Apparel Sourcing

Sourcing
• Sourcing may be defined as process of negotiating
and procurement of various Materials / products
to meet company’s marketing objectives.
• Sourcing also determine that where the product
will be manufactured, when and how it will be
manufactured.
• The marketing and sourcing team in the
organization aim and work for getting right
product available at right time, at right price and
in right quality.
 Sourcing
• Sourcing may be done locally of globally. The main aim is to
get products manufactured at effective locations either local
or around the world. Domestic sourcing is also called quick
sourcing because of easy access.
• Sourcing decision depends upon company's financial
resources, level of manufacturing expertise of the company,
and strategic objectives(make or buy) of the company.
• Due to globalisation the global buyers shifted sourcing to
most effective locations. In 1990’s the sourcing started
migrating to India, Bangladesh, China, Indonesia and Sri
Lanka etc.
 Global Sourcing
• The main reasons for sourcing migration to
these countries are
– The labour cost are much lower in developing
countries as compared with developed countries.
– Large English speaking workforce available.
– Strong Political and Social ties
– Export and import are becoming easy due to
globalization and liberalization of economies.
– Govt are also very positive and keen to get foreign
investments.
 Sourcing
• Small firms the merchandisers are responsible
for sourcing of materials.
• Mid Size or Big firms have a separate sourcing
teams to help the merchandisers in sourcing
the materials.
• Due to variety in materials in terms of quality
and various sourcing options available, the
major challenge is Lead time and delivery of
the material.
 Sourcing Options
• Internal sourcing / Manufacturing
– Domestic manufacturing
– Off shore manufacturing
• External Sourcing/ Manufacturing
– Domestic contractor
– Foreign contractor
• Internal cum external sourcing /
Manufacturing
 Internal Manufacturing
• Developing and manufacturing the products in
own plants whether domestic or international
plants.
• This needs much capital investment in
infrastructure such as plant and equipments etc.
• This option is suitable for a company with stable
products and also help the company to meet
and develop products according to changing
customer demand rapidly.
 Benefits
• The control over the quality of raw materials,
production schedules can be done and deliveries
can be monitored easily.
• Quality standards can be established and
monitored easily in own company.
• The priorities can be set for urgent orders and
any change in demand from customer can be met
easily because of own facility.
• The overall cost of product in long run will be low.
 External Manufacturing
• Producing a product by using an outside contractor for
manufacturing.
• It eliminates the financial risk of company for owning
plant and equipments, also reduces risk of overhead in
downtime.
• There are three approaches in external manufacturing
– CMT (Source all material and give to contractor for production)
– FPP ( Contractor source all material and produce the product
as per style developed by company)
– HPP ( HPP is similar to FPP with only difference that fabric will
be provided by the company)
 Benefits
• Control over the design and quality of
product.
• Less investment, more flexibility in styling and
limited technical expertise requirement.
• Less financial risk.
• Help to develop reliable sources of supply.
• Sometimes both internal and external
sourcing options are explored for the various
materials required for a product.