Below-listed is 9 steps to boost your business with the right sourcing strategy.

1. Analyze the need of sourcing:

Identify the need for sourcing. Ask as many questions you can ask your team and to your
customers. Know and understand your current business scenario. Set your current situation as a
benchmark and analyze the need for sourcing in your business.
2. Conduct market research:
Comparing the apparel market across the globe is a complex exercise that brings clarity to
business. This will help you to know the potential markets for your goods and how your business
can perform there.
3. Evaluate the supplier’s market:
Be careful while choosing a supplier. Often, organizations end up paying for a supplier’s inability.
That’s why any apparel business needs to evaluate suppliers based on their previous
performance. Before you finalize with any supplier, consider their financial statements, credit
reports, and references. Understand supplier’s working pattern and how well they can match
with yours.
4. Amass Suppliers’ information:
Another essential is collecting supplier’s information before you start working with them. Many
apparel companies face a big problem in maintaining a suppliers’ list with the following
information:

 Contact information
 Quotes
 Contracts
 Geographies potential
 Product information
 Performance data
5. Formulate a sourcing strategy:
Draft a sourcing strategy considering your company’s goal and supplier’s potential. Consider the
market you are targeting for your product and services. Look around the ways to maximize your
sourcing efforts and include everything in your strategy.
Analyze the internal and external factors while formulating the sourcing strategy.
Internal factors:

 Quality
 Budget
External forces

 Supplier’ Flexibility
 Supplier’s location
 Market player’s performance
Other factors to consider:

 Requirements for the suppliers

 Standardize operations
 Supplier- relationship management
Formulate an unbeatable strategy to reduce the risk and maximize the results. And entre the
market with confidence.
6. Negotiate with suppliers:
For many apparel businesses, negotiation is a crucial step to do, but equally important to create
maximum value in minimal budget. Discuss your organization’s vision and educate them well
about your product.
Other important factors to discuss are:

 Pricing structure
 Scope of work
 Time of delivery
 Teams and conditions
7. Enforce the sourcing strategy:
In the beginning, communication is a must to keep an ear on what’s going on the other side.
Especially, when you are working with new suppliers.
Establish strong links of communication with suppliers and keep them well- informed.
8. Monitor the sourcing plan:
Know the strength and weaknesses of your products and suppliers. So, that you can work on it
for next time.
Check the progress on:

 Timely delivery
 Process suppliers are following
 Problem suppliers are facing
 Specifications of your product
9. Modernize the strategy:
Now you know how performed with your sourcing strategy. You know the boom-doom areas.
The next thing you need to do is to modernize your sourcing strategy. While revamping your
strategy, consider the following factors:

 Market demand
  Customer response
 The lead times
 Hidden costs

Sourcing strategies for decision-making

1. Make or buy decisions
This decision arises when there is a need for the development of new products, desire to reduce
cost, need for specialized types of equipment and skills, unsatisfactory supplier or contractor
performance and increase or decrease in demand for established product.
a) Manufacturing / raw material cost: The first factor which has a significant influence on the
sourcing decision is cost. The direct cost estimate for the sourcing process includes the cost of
materials, direct labor cost and variable costs of factory such as training, packaging, etc.
b) Production capacity:

 Required capacity – The output required for that order

 Demonstrated capacity – It is the volume of the output that the plant can actually
produce.
c) Quality: Quality standards and quality requirements of products are often the major
influencing factor in sourcing decision. Most of the time, based on the availability and capacity
of the factory, one can estimate the mode of sourcing
d) Timing: In apparel and fashion industry, timing is critical to both manufacturers and retailers.
Timing affects the placement and volume of orders as well as production deadlines.
Buyer Negotiation Process Followed by Garment Merchandiser:
An effective buyer negotiation can be made by following some key factors which are mentioned
in the below:

