For the very first time this weekend, when I was getting dressed in the morning, I thought to myself: where did my shirt come from?  Where did the materials come from to make my pants?  Were the people that manufactured my clothes fairly treated?

I had never really thought much about this topic before, but I now can’t help myself.  Am I really being a responsible citizen, or am I using my consumer purchases to promote the poor treatment of animals, unsustainable farming practices, and unsafe working conditions?

These new thoughts all started when I purchased a sweater from Teel Lidow – founder of Boerum Apparel.  Teel, who happens to be the brother of one of my colleagues, sells clothing under a now-familiar mission: sustainable and fair practices.  However, Teel goes one step further than most and actually shows his full supply chain – complete with videos, pictures and descriptions of the exact locations where his clothes are produced.  It’s obvious from his website that he has actually visited the physical location of each step along his supply chain and that his business is having a positive impact on everyone (including all the animals) involved.

Teel’s business represents more than just a responsible clothing brand; it represents a new form of entrepreneurship that goes around traditionally established supply chains to produce higher quality, more cost-effective products.

Years ago, retail supply chains were bloated with different companies playing the roles of producer, distributor, wholesaler, and retailer.  Each entity took a cut of the end profits and provided a different value-add along the way – mostly related to the transportation and warehousing of the goods.  Sometime in the last 30 years, with the reduction of shipping costs and rise of digital communication, distributors and wholesalers started to blend together into a single entity.  The combination of distributors and wholesalers left a supply chain with only two intermediaries separating producers and consumers.  Teel’s business represents the natural conclusion of that trend by eliminating the wholesaler/distributor entity all together, leaving only a single company separating the producer and consumer.

The reduction of intermediaries not only gives Teel better quality and lower cost than many of his competitors, but it also gives him more control over the production of his product.  Control, which he uses to make sure his products do no harm to animals or humans along the way.

Also – I have to mention that the sweater I purchased from Teel is the single highest quality, softest wool sweater I’ve ever worn.  I just wore it all weekend in Burlington Vermont in 40-50 degree weather and it kept me warm all weekend.

Overall, it’s a great business and a really awesome idea.

Boerum Apparel
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  • I’m not an expert on supply chain management, but I believe the reduction in the supply change was primarily cost driven – and I meant inventory costs, not markup costs (e.g. every middleman marks the price up).

    Improved technology – starting with fax machines and computers – provided accurate sales and inventory numbers, and enabld more sophisticated demand prediction. Thus the shift to JIT (Just In Time) inventory.

    The old supply chain was an efficient solution to a real problem – I wouldn’t call it “bloated” – because the problem was managing supply given uncertainty, and the solution was buffering inventory at each level of the supply chain.

    But holding inventory is (very) expensive, so as soon as technology enabled a different solution, companies (particularly large, cost-conscious companies – WalMart being the best example, given how aggressive it was at supply chain management) shifted to the lower-cost model.

    The latest wave of change is kind of interesting. Before the 1990s, most factories was constructed by large companies and run exclusively for their benefit. But the outsourcing rush in the ’90s led to the development of vendors offering outsourcing services. In the beginning, they were small; but over the past 20 years, they’ve gotten (a) really big, and (b) they have excess manufacturing capacity. In any capacity-limited system, you build to accommodate peak demand – so for the rest of the year, it’s sitting idle.

    Selling excess manufacturing allows yet another change – a company can submit orders for products (for as little as $10k (!)) and these manufacturing companies will happily produce and ship the product over. These days, there’s at least one nifty website where manufacturing companies can list capabilities, min. order quantity, and pricing – you can go and browse it:

    Opening up manufacturing is great – and in corollary, the lowered search and discovery costs the internet enables make it (much) easier to select and transact with suppliers. (Though you would likely be shocked and horrified at how many suppliers aren’t online, and how manual and person-based the process is).

    So you get mini companies that build their very small supply chain, which is only possible because of the significant cost reduction in running a supply chain.

    You could consider the earlier solution (large companies) as being a rational solution to the much larger costs associated with production and distribution. Since technology has made the average cost approach the marginal cost, many smaller companies take the place of one larger company.

    P.S. How do companies that create products that are white-labeled by their customers fit into your model?