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.
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.
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|
|Local manufacturer||Fabric is manufactured locally, with local infrastructure.|
|Traditional export||Local fabric is exported to garment manufacturing countries.|
|International sourcing||Fabric is made locally, but raw i.e. yarn or fibre is sourced from other country.|
|Global sourcing||Fabrics are made with parts sourced from abroad as part of global sourcing strategy.|
|Off-shoring||Raw material is exported first i.e. yarn or fibre, 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
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 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.
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.
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.
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 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.
Garment exporter must give specifications to the supplier to get the accurate raw material. The ordering specifications are as
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|
|Label||7-15 days||20-25 days|
|Poly bag||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.
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.