Fashion merchandising : sourcing

September 11, 2013

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Abstract:

The globalisation phenomenon has induced a considerable change in

manufacturing and supply chain strategies across apparel and fashion value
chain. To get cost benefit, fashion retailor and manufacturers prefers relocation
of their operations to overseas, and the sourcing of components from, low-labour
cost countries.‘Sourcing is defined as the process of determining how and
from where manufactured goods or components will be procured.’ The
main motivational force to do sourcing of garments/fabrics is to give the highest
level of satisfaction, at low production cost. Today’s business strategy is shifting
the certain operations from apparel value chain to low cost and takes competitive
advantage to enhance the profit margin.

Introduction:

For garment export house fabric and trims are the raw material which needs to
be outsourced. Sourcing is basically determining the most cost efficient vendor of
materials, production, or finished goods at the specified quality and service level.
It is closely associated and an important part of apparel merchandiser’s
responsibility. Materials basically include piece goods that will be cut and
converted into the garments. Not only does the fabric have to be appropriate and
suited to the garment design and end use but it must also be made available at
the precise time when it is needed. Thus, lead times play an important role in the
sourcing and placing orders for the materials required for the production. Lead
times required from a supplier can vary from as little as two weeks to as much
as nine months. Trims are all the materials other than the piece goods that are
required to make up a garment. Findings require the same careful planning as
the piece goods. As soon as the fabric is in the stores, then only the sourcing of
the threads start because the colour of the thread must match the buyer’s
requirements. The ordering of the threads must be complete by the time fabric is
cut ready to be feeded to the sewing lines.

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Sourcing department along with apparel merchandiser plays the vital role to
execute and shipment of export order successfully. Merchandiser must make sure
that all approvals related to fabric and trims should be coordinated with the
sourcing department in given timeframe. Fabric sourcing department is basically
engaged in determining how and where its merchandise i.e. fabric will be obtained
within the scheduled time and cost. A sourcing manager must have knowledge
about all varieties of fabrics and trims in order to execute their functions
effectively. The different parameters in sourcing i.e. lead time, process of fabric
and trim approvals, cost of logistics and incoterms need to keep in mind while
deciding the sourcing tactics for particular export order.

Types of sourcing:
Type fabric sourcing Description

Fabric is manufactured locally, with local

Local manufacturer
infrastructure.

Local fabric is exported to garment manufacturing

Traditional export
countries.

Fabric is made locally, but raw i.e. yarn or fibre is

International sourcing
sourced from other country.

Fabrics are made with parts sourced from abroad as

Global sourcing
part of global sourcing strategy.
 Raw material is exported first i.e. yarn or fibre,
Off-shoring
then fabric is reimported to meet the demand

Global manufacturing Fabric is manufactured in other country.

These strategies are used for procurement of fabric by the export houses; the
most popularly used method is either local manufactured fabric is used to meet
the demand. If cost of manufacturing is higher or adequate infrastructure is not
available then off-shoring or global manufacturing is the popular practices for
fabric procurement. For garment export house it is very important to decide the
tactics of sourcing very carefully. Merchandiser along with fabric sourcing
department plays key role in deciding this tactics. As the export order processing
is the responsibility of production merchandiser, merchandiser is well aware of
byer’s requirements regarding fabric and lead time of the whole process.

Role of production merchandiser in sourcing:

The sourcing and merchandising has the same goal to meet i.e. to get right
fabric/trims at right place on right time and with right price. As merchandiser is
key person in whole order processing hence sourcing is the integral part of
merchandising activities. The role of merchandiser in sourcing can be described
as

 In small export house merchandiser bares the responsibility of sourcing

 In large export houses sourcing team coordinates merchandiser to
source the fabric and trims.
 Merchandiser is responsible for calculate fabric and trim consumption
per garment and coordinate it with sourcing department.
 The approvals related to fabric i.e. lab-dips, desk-loom, print-strike-off,
dye-lot, thread run, needs to get from buyer within time frame.
 The art work, trim card need to get approved from buyer which is
responsibility of merchandiser.
 To maintain the proper buffer in Time and action calendar is the
responsibility of merchandiser.
The process of fabric/trims sourcing

The process of fabric sourcing is very dynamic, it changes with the fabric type,
cost quoted by fabric supplier, lead time, buyers requirement. The typical process
of fabric sourcing in an export house can be described as:

The material and information flow

The material and information flow in sourcing is from buyer to either to buying
house or garment manufacturer. And buying house or garment manufacturer
passes this information to fabric and trim supplier. According to information fabric
and trim supplier supplies the material to garment manufacturer. Sometimes
buyer has nominated supplier for fabrics and trims hence; buyer shares all the
information to fabric and trims supplier directly and ask merchandiser to source
the fabric and trims as per requirement of order. In this case the all-risk related
to fabric and trims i.e. delay, variation, quality checks is transfer to fabric and
trim supplier and solely bare by the buyer.

