Final Exam Study Guide 4829 Chapter 5 PowerPoint notes Lexicon Going Global Exploration of supply chain components and expanded global sourcing options supporting production and delivery of finished products today include Design Product Development Vendor Compliance Materials and factory sourcing Manufacturing control Logistics Sourcing determining the most cost efficient vendor s of services materials production or finished goods or a combination of these at a specified quality and service level for delivery within an identified time frame One entity desires some material product or service the customer while the other provides it the vendor Customer In the sourcing world the sourcing company that contracts for delivery of services materials product development or finished goods Vendor a company that supplies services or products to other companies commonly known as customers Sourcing Options for Apparel Informed decisions must be made regarding whether to Develop and produce materials and garments in house Purchase finished garments Contract a vendor to develop and produce the garments Two basic factory direct models used for contracting production of finished garments CMT Original sourcing company customer bears all the costs does development sources the fabric delivers the fabric to the vendor and pays duties and transportation costs Production contractor vendor provides the expertise and equipment for the actual production of the garments Full package In full package sourcing the vendor must contribute to and finance most of the manufacturing process including product development and sourcing o Efficient full package production requires Higher levels of management expertise Latest technology Fully developed infrastructure Financial resources to assume the majority of manufacturing expenses Private Brand Importer Many retailers have expanded their merchandising activities to include development of their own products Private brand reflects the ownership of an exclusive label by a brand manager or retailer If the retailer contracts production of these products offshore it becomes a private brand importer a brand manager or retailer who sources private brand products in foreign countries for import into the domestic economy Brand Importer Today many traditional manufacturers practice the process of outsourcing much of their production to offshore facilities that they either own wholly or operate as joint ventures Additional Sourcing Venues Methods of sourcing include Trade shows and trade fairs Joint ventures shared ownership of a business or facility by two or more firms Licensing agreements A licensing contract is a means of transferring intellectual property rights extending the value of a brand without having to produce the product putting a brand name on a product produced by someone else for a contracted percentage of the sales Hiring of sourcing agents firms or entities that provide services necessary to procure and deliver products and services to wholesale customers Factors Impacting Sourcing Decisions Determining which sourcing option is best for a business is influenced by numerous factors and dependent on Type and quantity of products needed Monetary costs of acquisition Time required to produce and deliver Customs requirements in different countries Manufacturing philosophies Manufacturing control Product development systems Sourcing calendars Manufacturing Philosophies 2 different philosophies 1 Agile manufacturing methods as a part of quick response were at first promoted as tools contributing to flexibility and speed on the production floor Definition An operational strategy focused on inducing velocity and flexibility in a make to order production process with minimal changeover time and interruptions 2 Lean manufacturing emphasizes efficiency and strives to eliminate waste of time and materials throughout the entire process while also improving quality Sourcing Calendars A sourcing calendar is based on the merchandising calendar that sets the classifications of merchandise and the retail selling periods and that provides a time line related to the sequences of merchandise development design product development production and delivery to the retail sales floor Product Development Systems Current EDI electronic data interchange and integrated product development systems are essential for controlling the sourcing time line EDI is a means of passing document information between companies Creation of styles directly on three dimensional avatars draped on the computer revised and altered on the computer and translated directly into two dimensional patterns without the need of developing actual samples Manufacturing Control and Vendor Compliance The customer s established set of rules provides manufacturing control a process in which expected performance is compared with planned performance and defines standards for vendor compliance performance standards or rules established by the customer that a vendor must follow in order to do business with that customer Customs Issues The duty levied by customs must be paid before the importer can take possession of the goods so it is critical to know what the rate on the products will be prior to their arrival at port For novice importers it is recommended that a customs broker be selected Paperwork must be handled properly to avoid having merchandise held offshore Quality Assurance and Standards Quality assurance is a commitment to product quality that utilizes error prevention as integral to the entire product development process Standards are the basic characteristics used to determine acceptability of the quality and resulting performance and appearance of products and services Voluntary standards developed by American Association of Textile Chemists and Colorists AATCC Government restrictions stemming from application of the Consumer Product Safety Improvement Act CPSIA Government mandated standards related to flammability and product safety overseen by the Consumer Product Safety Commission CPSC Country of Origin Labeling Today COO labeling rules are still sorely needed because they continue to be used to help establish the tariff rate for duties charged on imported products Complexity of international sourcing increases the difficulty in determining the COO COO labeling is difficult when more than one country is involved different countries have different custom regulations and quotas Origin for yarn is determined by