A new supply chain model is set to provide a multimillion-dollar boost to New Zealand’s wool product exports.
The hybrid supply chain developed by carpet manufacturer Bremworth following Cyclone Gabrielle will ensure the company’s residential supply chain is insulated from future events that have the potential to disrupt operations.
It will also allow the company to enter the high-volume commercial export market, Bremworth chief executive Greg Smith said.
The hybrid supply model is complementary to existing operations and will allow Bremworth to source from both local and offshore suppliers.
It may remain in place for the long term, Smith said.
Bremworth’s Napier plant was closed as a result of the February cyclone.
With damage assessments underway, the carpet maker has implemented business continuity plans, which will see it outsource part of its production process to domestic and international suppliers as well as operating its own manufacturing facilities.
The company is in the process of signing a new licensing deal with a Canterbury textile firm specialising in processing natural fibres to enable it to process and dye wool fibre for its Whanganui yarn-spinning facility.
The material quantity is sufficient to meet its entire needs for production of highest value premium felted carpet and rugs.
Contracts are in the final stages of negotiation with international suppliers who have the capacity to supply Bremworth’s remaining yarn needs as well as providing significant additional capacity for growth.
Smith said under the new deals, NZ wool fibre will be shipped offshore, dyed, processed into yarn and then returned to Bremworth where it will be made into finished product.
He said the new model will ensure the company’s residential supply chain is insulated from future events that have the potential to disrupt operations.
It will also open opportunity to enter the high-volume commercial export market.
“In Australia, where wool carpet demand is much higher than in NZ, we believe that securing large-scale contracts could see us increase our revenue by tens of millions of dollars annually.
“While the short-term impact of the cyclone on our business has seen a level of disruption to our supply chain, the changes we are now implementing as a consequence will mean we are a more resilient business and potentially unlock new markets.”
The company has more than $16 million of finished carpet inventory on hand to service the market while new suppliers come on board.
“The first trial of one of our most popular products produced by one of our international suppliers has been a success, which is comforting.
“Based on what we know now we expect to be well positioned to meet the forecast increase in demand as flood-impacted homeowners look to replace their carpet over the coming year.”
Smith said the company has full replacement insurance cover against material damage as well as insurance cover for business continuity.
“While we are still working with our insurers to finalise the full extent of the financial impact to our business, we are expecting to receive an initial instalment payment of $20 million in the coming week.”