Factors affecting sourcing of fabric and trims

Lead time:

Fabric and trim sourcing is very time consuming process which includes desk loom
and lab-dip approvals, trim and art work approval, FPT approval. The fabric
sourcing itself will take lead time of 30-60 days depending upon type of fabric for
yarn dyed fabric it takes approx.45 day, for piece dyed fabric it take approx. 30
days and for fibre dyed fabric it takes approx.55-60 working days. Merchandiser
needs to decide the supplier of the fabric supplier on the basis of type of fabric
and time remains in hand to complete the export order. If fabric sourced from
other country, then time required for transportation needs to keep in mind.
Trim sourcing is another important factor that needs to take care. For trims
generally it takes 30 days to get in-house. That is also depends upon type of trims
and from where trims are getting procured.

Logistics:

Logistics is one of the main factors which affects the fabric sourcing drastically.
There are several aspects those are 1. Time required for transportation 2.
Infrastructure for logistics 3. Cost of logistics. Merchandiser needs to keep
in mind these factors while placing the order for fabric or trims. The time required
for transportation is very important to achieve the accurate lead time of
fabric/trims procurement. Absence of adequate infrastructure will lead to delay in
fabric procurement. Cost of logistics will directly affect the cost of garment; hence
merchandiser should be well aware about these aspects of logistics and then place
the order for fabric and trims.

Quality parameters:

The demand for high-quality low-cost fabric/trims coupled with the need to reduce
costs to increase operating profits is driving more companies to outsource
manufacturing overseas. Though sourcing is an effective way to do business but
sometimes fabric and trims supplier cannot meet the quality parameters, which
will lead to trouble for apparel merchandiser to execute the export order.

The ability of sourcing partners to produce quality fabric and trims consistently
depends on a number of factors. One of the main factors is skill of the workforce
and their worker’s flexibility to work to produce wide range of fabrics and trims.
The technology up -gradation of the sourcing partners. Another important factor
is the accuracy of written communications and instructions received from the
garment manufacturer/ apparel merchandiser.
Sourcing costs:

The sourcing decisions are taken mainly on the basis of cost manufacturing. But
now a days garment exporters makes strategic bonding with fabric and trims
vendors. The buyers also makes bonding with fabric and trims vendors, these are
called nominated vendor. The sourcing cost depends upon following factors

 Labour wages
 Manufacturing cost
 Cost of logistics/transportation
 Incoterm negotiated(for international sourcing)

When comparing the costs of manufacturing a fabric and trims offshore or

domestically, manufacturers must include all the hidden costs of added processes
and steps that go hand in hand with offshore production. The cost of sourcing is
optimised when fabric and garment manufacturing units are under one roof or
closer to each other. The freight chargers are increased when there delay in
manufacturing and material need to send with air freight.

Minimum Order Quantity (MOQ):

This is the important factor that affects the sourcing. For sourcing of fabric and
trims there is always a MOQ for which directly affects the cost. Every supplier
requires a certain MOQ to produce the fabric and trim economically; otherwise
the cost of running the production is higher if production is below MOQ. If garment
exporter places the order of raw material below MOQ then generally cost will be
more for that. Hence throughout the supply chain MOQ is maintained the in order
to achieve the appropriate cost of production.

Types of supplier:

In garment industry suppliers are appointed by export house or by buyer, for the
production of fabric and trims. As there are limitations of manufacturing of fabric
and trims for garment export houses, though some export houses has in-house
fabric production, it has become increasingly common in garment
industry to source the fabric and trim from others rather than employing a large
production capacity themselves.The main advantage of sourcing the fabric and
trim is the transfer of risk and enables the garment exporter toconcentrate on
only garment production.However, another concerns have been expressed about
the prevalence of supplier because of a perception that the exporter has less
control over the skills and training of suppliers employees and so there may be a
negative impact on quality and health and safety on site. There are two types of
suppliers namely

 Nominated supplier
 Non nominated supplier

For both type of supplier lead time generally remains same irrespective of MOQ,
order quantity, quality parameters of the raw material. Transit lead time will
changewith the location of the supplier i.e. domestic and overseas supplier.

Nominated supplier:

Nominating the supplier is a common practice in garment industry, a procedure

that was initiated by buyers to achieve better control over their supply chain, is
now a very common practice followed in the garment export industry and has
many aspects to it. These days a buyer nominates suppliers mainly for products
like accessories, fabrics, packaging material and logistics to gain better control
over their supply chain, get consistent quality and on time deliveries. The most
important factor is the standardization of the product as, by nominating suppliers,
buyers intended to get raw materials which is having consistent quality and with
no defects or flaws. The second important reason for nomination is on time
deliveries as buyers were getting delayed orders and most of the times
agents/manufacturers blamed suppliers of trims, accessories or fabrics for the
delays.
Advantages of nominated supplier:

 Time saving forgarment manufacturer because they only have to deal

with one company to provide basic raw material.
 Quality assurance of the raw materials is consistent and taken care by
buyer
 Nominated supplier can be involved in product development since they
are already having good experience in this field.

