CTE4829 Global Sourcing Final Exam Review Global Sourcing Role of global sourcing Full package o Sourcing determining the most cost efficient vendors 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 Sourcing options for apparel o Informed decisions must be made regarding whether to Develop materials and garments in house Purchase finished garments Contract a vendor to develop and produce the garments o Two basic factory direct models used for contracting production of finished garment CMT cut make trim Original sourcing company customer bears all the costs does development sources the fabric delivers the fabric to the vendor and pays duties and transportations costs Production contractor vendor provides the expertise and equipment for the actual production of the garments The vendor must contribute to and finance most of the manufacturing process including product development and sourcing Efficient full package production requires o Higher levels of management expertise o Latest technology o Fully developed infrastructure o Financial resources to assume the majority of manufacturing Private Brand Importer expenses o Many retailers have expanded their merchandising activities to include development of o Private brand reflects the ownership of an exclusive label by a brand manager or o if the retailer contracts production of these products offshore it becomes a private their own products retailer brand importer Brand Importer o 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 o Methods of sourcing include Trade shows and trade fairs Joint ventures Licensing agreements Hiring of sourcing agents Factors Impacting Sourcing decisions o Determining which sourcing option is best for a business is influenced by numerous factors and dependent on Customs require to produce and deliver Type and quantity of products needed Monetary cost of acquisitions Manufacturing philosophies Manufacturing control Sourcing calendars Product development systems Manufacturing philosophies o Two different philosophies Agile manufacturing methods Lean manufacturing As a part of a quick response were at first promoted as tools contributing to flexibility and speed on the floor Emphasizes efficiency and strives to eliminate waste of time and materials through the entire process while also improving quality Sourcing Calendar o 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 Product development systems o Current EDI electronic data interchange and integrated product development systems are essential for controlling the sourcing time line o 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 o The customer s established set of rules provides manufacturing control and defines standards for vendor compliance Customs issues Quality assurance and standards o The duty levied by customs must be paid before the importer can take possession of the goods It is critical to know what the rate on the products will be prior to their arrival at the port o For novice importers it is recommended that a customs broker be selected o Paperwork must be handled properly to avoid having merchandise held offshore o Quality assurance is a commitment to product quality that utilizes error prevention as integral to the entire product development process o Standards 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 o Used to help establish the tariff rate for duties charged on imported products o Complexity of international sourcing increases the difficulty in determining the COO o Difficult when more than one country is involved Different countries have different customs regulations and quotas o Origin for yarn is determined by where yarn is suspended or extruded NOT origin of the fiber o Origin for fabric is where it is knit or woven o Origin for apparel is where garment is assembled Care Labeling Tackling sizing issues o Issue of where care instructions should be provided in multiple languages o ISO and ASTM developed pictograms but they are not globally standardized o Sizing and fit issues are important to consumers o In the US the voluntary sizing standard monitored by the ASTM provides tables of body measurements giving designers and manufacturers a basic blueprint for sizing apparel they produce Materials and production sourcing options o When exploring options and processes required for acquisition of necessary materials and considering selection of vendors for production Take into account all costs involved as a product moves through the supply chain Explore the logistics required to get the product from the vendor to the point of sale Materials sourcing options o Traditional schedule for production of textile fabrics begins almost a year ahead of decisions about fabric preferences Calendar where fabrics are not produces in production run quantities until after they are ordered by apparel firms from samples marketed at trade shows o Fast fashion firms shorten their calendars by focusing on utilizing available fabrics to cut the waiting time for fabric production Exclusivity issues concerning fabrics Selection of production facilities o Selecting a vendor for a production run considers Conduct throughout production cycle Ability to meet contractual obligations Reliability in meeting contract deadlines Factory conditions Necessary equipment capability trained operators and expertise Costing Fabric Costs o In order to remain in business the firm must acquire its goods for less than the price