Sourcing in Apparel Industries

Dated – 26/08/2008

Sourcing In Apparel Industries Arun Shukla MBA (Marketing) International Institute of Information Technology Pune India

Overview

Understand what sourcing means in Apparel How is sourcing being managed currently in Apparel? What processes are manually managed and what processes are digitized? Understand the challenges faced while managing sourcing in Apparel Are there applications, systems, vendors who are providing specific solutions? Who are they and what solutions are they providing What requirements are they addressing with their solutions? What requirements are yet unaddressed? What are the challenges that the customer is facing Can we address this challenge? What will be required to deliver a value solution? Can we package this solution as a clearly differentiated offering? Compare with competitors What are the constituents of the offering? Why is it differentiated? How does it compare with competition?

Understand what Sourcing means in Apparel The Apparel manufacturing undergoes different segments of Processes. The steps of development are a guideline to help you, to know, how the process can help you for importing garments and its functions.

1. Season: The process by which a particular design, activity, color, etc., comes into some popularity and then phases out. This cycle of adoption and rejection is quite similar to the product life cycle. The Apparel Fashion cycle uses different terms to describe its phases: (1) Distinctiveness phase, in which the style is eagerly sought; (2) Emulation stage, in which its popularity grows; and (3) Economic stage, in which it becomes available at lower prices to the mass market. 2. Budgeting: The detailed financial component of the strategic plan that guides the allocation of resources and provides a mechanism for identifying deviations of actual from desired performance so corrective action can be taken. A budget assigns a money figure to each revenue and expense related activity. A budget is usually prepared for a period of six months by each component of an organization. A budget provides both a guide for action and a means of assessing performance. A statement prepared by management containing planned financial commitments for all the components of the merchandise plan (Designing, Sampling, Advertising, Material Procurement, Pre-sales, Pre-production, Production, Shipping, Reductions, Stocks, Profit Margins, and purchases) at a seasonal period. 3. Designing: Apparel product design models are often based on consumers' perceptions and preferences have typically formulated in the context of multidimensional measurement analysis. In this case, various optimization programs have to been used such as color, measurements, sex categories, trims and quantities in percentage. The Stitchplus designing team also works with possessed ideas in order a product fulfilling the desirability/durability of that product content for each set of potential customers. The level of market demand for any potential product is estimated by aggregating the individual preference models across customers. 4. Sampling: Sampling requires performing prototypes with detailed sketches transformed into virtual reality effects of the customers need. This Sample product enables them to produce a screen idea of the market survey and give a idea in selling the products within the season changes. We, sample developers always look at new dye effects, blends of fibers and yarns and textiles for specialized end uses computers to analyze test results and draw on statistical figure to enable them to evaluate the performance of a new sample without spending time reproducing it several times before

achieving the desired effect. The first sample is produced by the vendor but our team often works with a technician or sample machinist who interprets and executes the concept on sample or production machinery. Stitchplus finalize the first sample submitted to the customer for approval and gives a costing out as accurately as possible. Any amendments to the sample will then be carried out and the sample resubmitted for approval. This process may be repeated several times before the sample receives final approval and is ‘sealed’. 5. Attending Fairs: Why is it that all businesses, no matter whether they produce, manufacture, market products and services should be involved in sales promotion activities or attending business fairs? There are many reasons and the ones that apply to you will do so because of your specific product or service, location, business arrangement, amount of marketing activity you perform, etc.

How promotion activities like Sampling would benefit your business: 1) New products will be reminded to your commodity merchants, processors, retailers & consumers systematically; 2) you sell seasonal and fashionable products which require some degree of reintroduction & promotion from year to year; 3) New Brands from your sampling will attract new consumers that must learn to make buying decisions about your products; 4) To develop sales volume required to maintain low-cost mass production operation dealing in consumer goods; 5) An opportunity to increase sales of your product by some means other than pricing strategies. 6. Pre Production Approvals: All products and promotions undergo a rigorous approval process to ensure faithful representation and reproduction of each property with a consistently high standard of quality procedures.

7. Production & Shipping: The production process involves myriad steps and depends on the talent and skill of many individuals. It is a team effort. Apparel making is not conducive to precision mass production. Frequent style changes and varying degrees of fabric workability force continual adjustments in the manufacturing process. Standardized equipment is difficult to design and implement, and production is therefore dependent on skilled workers. A manufacturer's reputation for good fit, wear ability and few customer returns is a valuable sales aid. Therefore, detection of imperfect garments is essential. Quality control begins at the yarn selection stage itself, and then it is processed as a fabric where it is inspected for defects of material, dyeing and finishing. Minor irregularities are marked on the fabric with little red flags or strings and the total roll price is discounted accordingly. When the fabric is laid out on the manufacturer's cutting table, it is inspected again - usually by the cutter - and any defects are cut out. If too much of the fabric is imperfect, it is returned to the mills.