Along with these advantages there are certain disadvantages for nomination of
suppliers

 Nominated Suppliers may become overconfident about their product

quality
 There may be a Monopoly of supplier in the market
 Nomination may leads to unethical practices like corruption by agents
and traders
 Loss of price competitiveness as suppliers sometimes overcharge

Non-nominated supplier:

Non nominated suppliers are the garment manufactures source of raw

material. Sometime buyers provide the specification of the raw materials and ask
garment manufacturer to source the same their own suppliers. Non nominated
supplier has their own advantages and dis advantages.

 As they have challenge to sustain in business, hence non nominated

supplier try their best to follow the instructions given by buyer or
garment manufacturer
 The cost is competitive to market, which makes them advantageous
 Garment exporter may get chance to explore with the innovative
products offer by non-nominated supplier.

The disadvantages of these suppliers are

  There may be flaws in quality of the raw material due to communication
gap between buyer and supplier.
 To get involved these suppliers in product development process is
difficult task.
 It will be difficult for buyer to control the social compliance and ethical
business practice norms on these suppliers effectively.

Ordering specifications:

Garment exporter must give specifications to the supplier to get the accurate raw
material. The ordering specifications are as

Raw material Ordering specification

 Fabric design (desk-loom)

 Fabric swatch(if provided by buyer)
 Lab-dip/colour standard
 GSM (Gauge in case of knitted)
 Yarn count
 Cuttable fabric width

Fabric  EPI/PPI
 Fabric finish
 Requirements of dyes and finishing chemicals
 Unit of measurement i.e. meter/ yard for woven and KG for knitted
 Order quantity
 Shrinkage tolerance
 Fastness properties

 Raw material i.e. wood, nylon etc.

 Colour (sample provided by buyer)
Buttons  Unit of measurement I.e. linge
 Order quantity
 Quality parameters
  Button strength
 Colour fastness
 Order quantity

 Raw material i.e. metal, nylon

 Colour
 Length

Zippers  Type of puller

 Zipper finish
 Fastness properties
 Zipper strength requirements

 Colour I.e. thread run

 Thread specifications i.e. 2 ply, 3 ply
 Fibre type i.e. filament yarn, or staple yarn
 Thread ticket no. (thread count)
 No. of cones

Thread  Meter of thread content on cone i.e. 1000, 5000 meter.

 Finish
 Thread construction
 Fastness properties
 Strength
 Heat sensitivity

 Type of label i.e. printed, jacquard

 Design specification of label
 Size specification of label
 Colour combination
Label  Font type
 Font size
 Line spacing
 Care Instructionstype
 Fastness properties
  Dimensions of the label

 Polybag Thickness
 Raw material specification i.e. polyethylene. Polypropylene etc.
 Colour

Polybag  Dimensions
 Specification of Print on polybag
 Type of closure
 Type of dents

 No of plies i.e. 3,7

 Raw material
 Dimensions
 GSM of the paper
Cartons  Print specification of cartons
 Type of carton
 Dimension tolerance
 Bursting strength

 Fibre content
 Construction specification i.e. woven/non-woven
 GSM

Interlining  Colour
 Fastness properties
 Fusible /non-fusible
 Shrinkage

Approximate Lead time requirement for domestic and overseas sourcing

Article Domestic sourcing Overseas sourcing

Fabric (solid dyed) 30 days 45 days

 Fabric (y/d dyed) 45-60 days 55-70 days

Fabric (fibre dyed) 75-90 days 90-120 days

Buttons 10-15 days 20-25 days

Zipper 7-10 days 10-15 days

Thread 7-15 days –

Label 7-15 days 20-25 days

Poly bag 7-10 days –

Cartons 7-10 days –

These lead time are depends upon the quantity and considering the ideal
condition. In any emergency case supplier can also supply the fabric is less
duration.

Conclusion

The increasing use of sourcing practices dramatically changes the way of products
develop, manufacturing and distribution. These changes scenario makes the
industry more efficient to fulfil customer demands in a defined cycle time, and at
comparative costs. The strategy of sourcing the raw material for garment
manufacturing is depends upon parameters like lead time, cost and quality. The
international laws of tariffs and trade affects these strategies strongly. Apart
from these conditions, sourcing decisions are made based on domestic market
condition, cost benefits, international market situation, relation between the
respective countries and political stability of the country