Wool Market Procurement Intelligence Report

The market for Clothing and Textiles and its sub-segments such as Wool are at an interesting intersection. Buyers are moving towards longer contract durations with suppliers of Wool to benefit from value-based discounts, integrated products and services, lower renewal cost and lesser expenses on contracting activities.

The global industry has seen a gradual increase in labor cost due to several factors, such as shortage of a trained workforce, increase in minimum wages, regulations around employee benefits and declining appeal for what have been traditionally called unskilled jobs. As the employee expenses increase, suppliers are compelled to pass some of this increase to their buyers by charging higher prices.

Several factors in the value chain of Wool, such as labor cost, logistics, and energy costs are driving up the procurement costs. Additionally, engagement of suppliers who are still operating with outdated assets, technologies and processes is also increasing the cost for buyers.

Trends like these and many others discussed in this report are necessitating a relook at the way Wool is procured and the procurement cost saving opportunities that exist.

Sometimes, procurement functions are unable to timely alter their practices while responding to market conditions. Industry experts acknowledge that periodically reviewing procurement best practices and adopting learnings from across procurement categories can help procurement teams respond to market needs in a more agile way. This report combines our experience of other categories with Wool procurement insights and hand picks best practices that can work for category managers delving in this market.

For example, Suppliers that have an in-house maintenance and support team should be preferred. This will ensure that maintenance and aftersales support will be provided to the buyer at reduced rates by service providers.

Buyers should proactively manage relations with Wool suppliers and have pre-determined intervention criteria for onboarding or replacing a supplier, changing specifications or terms and conditions.

While competitive bidding as a cost optimization tool is extremely potent but should be carefully deployed only when there is no significant differentiation among Wool suppliers.

Wool procurement managers also need to proactively identify and mitigate potential risks that can arise in the supply chain or contracts for Wool procurement. Some examples include: