Let us cast a quick glance over the major changes taking place \n in the textile and apparel trade globally. The of the most important \n questions in sourcing are “From where\/whom?” and “How?”. They \n also provide most of the unpredictability and the risk that \n so characterises sourcing. <\/p>\n
For this heavily protected trade, one of the most important \n developments is the transition from the General Agreement on \n Tariffs and Trade (GATT) to the World Trade Organisation (WTO). \n Put simply, the WTO is driving towards increasing mutual market \n access for producers in countries that are a part of the WTO. \n The major aim is to remove quantitative restrictions, including \n quotas, and to reduce import duties, which act as a barrier \n to cross-border trade. If all goes as planned, 1 January 2005 \n will see a textile and clothing world trade free from quota \n restrictions. That one element, which possibly guides apparel \n and textile sourcing more than anything else, will cease to \n exist. However, to minimise the “cliff effect”, quotas are being \n phased out in four stages, rather than abolished at one stroke. \n So, the WTO agreement should lead to greater supply and lower \n prices due to lower import duties and no quota premium, and \n make our lives simpler overall.
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<\/center><\/td>\n Thus, due to these factors, many more cost effective supply \n bases are developing quickly, adding to the complexity of choice. \n Many of these are low cost supply countries that now exist not \n only in Asia, but in Europe and the Americas as well. So which \n countries should you pick? Is Hungary better than the Hong Kong, \n the Caribbean better than Cambodia? Should you still be sourcing \n from the high-cost countries such as Italy, the UK etc. when \n there are so many low cost bases from which to choose? <\/p>Then there is the question of the sourcing method. Virtually \n every kind of relationship and business structure possible is \n included in the textile and apparel supply chain:<\/strong> Some of these methods are declining, some are increasing in \n popularity, while others are stable. Should you apply more than \n one? Should you differentiate depending on the supply country \n or should you adopt one as “the way” for your business? <\/p>\n Taking the Gamble Out of Sourcing<\/strong> <\/p>\n The problem, clearly, lies in the unpredictability about the \n benefits from each country and method of sourcing. And, simplistically, \n the solution lies in taking as much of the uncertainty out. \n The way to do that successfully is to ensure that your sourcing \n strategy, organisation and processes are led by your overall \n business strategy. Many organisations, retailers as well as \n suppliers, have built up highly successful businesses in the \n last few years by ensuring that sourcing is one of the core \n management areas of their business rather than an afterthought. \n But in many more, sourcing is relegated to the “back-room”, \n as something that happens mostly outside the company’s boundaries. \n How can you bring sourcing within the mainstream of your business? \n <\/p>\n Imagine the sourcing process. Some people might imagine conceiving \n a product, a style, putting together the fabric and trims, creating \n a sample, getting it produced within a given time and cost. \n Others would visualise it beginning with next season’s business \n plan, a plan to sell certain numbers of a product at a particular \n price, bought in at a certain cost with a planned profit and \n mark-down allowance. Still others might remember exchanging \n endless overseas telephone calls and faxes with their suppliers, \n the dreaded messages from the shipping company about late deliveries. \n All of those unpredictables that make sourcing a gamble. <\/p>\n Stop! If you are a retailer, I would ask you to now visualise \n your retail store, your catalogue, your website. If you are \n a manufacturer, I would ask you to visualise your customer and \n their consumers. That is where the sourcing process truly begins. \n Your business is defined by your consumer or customer, who has \n certain expectations – a product, a particular price, a time \n limit, a certain quality. Naturally these demands and expectations \n are what you are trying best to understand and fulfil. So should \n your associates who support the process. <\/p>\n No matter what you are, a retailer or a manufacturer, you \n need to focus on the consumer. The “push” system of supply is \n outdated – customers have greater, easier access to a much wider \n choice of goods and services, and expect ever-greater standards \n of quality, service and customisation. The sourcing and supply \n process must change too. Previously one end of the supply chain \n understood consumer demand, and translated that understanding \n into a product concept that was manufactured, shipped and sold \n to the consumer through retail stores. Increasingly now, the \n functions of Design, Development (production), Distribution \n and Display (retail) must link together to share skills, knowledge \n and capabilities that allow joint market analysis, product development, \n common measurement and accurate forecasting, and create a delighted \n rather than merely “satisfied” customer. <\/p>\n Too often sourcing decisions are made as a reaction to the \n immediate present and the recent past. Factors such as past \n relationships, past experience of individual buyers, gut feel \n and immediate price comparisons are commonly the driving forces. \n These are all internally focussed; the decisions based on what \n is available within the business (and its supply base), rather \n than what the consumer or customer wants. <\/p>\n Let us take business strategy first. Generally, three major \n areas define and differentiate one business from another: Product, \n Price and Service. A study by global management consultants, \n Kurt Salmon Associates in 1998-99, showed that successful businesses \n had a clear positioning in being focussed on a single or a combination \n of two aspects. On the other hand, business that were not successful \n financially, were generally fuzzy in their positioning, in their \n definition of what the business stood for. Are you clear about \n where your business stands and what is your platform, on which \n you sell to your customers? If you are, you have taken the first \n step to sourcing successfully. What are the obvious links with sourcing? \n If you are price-oriented, surely your sourcing must be driven \n very much by sourcing cost. But not the FOB cost alone – you \n need to factor in import duties, transport costs, costs of rejections, \n costs of maintaining a supplier relationship, and many other \n factors that are often invisible. If, on the other hand, you \n are oriented towards Product and Service, surely you need infrastructure \n within your business or in your supply base to create innovative \n products, turn sampling around quickly, and ensuring that quality, \n accuracy and timeliness are the benchmarks used to measure success \n or failure. <\/p>\n So you now understand what your business is all about, and \n what your sourcing needs to be. Let us ask a third question, \n do your buyers, merchandisers, technologists, suppliers and \n logistics providers have the same understanding as you about \n the defining factors and the objectives? Unless you draw these \n links, and make sure that everyone around the business shares \n a common understanding, you will have to resign yourself to \n live with unpredictability. <\/p>\n A final point: there is a wide variety of suppliers and supply \n bases out there. While defining your business, you also should \n clearly define how much capability exists within your business \n to handle the sourcing process from concept to delivery. Define \n your competencies: can you conceive the product, can you design \n it, prototype it, define technical specifications, produce (or \n manage the production) and ship it? What are the things you \n absolutely wish to control, and what are the activities that \n you want your suppliers to carry out? Once you have done that, \n choices become simpler. The future direction for selecting supply \n countries becomes clearer and identifying the winning suppliers \n becomes a more rational process. <\/p>\n Yogi Berra is quoted as saying, “It’s tough to make predictions, \n especially about the future.” Certainly, sourcing is a lot about \n getting your predictions right – the right product, the right \n quantities and the right timing, the right supply base for future \n growth. But it helps to make sure that sourcing activity is \n led as much as possible by targets and business objectives, \n rather than only by short-term reactions to changes in the environment. \n Define your business and the business requirements, and let \n those define your sourcing – that’s the only way to get some \n of the unpredictability out of sourcing. <\/p><\/td>\n This article is based on a presentation to the Textile \n Institute’s London and South East England Chapter and draws \n on experiences with developing global sourcing strategies \n of a number of retailers and manufacturer-suppliers.<\/i> <\/p>\n © Devangshu Dutta, 1998 <\/p>\n <\/center><\/td>\n In recent years, sourcing and supply management has emerged as one of the greatest opportunity areas for retail business as well as for suppliers to leading retailers. At the same time, it is possibly also the one most prone to risk. This set of activities holds the key to improving service, product offer and overall […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2820","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n\n
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