can collect and analyze data from our facilities in real time, allowing us to identify which factories are capable of fulfilling quick-turn orders promptly.
In this challenging retail environment, how are you working with clients to balance sustainability needs with cost efficiency?
The entire industry is increasingly prioritizing sustainable raw materials and packaging, and we have aligned our efforts accordingly. Today, numerous eco-friendly fabrics and accessories, such as recycled poly and hang tags, are available and used regularly, thus making these sustainable alternatives more affordable compared to the past.
In terms of packaging, we reduced unnecessary use of polybag and tapes, opting instead for recycled materials. Additionally, by leveraging digital tools throughout the production cycle and implementing traceability standards, we can better gather accurate data and identify areas for optimization to achieve operation efficiency.
When it comes to quality and compliance, what are the biggest challenges?
From a quality perspective, the greatest challenge lies in meeting both the clients’ stringent quality standards and the evolving needs of customers for real-time production adjustments. In today’s competitive market, where customers have many options for quality products at competitive prices, quality is no longer optional but imperative.
Ensuring social compliance in a multinational manufacturing corporation with a workforce of tens of thousands of workers in today’s diverse and dynamic landscape is no easy task. However, through a robust global organization and tight collaboration with our supply chain partners, Sae-A diligently practices oversight to prevent any violations that could harm the company’s and our trusted business partners’ reputations. Despite multiple hurdles and heightened scrutiny as a leader in the industry, our commitment remains firm toward social compliance. Another aspect when we run into challenges is taking proactive measures and engaging in transparent dialogue with stakeholders to address issues and ensure alignment with buyers, as well as local and international standards.
Which technology or digital solution has made the most difference in your operations this past year?
We have streamlined operations by utilizing artificial intelligence (AI) and robotic process automation (RPA) to consolidate disparate enormous data sets such as buyers’ purchase orders and suppliers’ import/export documentation, significantly reducing user work hours. In response to the contactless era, we have successfully implemented a system that allows for the search and verification of 3D-modeled products from anywhere within the company, without the need for specialized tools.
Moreover, we have established an advanced planning system (APS) to efficiently manage over 1,000 global production lines, leveraging the resulting supplementary data. We have also completed the development of a traceability system to strengthen the transparent management of the origins of yarns and fabrics. All of these adaptions in technology and digitalizing our work process help to reduce waste and carbon emissions, bringing us closer to our sustainability goal that we have committed to in the Science Based Targets initiative.
What is the best decision your company has made in the last year?
One of them was our proactive investment decision to establish a fabric mill in Central America and expansion to our third spinning mill in Costa Rica. Despite a tough business environment, including a slowdown in orders due to high inventory levels stemming from the pandemic, our company recognized the need to adapt and innovate. In response to demands for a flexible speed-to-market model and a need for diversified fabric options, particularly in the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) region, we decided to invest in an in-region fabric mill.
By strategically locating the fabric mill in the CAFTA-DR area, we aimed to provide our clients with a vertically integrated production solution that offers speed, diversified fabric and duty benefits. This decision not only aligns with our commitment to meeting clients’ needs, but also opens up new opportunities for growth and expansion in our business.
What keeps you up at night?
In a challenging environment we have never experienced before, there are so many things that keep me up at night. However, lately, one of our key production bases, Haiti, has emerged as a significant concern. Over a decade ago, we made a substantial investment in the Caracol Industrial Park, in collaboration with the U.S. and Haitian governments.
Our goal was to create jobs and help the region achieve economic independence and prosperity. We have also built schools nearby so the students could receive first-class education and grow to become leaders of their country. Unfortunately, Haiti is currently facing political instability and escalating crime rates, and as such, our business there has become exceedingly challenging, with our workers exposed to the dangers in this country.
I am deeply concerned about our operations and employees in Haiti, as well as the well-being and safety of everyone affected by the difficult situation there.
What makes you most optimistic?
The recent trend of business improvement as we entered 2024. I am also optimistic about new opportunities and how Sae-A can emerge and excel in our unique way, which truly sets us apart in this ever-changing landscape.