Quality of work is checked during each step of production. If errors are discovered early in the process, they can usually be corrected. Inspection is done by the workers themselves and also by the factory production manager or a floor worker who supervises production flow. In addition, Stitchplus usually spot checks quality on a daily basis. Completed garments are examined again by the finishers and by the shipping clerk as they are pulled for delivery on time. Garments will be carefully scrutinized to be sure that the size, color and style number on the cutting ticket correspond to the garment itself. They will be inspected for quality of material, stitching, trimming, correct labels and even the right color of thread. Finally, any garments returned to the manufacturer by retailers should be analyzed to determine the source of error in production. Shipping methods are considered as a archaic by most industry members. All orders are hand picked. If a store orders certain styles in different colors and in progressive sizes, it will be hand-selected and consolidated for one shipment. Vendors will normally ship by parcel post, freight and air freight. Rates are charged by shipment weight only. Carriers will provide specific packing instructions and suggestions for economic use of their services. For local pick-up and delivery of materials and finished garments, good shipping person for quality control, proper and efficient filling of orders, meeting delivery dates and avoiding shortages.

Challenges while managing Sourcing in Apparel Designing, sourcing and buying goods can be a complex process that is typically hampered by the extensive use of spreadsheets, emails and phone calls. The need to key and re-key data from paper to system or between disparate systems is inefficient and can lead to unnecessary errors. Errors in processing or having to make simple changes to product specifications such as color or measurements, can incur costly time delays and unnecessary costs. Updating and sending out multiple versions of documents to suppliers requires a significant amount of human resource, and can lead to duplication and misunderstandings. Throwing more resources at the problem might help, but it’s not the long-term answer. Until now, the ability to help apparel retailers manage these critical functions effectively has been an issue largely unaddressed by IT vendors. But the desire to take advantage of innovative software to help formalize best practices and help under-pressure apparel retailers’ scale their businesses effectively is clearly there. Today, leading retailers around the world are looking to technology to help them manage the global sourcing process. Example: IBM Business need: Goo-Way staffs have to manually search by hand for the past and present documents and have them couriered to the relevant parties. They wanted to find a way to reduce the physical searching of documents which was time consuming. Solution: Startin Point recommended the use of IBM DB2 Content Manager Express Edition along with its own scanning application, TruCapture for IBM Content Manager Express. IBM DB2 Content Manager Express Edition delivers an affordable and comprehensive content management solution for Goo-Way’s growing business operations. Benefits: With IBM DB2 information management software, there was improved communications for Goo-Way internally among various departments and externally with customers, suppliers and governmental bodies.

Challenges faced by the Customers

1) Any merchant nowadays has to manage numerous details on how private label brands are sourced, produced, and delivered, which can be quite daunting to deal with, especially when trading partners are scattered all over the world. 2) How to assimilate and communicate multiple data points effectively into a unified operation on a single screen? Many still share product information over the phone, or via email and faxes, or through physical communication, and the difficulty is thus to consolidate all these diverse data points. 3) The key in global sourcing today is to minimize the overall cycle and disruptions, and the most important way to do that is to have live, accurate, immediate information. 4) The current (mainly manual) systems still typically require information to flow via scattered spreadsheets, phones, faxes, mail, and e-mails within the retailer’s different groups, and when it is the time to place the order, the data is usually no longer timely or accurate. The information then has to be revised during the ordering phase, which leads to the possibility that the vendor may respond incorrectly—and one then has to go through the vicious cycle again. 5) Determining the true costs of above activities can also be complex, since in addition to a nominal purchase price, one has to add freight, tax, duties, and cost of inventory, inevitable quality issues, and the buyers’ time. Landed costs also vary tremendously, depending on how the merchandise is shipped. For all the above reasons, the issue of achieving more transparent and cohesive sourcing processes has become a frontline concern for many retailers, driven by boardroom directives to boost margins through direct sourcing of international products.

Challenges for Apparel PLM in Sourcing 1) The system should monitor the product progress and assure quality requirements from design concept via product brief, technical package, request for quote (RFQ), order, and delivery, to invoice. 2) In order to keep deliveries on schedule, they need a comprehensive process and alerting system to capture and communicate specification changes, test results, and potential production impacts, and to provide the visibility to manage materials and resources effectively. 3) This information, along with quality resolution, calendaring, and status alerts (as well as the component library, or a growing database of approved designs and configurations or components such as fabrications, buttons, zippers, trims, embellishments, and so on, with automatic whereused cross-referencing), should all keep product development and production on track and moving towards the store floor. 4) Typically, retailers try to take advantage of product data management (PDM) solutions such as Gerber’s WebPDM or Freeborder’s Product Manager to organize their production specifications. But these systems were primarily designed to integrate with cutting and piecing machinery, not to track quality testing, manage sourcing activities, or unite the buying process, nor to maintain the official transaction details.

