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Companies today are operating in increasingly global and competitive markets, and are now faced with ever-growing economic uncertainty. Global sourcing readiness has never been as important as it is now. Some ways that apparel manufacturers can better plan their sourcing ventures include:
• Working closely with government agencies and demonstrating a solid compliance program that will ultimately provide an advantage in assisting their clients' supply chain optimization; and
• Understanding and dealing with the additional risks of cultural differences, currency, logistics constraints, connectivity, distance, language barriers and political instability.
Reduction of Costs while Optimizing Key Vendor Efficiencies
A bad sourcing decision can generally be addressed and weathered when the economy is doing well, but can be devastating to a company when the economy is in a downward turn. Considering the far-reaching implications from an offshore vendor, there are some key points to consider when sourcing goods from overseas:
• Raw material supply can often represent 40 to 50 percent of sourcing decisions. As a result, having a vendor with access geographically to raw material sources can be effective in achieving optimal reduction of production costs.
• Countries with low labor costs and a good infrastructure will help apparel manufacturers to succeed, providing they have access to requisite raw materials such as yarn, fabric and trim supply.
• Stable business climate and ease of import and export of goods as well as transportation and communications infrastructure are all major points to consider in the overall cost of sourcing.
One mistake that many organizations make is strictly looking to lower costs, rather than evaluating the overall value with their suppliers.
Strengthening Supplier Relationships
The importance of establishing solid vendor relationships can be summed up by three primary attributes:
• price, quality, and speed to market
• specialized vendor capabilities
When determining a key vendor, value-added capabilities such as product development and design will provide a distinct advantage over their competition as they can advise clients on trends in style and the production capabilities to produce similar looking merchandise. Potential vendors must demonstrate they have the ability to manage service-related issues through a well managed supply chain infrastructure. Furthermore, the ability for the manufacturer to work collaboratively with both vendor and distributor (or wholesaler) can lead to long-term relationships which benefit the retail consumer with better-quality merchandise at a lower cost.
In the fashion, apparel and footwear industry, competitive sourcing capability relies on transactional systems, a collaborative product development environment, and the integration of the two. The convergence of transaction and product data serves to generate greater capabilities than either one system can provide alone. Both transactional systems and product lifecycle management solutions are now addressing company needs in sourcing, and we believe that PLM vendors will continue to advance their performance in sourcing due to proximity to product information. Nevertheless, no matter which umbrella sourcing falls under, collaboration across the various enterprise systems is the future of sourcing.
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