Executive Briefings

There's Outsourcing and Then There's Outsourcing: Who Says Apparel Has to Be Made in Asia?

Many apparel manufacturers moved production to Asia in the name of lowering costs. They manufacture large quantities of items to avoid costs of machine changeovers, labor utilization and economies of scale. But who says all textiles and labor need to come from Asia?

An innovative approach is focusing on customer and business results, not traditional factors. Zara, one of the world's largest international fashion companies, does most of its production in Europe, where it is based. It manufactures clothes in relatively small production quantities, especially early in the season. Zara's manufacturing costs are much higher than its rivals', but that's not their primary focus.

While manufacturing costs have a direct impact on profit, so do many other factors, such as material costs and leftover garments at the end of the season. Zara keeps shipping costs down by manufacturing its products in Europe. In addition to other factors, its small quantities allow flexibility during the season to respond to buying trends, and ensure there are few if any leftovers at the end the season to sell at a loss.

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Many apparel manufacturers moved production to Asia in the name of lowering costs. They manufacture large quantities of items to avoid costs of machine changeovers, labor utilization and economies of scale. But who says all textiles and labor need to come from Asia?

An innovative approach is focusing on customer and business results, not traditional factors. Zara, one of the world's largest international fashion companies, does most of its production in Europe, where it is based. It manufactures clothes in relatively small production quantities, especially early in the season. Zara's manufacturing costs are much higher than its rivals', but that's not their primary focus.

While manufacturing costs have a direct impact on profit, so do many other factors, such as material costs and leftover garments at the end of the season. Zara keeps shipping costs down by manufacturing its products in Europe. In addition to other factors, its small quantities allow flexibility during the season to respond to buying trends, and ensure there are few if any leftovers at the end the season to sell at a loss.

Read Full Article