 Researching the needs of both parties,

 Preparation,
 Offer,
 Discussion,
 Counter and revised offers,
 Summaries,
 Agree and commit.
All the factors have explained in the following:
1. Researching the needs of both parties:
The higher the knowledge a buyer has of their own and the apparel merchandiser’s
requirements, the better able they are to construct an acceptable solution. The buyer must be
clear about both the department mark-up to be placed on the product cost price and the
intended retail selling price so that he can judge the viability of the garment merchandiser’s
products. He should also have sufficient product construction knowledge to understand how
changes can be made to achieve better value in the product.
The process of researching needs does not stop once the buyer negotiation is underway the body
language and facial expression of both parties will signal their reactions of the ongoing discussion.
Successful buyers will listen to and watch the garment merchandisers carefully and making
judgments about how to trade benefits with them. In addition to listening and observation skills,
buyers need to be able to use questions effectively. Open questions require a respondent to
elaborate which may provide the buyer will valuable knowledge on how to proceed when
meeting an apparel merchandiser. Closed questions can be used to generate specific responses.
2. Preparation:
Effective preparation is also very important to successful communication which ultimately makes
easy to do buyer negotiation effectively. The particular preparation required will vary according
to the nature of meeting but some factors are always important. Meeting should begin on time
and follow a clear agenda with a realistic amount of time to accommodate the work. Where there
is an existing relationship with a garment merchandiser, a file containing the relevant notes and
documentation relating to the orders should be read prior to the meeting and taken in for
reference.
Garment merchandisers meeting are usually held in uncluttered or empty rooms or offices to
avoid any distraction from the business of the meeting. It is also usual for there to be two people
from buying in the meeting so that buyer can have an objective view point available while
personally involved in the buyer negotiation.
It is essential that the buyer also has identified the maximum and minimum positions that he will
accept for a range of factors including product price, order size and lead time.
3. Offer:
Having identified where the respective position lies between them. The buyer and garment
merchandiser can make specific proposals to set the boundaries of negotiation (buyer
negotiation). It is unlikely that many of the offers initially made will end up being accepted. So
both parties allow for some manoeuvre. This is the opportunity for the buyer to being trading
what is of relatively low value for him but of more value to the apparel merchandiser.
4. Discussion:
The likely framework of a final settlement will emerge in the discussion as each side probes the
other ad makes suggestions. Answer to the suggestions can be revealing with choice of words
and tone signaling interest of reluctance and should be noted as potential bargaining material.
There will be areas on which one side can move more than the other and vice versa. It is
important for the buyer to make a note of which ones provide the greatest and least
opportunities for flexibly the trade- off later in the buyer negotiation.
5. Counter and revised offers:
This is the real bargaining where elements of the order such as numbers of units, product details,
lead time and so on are being decided in the context of an overall cost price. The buyer should
make firm proposals and be cautious of offering concessions unless she is getting one in return.
The final element that will pull all of the other variables together will be the cost price which is
agreed at the end. Although the bargaining may be tough, the spirit of the communication should
be remaining friendly and not adversarial. Parities are more likely to co-operate if they are being
treated fairly and responsibility.
6. Summaries:
It is vital to summaries at key stages through the buyer negotiation when significant points are
agreed to avoid losing early gains as to ensure that both parties understand each other. With so
many potential variables included can be easily forgotten unless there is a record of agreement
through. Records will also provide both sides with an explanation of how the deal was
constructed should a particular variable become contentious at a later date.
7. Agree and commit:
It is very important to make an effective buyer negotiation job. Once the parties have agreed an
order, they have to communicate the details to other functions. The garment merchandiser may
need to book production space, order fabric or trimmings and source labels. The buyer will need
to inform the apparel merchandiser of the retail selling value of the order so that a track can be
kept on spending.
Sourcing is defined as the process of determining how and from where manufactured goods /
components / raw materials will be procured. The main motivation of the sourcing process is to
obtain high satisfaction with the low-cost.
Figure: Sourcing cycle in apparel industry
Classifications of sourcing process
The following are the various types of sourcing process based on the requirements.
• 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 yarn or fibre is sourced from other
countries
• 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 re-imported to meet
the demand
• Global manufacturing - Fabric is manufactured in other country.
Top Apparel Sourcing LCC (Low-Cost Countries)

 China
 Vietnam
 Honk Kong
 Thailand
 Srilanka
  Bangladesh
 Ethiopia
 Combodia
 Mexico
 India
Sourcing process in an apparel industry
The stages in sourcing process are very subjective and dynamic; they differ for each and every
order based on specific requirements. Hence, the merchandiser cannot have pre-determined
standard operating procedure. In the same way, the lead time for each process will also vary
depending upon the raw material even though the vendor remains same. The typical sourcing
process of fabric / trims / other raw material sourcing in an apparel industry can be described as:
Stage 1: Proto sample approval
Stage 2: Approval process for material
• Trim card – for trims
• Artwork – for prints and embroidery
• Lab dips – for dyed fabric
• Desk loom – for fabric
• Print strike-off – for print colour and quality.
Stage 3: Approval / rework / correction of material and results from buyer
Stage 4: Purchase order development
Stage 5: Sample fabric / trims / lab dips for testing as per requirements
Stage 6: Approval from the customer / buyer
Stage 7: Bulk production and in-house.
In this process, the material refers to fibre, yarn, fabric interlinings, buttons, zippers and other
required items. The main objective of the sourcing process is to search and identify the target
material anywhere in the world, negotiate for product quality and price and source the material
at required time and quantity. Strong and supportive relationship with the vendor is essential for
the successful execution of any merchandising process. The development, selection and sourcing
are the responsibility of the creative and technical designer of the factory along with the
merchandiser.
Role of merchandiser in sourcing process
The sourcing and merchandising departments have the same objective to meet i.e., to get right
fabric / trims at the right place at the right time with right cost. During the order execution
process, merchandiser handles whole order from the initial stage and thus he is a key individual
in the sourcing process compared to the sourcing department. Since the merchandiser knows all
details about a particular order, he/she is the decision-making authority in sourcing process,
whenever a critical situation is faced. The responsibilities of merchandiser in sourcing can be
depicted as follows:

Merchandiser Sourcing Manager

Material In-house/
order delivery

 Material availability
 Sample approval at
 Logistic expenditure
correct times
 Time required
 Coordination with
sourcing department  Vendor lead time
 Follow up for the material  Cost details
 Target dates  INCO term

Factors affecting sourcing process

1. Lead time
Lead time of the products varies with respect to different points like

 Point of origin
 Mode of transportation
 Open stock material or specifically made items
 Performance test requirements
 Imported or domestic.
2. Minimum order quantity (MOQ)
Minimum order quantity or order minimum is the smallest quantity a vendor will sell on a single
purchase order. This is one of the important factors that affect the sourcing process. Every
supplier requires a certain minimum order quantity to produce the fabric and trim economically;
otherwise, the cost of production will be higher if production is below minimum order quantity.
3. Logistics facilities
Logistics is one of the main factors which affect the fabric sourcing lead time drastically. There
are several aspects with respect to it which are given below:

 Time required for transportation

 Infrastructure for logistics
 The cost of logistics.
4. Quality parameters
As the purpose of sourcing process demands high quality product for low cost, the need for the
quality products increases in the market. Providing cheaper products with higher quality will lead
to a better relationship with the buyer and also increases the profit margin of the firm.
5. Sourcing Cost
The cost of the sourcing process depends on following factors:
• Labor wages
• Manufacturing cost
• Cost of logistics/transportation
• INCO term negotiated (for international sourcing)
Types of supplier for apparel industry
• Nominated supplier: Nominated suppliers are the suppliers who are recommended by the
buyers of a particular order. This process was initiated by the buyers to achieve a better
control over their product, throughout the supply chain.
Advantages of nominated supplier
• Time saving for garment manufacturer because they have to only deal with one supplier to
get one or more material
• Quality assurance of the raw materials is ensured and taken care by buyer
Disadvantages for nominated suppliers
• The nominated suppliers may become overconfident about their product quality
• There may be a monopoly arising in the market
• Non-nominated supplier: Most of the time, the buyer use to send the technical information
sheet of a particular order and he/she will ask the manufacturers to source the raw materials,
accessories and other materials to develop their product. In this situation, the manufacturers
will access different vendors / suppliers
Advantages:
• The non-nominated supplier works hard and tries his best to follow the instructions given by
buyer or garment manufacturer due to highly competitive market
• Garment exporter may get the chance to explore with the innovative products offer by a non-
nominated supplier
Disadvantages:
• There may be flaws in the quality of the raw material due to a communication gap between
buyer and supplier
• To get involved with these suppliers in product development process is a difficult task
Supplier selection process
1. Identify Suppliers: Gather the opinions of stakeholders and define the criteria for the selection
process. This list of stakeholders may include members from research and development,
purchasing, marketing, quality assurance and any other area of your organization that touches
the supplier selection process
2. Measure performance: Conduct an audit before signing in the contract to confirm the supplier.
The audit will help the manufacturer to understand that the supplier does not have any
significant compliance or quality system failures that could affect your ability to produce top-
quality products. Another reason to conduct the audit beforehand is to understand the supplier’s
strengths and weaknesses before the relationship becomes official.
3. Supplier Feedback: The supplier self-assessment can be used to identify performance gaps, as
well as discover how the supplier understands their own operation.
4. Certification: As supplier relationship grows stronger, and both parties feel they are receiving
positive performances, the supplier may be able to achieve a certified status.
Vendor / supplier evaluation
• Pricing factor
• Quality factor
• Delivery factor
• Service factor
 Prepared By
Sayed Hasan Mahmud
Lecturer, TE, NITER