5) Integration with nifty applications like Google Earth’s geospatial locator should help them virtually immediately locate available agents, inspectors, and facilities to speed quality testing and manufacturing. Applications, systems, vendors who are providing specific solutions

Comparison with Competitors

1) Stichplus • Stitchplus the Apparel Sourcing Company offers superior services in the Textile Field from Product Design, Sample Development, Color/ Fabric Approval, Size Sets Analysis, Production Schedules, Quality control Policies and Shipping. • We have vast experiences in developing Sample projects of any category from Children wear to Men's measurement, Home Made ups and Design Consultants divisions. It is stated in our corporate policy that Talented Works Results Quality and 100% Client satisfaction in any communication updates with Hour to Hour basis. • Stitchplus is an Indian Apparel Sourcing Company looking for an interaction with a partnership network all over the US and European countries. The quality of our work in merchandising starts with a Service Spectrum called Order Flow Chart Procedure (OFCP) standard. • What's more - we've introduced an active involvement of Business Analysis Group into the process of Product Procuring Phenomenon's. Our Analysts make researches for various types of Products categories and update it in our web site periodically. This expert research helps to choose features that suit your market requirement and makes best in accordance with your business needs.

2) Centric Software Global Sourcing Applications With Centric's sourcing applications, manufacturers and retailers bring the right mix of private label and branded products to market at the right price and the right time. Off-the-shelf applications for Global Sourcing configure easily, mapping to business processes while leveraging existing systems. A) Product Sourcing B) Product Specification A) Product Sourcing Make profitable business decisions to achieve GMROI targets, on-time delivery, and brand equity. • Make accurate cost comparisons by considering all aspects of sourcing and supply chain into landed product cost evaluations. • Achieve visibility of placements to understand the relationship between vendors and risk to business objectives. • Manage quality inspections, compliance tracking, and audits to assure compliance and avoid costly infractions.

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Optimize geographically dispersed production to understand real FOB costs and manage risk to performance.

B) Product Specification Centric Product Specification, based on Centric's unique Product Intelligence platform, allows you to: • • • •

Accelerate development and delivery of sourced products Streamline creation of technical product specifications for different uses and suppliers Collaborate with suppliers on all details including color, size, lab dips, packaging, trim, bill of material Reduce delays and costly mistakes through accurate communication

3) Dassault Systemes The ENOVIA Apparel Accelerator for Sourcing and Production This enables apparel brands to define their sourcing organization, structure and hierarchy for optimized sourcing management. Jointly developed by Dassault Systémes ENOVIA and Wing Tai’s Zymmetry Group, the product uses a single PLM platform to seamlessly connect global sourcing and production offices to brand and retail headquarters. Product Highlights • Sourcing Organization and Vendor Management • Component and Standards Development • Product Development • Sample and Test Request Management • Request for Quotation The ENOVIA Apparel Accelerator for Sourcing and Production enables companies to: •

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Improve gross margins by allowing more control over the cost analysis and negotiation with vendors as well as enforcing more structured hand-offs between headquarters, buying offices, agents and vendors. Optimize merchandise opportunities and cost control through on-line RFQs enabling multiple quotations for supplier provided options based on volume, delivery dates, trade terms, and alternative component. Reduce amendments to purchase orders by managing changes on early forecasts to reserve capacity and facilitating staged commitments to vendors for material and trim purchases.

4) Zymmetry Application: ZymSourcing Industry Issues addressed

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Collaboration and change management with international buying offices, production offices, agents and factories Tracking material and trim liabilities for quantity changes against planned and committed garment production Supplier planning, compliance tracking and quality assurance reporting Visibility and reporting on local and global calendar events for apparel development and production

Key Features • Material & Style management • Costing Analysis • Bulk material commitment and liability tracking • Unique Assortment Plan through to Purchase Order functionality • Production & shipment tracking • Integration capabilities with ZymFactory • Quality control & assurance

References: 1) The Global Apparel Value Chain: What Prospects for Upgrading by Developing Countries? Gary Gereffi Dept of Sociology Duke University Durham, USA 2)

Reading the Tea Leaves: What’s Brewing in GLOBAL SOURCING Sourcing & Logistics – Outlook

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Global Sourcing in the U.S. Apparel Industry Gery Gereffi Duke University

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Material World Sourcing Summit Report Apparel Magazine