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L Brands diversifies supply chain

L Brands has been focused to diversify its supply chain over the past five years. The company has been in negotiations with its Chinese suppliers to take costs out of the production chain to offset the increases but that also means leaving a little bit on the table so vendors don’t end up seeing their businesses fail.

By the end of 2019, China is expected to represent less than 20 per cent of the brand’s total production. L Brands’ move to other locales is less about tariffs and more about good business practices. The company had been moving production outside China even before the tariffs, putting it in a diversified supply chain position ahead of the hikes. A few years back, 84 per cent of its bra pads were made in China. Most of that is now in Vietnam and Sri Lanka. The lingerie group still works with Chinese vendors, but now less than five per cent of bras are made in China.

The problem with China is not where the product is being made, but also where the raw materials come from. For L Brands’ beauty offerings, 90 per cent of the beauty products are made in the US but all the chemicals used are made in China.